CHARLESTON – Jefferson Circuit Judge David Sanders incorrectly awarded Summit Point Raceway $1.2 million in a coverage dispute with workers compensation insurer BrickStreet Mutual, the Supreme Court of Appeals held.
The Justices on Nov. 18 found Summit Point's policy clearly excluded coverage of "deliberate intent" injury suits that operate outside workers compensation law.
"Because the policy language is plain, and the plainly worded exclusion of deliberate intent coverage was conspicuous, plain, clear, and obvious, the policy simply did not provide coverage for deliberate intent liability," Justice Robin Davis wrote.
She rejected Sanders's finding that BrickStreet had to cover a deliberate intent action because it didn't offer the coverage as state law required.
She wrote that "the Legislature merely required that such coverage be made available to insureds upon their voluntary request."
Workers compensation law keeps any injury claim out of court unless the employer knew that an unsafe condition presented a high probability of serious injury or death.
In the past, when a state commission provided workers compensation insurance, it offered deliberate intent coverage on top of coverage for regular claims.
In 2006, after the Legislature converted to private insurance and set up BrickStreet with a three year monopoly, BrickStreet offered to continue every employer's coverage.
On BrickStreet's first business day, it sent a letter telling employers that if they previously purchased excess liability coverage, they could continue purchasing it.
BrickStreet told other employers how to apply for it if they wanted it. BrickStreet repeated the message in a letter three months later.
Summit Point received the letters and didn't buy excess coverage.
In 2007, Summit Point employee Brandon Gregory caught a hand in a wood planer. He submitted a claim for workers compensation, and BrickStreet paid in full.
Gregory then filed a deliberate intent action against Summit Point.
Summit Point asked BrickStreet to assume its defense costs, and BrickStreet refused. Summit Point settled Gregory's claim and sued BrickStreet, alleging bad faith, breach of contract, and unfair practices.
Summit Point moved for partial summary judgment on BrickStreet's obligation to make a commercially reasonable offer for deliberate intent coverage.
Sanders granted the motion last year and awarded Summit Point $1,201,080.30, for the costs of defense and settlement plus interest and attorney's fees.
BrickStreet argued on appeal that the ruling could extend to 30,000 employers who didn't choose deliberate intent coverage or pay for it.
The appeal succeeded, as all five Justices found BrickStreet fulfilled its obligations when it sent the coverage letters to Summit Point.
They identified an exclusion in the policy for "bodily injury caused by your intentional, malicious, or deliberate act," with a statutory citation.
"The above quoted exclusion was conspicuous, plain, clear, and obvious in excluding coverage for deliberate intent actions," Davis wrote.
Don Parker and Angela Herdman, both of Charleston, represented BrickStreet.
William McCune and Alex Tsiatsos, both of Martinsburg, represented Summit Point along with Peter Chakmakian of Charles Town.