ROBERT E. HARTLEY; BRENDA MITCHUM, INDIVIDUALLY; AND BRENDA MITCHUM, AS ADMINISTRATRIX OF THE ESTATE OF DANIEL ROBERT HARTLEY ON REMAND OF KENTUCKY v. GEICO CASUALTY COMPANY
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RENDERED:
SEPTEMBER 29, 2006; 10:00 A.M.
NOT TO BE PUBLISHED
Commonwealth Of Kentucky
Court of Appeals
NO. 2003-CA-001134-MR
ROBERT E. HARTLEY; BRENDA MITCHUM,
INDIVIDUALLY; AND BRENDA MITCHUM, AS
ADMINISTRATRIX OF THE ESTATE OF DANIEL
ROBERT HARTLEY
APPELLANTS
ON REMAND FROM SUPREME COURT OF KENTUCKY
2004-SC-000874-DG
APPEAL FROM MEADE CIRCUIT COURT
HONORABLE SAM H. MONARCH, JUDGE
ACTION NO. 01-CI-00195
v.
GEICO CASUALTY COMPANY
APPELLEE
OPINION
AFFIRMING
** ** ** ** **
BEFORE:
GUIDUGLI, HENRY, AND JOHNSON, JUDGES.
GUIDUGLI, JUDGE:
This matter is again before the Court on
remand by the Supreme Court of Kentucky pursuant to an Opinion
and Order entered July 20, 2006.
After granting discretionary
review, the Supreme Court vacated this Court’s opinion rendered
September 17, 2004, and remanded the case for reconsideration in
light of Foster v. Kentucky Farm Bureau Mutual Insurance
Company.1
In the present case, this Court originally reversed
the summary judgment dismissing the bad faith claim, holding
that in cases arising under the Kentucky Motor Vehicle
Reparations Act,2 a plaintiff alleging bad conduct on the part of
the insurance carrier regarding the late payment of basic
reparation benefits is permitted to bring a private cause of
action for bad faith under the Unfair Claims Settlement
Practices Act.3
In so holding, this Court distinguished the case
of Phoenix Healthcare of Ky., LLC v. Kentucky Farm Bureau Mutual
Insurance Company.4
We shall now reconsider our prior holding.
Robert Hartley and Brenda Mitchum, individually and as
the administratrix of the Estate of Daniel Robert Hartley,
appeal from the Meade Circuit Court’s April 30, 2003, Opinion
and Order dismissing their bad faith claim relating to GEICO
Casualty Company’s handling of their claim for basic reparation
benefits under the MVRA.
They also appeal from the portion of
the circuit court’s February 15, 2002, Opinion and Order
awarding them $1000 toward reasonable attorney fees.
The two
issues on appeal concern whether the circuit court properly
granted a summary judgment to GEICO on the bad faith claim and
1
189 S.W.3d 553 (Ky. 2006).
2
KRS 304.39, et seq.
3
KRS 304.12-230.
4
120 S.W.3d 726 (Ky.App. 2003).
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whether the circuit court awarded sufficient attorney fees.
Upon reconsideration, we now affirm.
Mitchum and Hartley are the biological parents of
Daniel Robert Hartley, who on June 29, 2000, at the age of
fifteen was tragically struck and killed by an automobile driven
by Joy B. Barr.
Barr was insured by GEICO, a Maryland insurance
company licensed and authorized to do business in the
Commonwealth.
Mitchum, who worked as a claims adjuster for
another insurance company, was appointed as the administratrix
of the Estate, and began negotiations with GEICO to settle the
bodily injury and basic reparation benefits claims.
While at
first reserving the $10,000 in PIP benefits for funeral expenses
and survivor benefits, Mitchum later included a claim for
medical expenses.
On June 28, 2001, Hartley and Mitchum filed a
complaint in the Meade Circuit Court alleging violations of the
UCSPA in GEICO’s handling of their claim for basic reparation
benefits for survivor replacement services loss and medical
expenses.
They demanded damages for emotional pain and
suffering, $9000 in PIP benefits, 18% interest, attorney fees,
and punitive damages.
In its answer, GEICO denied that it was
obligated to pay benefits for survivor’s economic loss or
replacement service loss, but admitted that it would generally
pay medical expenses in similar cases.
-3-
However, GEICO denied
ever having received a claim for the reimbursement of medical
expenses, although it did receive the medical bills on April 9,
2001.
The same day, GEICO filed an Offer to Confess Judgment
pursuant to CR 68 in the amount of $9000, representing medical
bills incurred by the Estate.
Mitchum and Hartley moved for summary judgment only on
the claim regarding payment of the medical expenses, asserting
that in the April 9, 2001, letter, Mitchum made a claim for
basic reparation benefits in the form of medical expenses and
included supporting documentation.
The circuit court granted
the motion, and awarded Mitchum and Hartley $9000 in medical
expenses, plus 18% interest from May 9, 2001, and an allowance
toward reasonable attorney fees.
In the opinion, the circuit
court stated, “[o]n April 9, 2001 . . ., the estate submitted
copies to GEICO of medical bills totaling $10,293.31[] and
modified its BRB claim from one for survivor’s replacement
service loss to a claim for medical expenses.”
By later order,
the circuit court granted Mitchum and Hartley a judgment in the
amount of $1000 as an allowance toward reasonable attorney fees
rather than the $7,323.75 they had requested.
GEICO then paid
the $9000 in medical expenses, interest, and attorney fees
awarded.
The portion of the Opinion and Order awarding $1000
toward reasonable attorney fees is one of the rulings Hartley
and Mitchum have challenged on appeal.
-4-
Turning to the bad faith claim, GEICO then filed a
motion for summary judgment, arguing that its handling of the
claim did not rise to the level of actionable bad faith as its
refusal to pay the remaining basic reparation benefits was based
upon a misunderstanding, and was not malicious.
GEICO also
argued that the statute itself contains a statutory remedy in
the form of 18% interest and reasonable attorney fees, so that
Mitchum and Hartley should not be permitted to bring a civil
cause of action under KRS 446.070.
In an Opinion and Order
entered April 30, 2003, the circuit court, on the merits,
dismissed all claims for damages due to the nonpayment of
survivor benefits, holding that Mitchum and Hartley failed to
establish that GEICO’s actions rose to an actionable level of
bad faith.
This appeal followed.
1) BAD FAITH CLAIM
On remand, the Supreme Court has instructed us to
reconsider our previous decision in light of its recent opinion
of Foster v. Kentucky Farm Bureau Mutual Insurance Company.
In
Foster, the Supreme Court addressed whether a conflict existed
between Kentucky’s USCPA and the statutes under the MVRA
permitting 18% interest and attorney fees for the failure of an
insurance company to pay a no-fault claim without reasonable
foundation.
In holding that the MVRA provides the exclusive
remedy in such a situation, the Supreme Court explained:
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The [MVRA] provides an exclusive remedy
where an insurance company wrongfully delays
or denies payment of no-fault benefits.
There is no other Kentucky statute,
regulation or case law which permits Foster
to claim work loss for BRB. The MVRA is the
exclusive remedy. Grzyb v. Evans, 700
S.W.2d 399 (Ky. 1985), provides that where a
statute both declares the unlawful act and
specifies the civil remedy available, the
aggrieved party is limited to the remedy
provided by the statute. General damages
are not available when a specific remedy is
provided such as in this case. KRS 304.39210 states that the penalty for any delay in
payment of basic reparation benefits is
payment of interest at a rate of 12% per
annum on the delayed benefits, or 18% per
annum if the delay was without reasonable
foundation. Interest, which is set out in
certain situations in KRS 304.39-220, and
the award of attorney fees are the remedies
provided to an insured if an insurance
company fails to pay basic reparation
benefits in a timely manner and/or without
reasonable foundation.
Grzyb, supra, involves a special body
of law, the Kentucky Civil Rights Act, KRS
344 et seq. FB Ins. Co. v. Jones, 864
S.W.2d 926 (Ky.App. 1993), does not control
because it relates to general insurance law
questions. The Kentucky MVRA preempts
general insurance law where an insurance
claim arises as a result of physical injury
caused by a motor vehicle accident and
establishes remedies for violations of the
statute. This can be compared to the civil
rights provision of Grzyb. [The] MVRA is a
comprehensive act which not only relates to
certain tort remedies, but also establishes
the terms under which insurers pay no-fault
benefits, and provides for the penalties to
which insurers are subjected if they fail to
properly pay no-fault benefits.5
5
Foster, 189 S.W.3d at 557.
-6-
We also recognize that this Court’s earlier opinion in Phoenix
Healthcare is in line with the Foster case, in that it held that
KRS 304.39-210 and KRS 304.39-220, both part of the MVRA,
provide the exclusive remedy for the late payment of basic
reparation benefits.
Relying on the holding in Phoenix
Healthcare, the U.S. District Court for the Western District of
Kentucky has also held that a plaintiff’s claim for basic
reparation benefits under Kentucky’s MVRA subsumed his claim for
bad faith.6
In the present case, we now hold that Mitchum and
Hartley’s bad faith claim under Kentucky’s UCSPA is barred as
the MVRA provides the exclusive remedy for the late payment of
basic reparation benefits in the form of interest and reasonable
attorney fees.
For this reason, we must uphold the circuit
court’s summary judgment dismissing the bad faith claim.
2) AWARD OF ATTORNEY FEES
Mitchum and Hartley contend that the circuit court’s
award of $1000 toward reasonable attorney fees was insufficient
in light of their motion requesting fees in the amount of
$7,323.75, and that its failure to provide a basis for its
ruling constituted an abuse of discretion.
GEICO asserts that
the award was reasonable under the circumstances, and that such
6
Allen v. Safe Auto Ins. Co., 332 F.Supp.2d 1044 (W.D.Ky. 2004).
-7-
an award is purely within the discretion of the circuit court.
We agree with GEICO that the circuit court did not abuse its
discretion in only awarding a portion of the fee requested.
We
note that the fee was “for advising and representing a claimant
on a claim or in an action for basic or added reparation
benefits” if the delay in the payment of benefits was without a
reasonable foundation.7
In this case, the amount of remaining
basic reparation benefits only equaled $9000.
For the foregoing reasons, the judgment of the Meade
Circuit Court is affirmed.
ALL CONCUR.
BRIEF FOR APPELLANTS:
BRIEF FOR APPELLEE:
M. Austin Mehr
Wesley B. Deskins
Lexington, KY
Perry M. Bentley
Lucy A. Pett
Lexington, KY
ORAL ARGUMENT FOR APPELLANTS:
ORAL ARGUMENT FOR APPELLEE:
M. Austin Mehr
Lexington, KY
Perry M. Bentley
Lexington, KY
7
KRS 304.39-220.
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