CHARLES TOWN –- Workers' compensation insurer Brickstreet Mutual must pay a man for loss of his fingers, not because his employers carried the right coverage but because Brickstreet let them think they did, Jefferson Circuit Judge David Sanders ruled.
Sanders granted summary judgment in May to Summit Point Raceway Associates, a wood flooring shop in Summit Point, holding that BrickStreet breached its policy.
Sanders ordered BrickStreet to reimburse Summit Point Raceway Associates not only for an injury to worker Brandon Gregory but also for $190,000 in legal defense costs.
Gregory lost fingers in 2007, when a machine blade snared his glove.
He sued Summit Point Raceway Associates, company president William Scott, and shop supervisor Clyde Phillips.
He alleged deliberate intent, seeking an exception from workers compensation law that generally prohibits civil suits over work injuries.
Workers can claim deliberate intent if employers knowingly expose them to high risks.
Summit Point notified BrickStreet of the suit and asked it to assume costs of defense.
BrickStreet didn't respond, and Summit Point sent another notice.
BrickStreet still didn't respond, and Summit Point sent a third notice.
Four months after the first notice, BrickStreet denied coverage on the grounds that Summit Point's policy didn't cover deliberate intent.
Summit Point responded that under state law, BrickStreet had to offer the coverage and obtain a waiver from any employer who turned it down.
BrickStreet claimed it offered "broad form coverage," and Summit Point declined it.
Maria Orsini of Summit Point signed an affidavit swearing, "Had broad form coverage been explained to me by Brickstreet, Summit Point would have purchased that coverage."
She wrote, "I reasonably expected that Summit Point's insurance policy with BrickStreet would have covered injuries and lawsuits similar to Brandon Gregory's injury and lawsuit."
Sanders agreed with Orsini, finding nothing in the record to show that a BrickStreet agent explained the policy to Summit Point personnel.
"Indeed, no BrickStreet agent ever met with Summit Point personnel at all," he wrote.
BrickStreet's failure to make an offer and obtain a waiver resulted in automatic inclusion of the coverage in the policy, he wrote.
"Whatever BrickStreet meant by the term 'broad form,' use of that term was not an explanation," he wrote.
"BrickStreet provided absolutely no evidence of a knowing and informed rejection of deliberate intent coverage by Summit Point," he wrote.
Summit Point reasonably believed its policy covered Gregory's suit, he wrote.
"Summit Point was forced to defend the case at its own cost -- approximately $190,000 –- and settle the case without any assistance from BrickStreet," he wrote.
"These damages flowed directly and proximately from BrickStreet's breach of contract; they are familiar and expected consequences," he wrote.
He ruled that the $100,000 limit on Summit Point's policy did not apply because, "limits were never offered or discussed."
He ordered BrickStreet to pay Summit Point the settlement amount, defense costs, interest, and the legal fees Summit Point paid to litigate against BrickStreet.
He wrote that if lawyers couldn't reach an amicable settlement in ten days, Summit Point could bring a motion for damages.
Ten days passed without settlement. As of June 22, Summit Point had not filed a motion for damages.
Richard McCune of Martinsburg represented Summit Point. Angela Herdman, of Spilman Thomas and Battle in Charleston, represented BrickStreet.
The law requiring BrickStreet to offer deliberate intent coverage expired in 2008, at the end of a monopoly that the Legislature granted at its creation in 2006.