A Perfectly Imperfect Process: Dauphin County’s First Post-Koken Jury Trial

By Allison L. Krupp, Esq.*

On December 29, 2005, all underinsured motorist claims (UIM) that couldn’t be resolved by the parties themselves were resolved through arbitration. The following day, everything changed. It was on that date that the Pennsylvania Supreme Court issued its decision in Insurance Federation of Pennsylvania, Inc. v. Koken, 889 A.2d 550 (Pa. 2005). The court held that UIM claims do not necessarily have to be arbitrated, although the parties could still agree to do so. Unfortunately, there were many issues that Koken didn’t resolve. Koken didn’t say whether the UIM claim should be litigated before or after any outstanding bodily injury claims. It didn’t say whether the UIM claim and outstanding bodily injury claim should be merged and tried together, or severed and tried separately. As a result, Pennsylvania trial courts have grappled with how to appropriately handle cases that include both a bodily injury claim against the alleged tortfeasor, as well as a UIM claim against the plaintiff’s/insured’s own insurance company.

Some courts have agreed to sever the claims, resulting in two separate trials. Some courts have agreed to bifurcate the claims, resulting in one trial with two separate parts. In such cases, the jury first determines the bodily injury claim, after which it hears evidence regarding the UIM portion of the case. Still other courts have allowed plaintiffs to try both claims within the same trial, but they do not allow counsel to discuss insurance with the jury, or even acknowledge that an insurance company is a defendant in the case. Finally, some courts have tried the bodily injury claim and the UIM claim together and have permitted counsel to discuss insurance and that the UIM carrier is a defendant in the case.

Many were hopeful that the Pennsylvania Supreme Court would provide some guidance on the UIM/bodily injury conundrum were it to grant allowance of appeal in Stepanovich v. McGraw and State Farm Insurance. In that case, the bodily injury and UIM claims were litigated together in Allegheny County. The alleged tortfeasor filed preliminary objections seeking to bifurcate. The court ruled that counsel for both defendants were permitted to actively participate at trial; however, there would be no duplication of questions and no mention of insurance. The jury subsequently found that the tortfeasor was not negligent.

Stepanovich filed a post-trial motion, which the trial court granted. It ruled that it had erred by not allowing plaintiff/insured to identify State Farm as a defendant, and it granted a new trial. On appeal, the Superior Court ruled that the jury’s determination regarding negligence did not depend upon the identity of the UIM carrier. Therefore, Stepanovich was not prejudiced by being unable to discuss insurance or the fact that an insurance company was a defendant in the case. The Superior Court reversed the trial court’s order granting a new trial. On April 23, 2014, dashing the hopes of many, the Pennsylvania Supreme Court denied the petition for allowance of appeal. As a result, no direct guidance from the Supreme Court on the issue is forthcoming any time soon.

Shortly after the Supreme Court’s denial of the petition for allocatur in Stepanovich, the Dauphin County Court of Common Pleas held its first post-Koken jury trial before the Honorable Bruce Bratton. The case, Oaks v. Erie Insurance Exchange and Austin, arose from a typical two-car motor vehicle accident in which Oaks was a passenger in one of the vehicles. Austin’s vehicle had allegedly slid on some wet leaves, causing him to enter the other lane of travel and strike the vehicle in which Oaks was riding. Erie had denied Oaks’ UIM claim on the basis that her damages did not exceed the tortfeasor’s liability limits.

Suit was subsequently filed in the Dauphin County Court of Common Pleas against the alleged tortfeasor (Austin) and Oaks’ insurance carrier (Erie). The complaint included two separate counts: negligence against Austin and breach of contract against Erie. Austin challenged liability on the basis that sliding on the wet leaves was beyond his control. The principal issue with respect to damages was whether Oaks had sustained a torn rotator cuff prior to, or as a result of, the subject accident. The only remaining damages at issue at the time of trial were those related to pain and suffering. The following is a brief summary of the litigation.

Austin filed a pre-trial motion to bifurcate and sever the UIM claim from the bodily injury claim. Judge Bratton denied the motion to bifurcate, observing that it had been filed on the “eve of trial after Erie had fully participated in all proceedings.” The judge did enter an order, however, limiting the amount of information regarding insurance that the jury would hear: counsel was not permitted to explain that Erie was the UIM carrier—they could only explain that Erie was a defendant in the case and that it insured the plaintiff. Counsel was also prohibited from discussing Oaks’ payment of premiums for her Erie policy.

Many of the questions posed during the jury voir dire related to the potential jurors’ opinions and personal experiences with insurance companies, specifically, with Erie Insurance. For example, Oaks’ counsel asked the jurors whether they felt that insurance companies have become easier to deal with or more difficult to deal with in the last 10 years. He also asked the jurors whether they would be willing to sue their own insurance company depending upon the circumstances. Many of the jury pool’s answers to these questions focused on the language of insurance policies and provisions that may be “buried” in the policy. When the questioning turned specifically to Erie, the jury pool was asked whether they maintain insurance with Erie and, if so, whether that would impact their ability to be fair and impartial jurors in the case. Jury pool members expressed concern that their premiums could increase depending upon the amount of the potential verdict; that Erie might “come after” them if they ruled in favor of Oaks; and that they might decide to change insurance carriers, depending upon how Erie handled the UIM claim.

During voir dire, Austin’s counsel’s primary concern was convincing potential jurors that Erie and Austin were not connected and that their feelings toward Erie should not impact their verdict as to Austin. Counsel for Erie told jurors that they would hear almost nothing about Erie and that this case did not involve a provision being “buried” in the policy.

After the jurors were chosen by counsel, Judge Bratton explained that there were two types of claims at issue in the case: a negligence claim against Austin for injuries allegedly sustained in the motor vehicle accident and a breach of contract claim against Oaks’ insurer, Erie Insurance. The judge explained that the jury’s decision with respect to the negligence claim “would also resolve the breach of contract claim.”

In his opening, Oaks’ counsel did not focus a great deal on insurance. He commented that in cases such as this, his client is “required” to sue her insurer, and that Erie agreed there was an effective policy on the date of the accident, but had denied Oaks’ claim for benefits. Austin’s counsel did not discuss insurance at all during his opening. Erie’s counsel explained that the principal disputes between Oaks and Erie concerned what injuries were actually caused by the accident and what injuries pre-existed the accident. He stated that Erie would not be calling any witnesses (although a claims professional was present in the courtroom during the duration of the trial and was introduced to jurors during voir dire).

During his closing argument, Erie’s counsel once again reiterated that the principal dispute between Erie and Oaks related to whether the injuries were caused by the accident. He was very careful to only use the word “insurance” when absolutely necessary and, instead, focused upon Oaks’ alleged injuries and when those injuries occurred. Austin’s counsel’s closing focused on liability and did not discuss insurance.

It was during Oaks’ closing argument that the issue of insurance was given the greatest attention. The argument began and ended with Erie’s allegedly unreasonable denial of benefits. Oaks’ counsel asserted that Erie agreed there was a policy, but had refused to take responsibility and pay benefits that are owed under the policy. Counsel once again argued that Oaks “had to” sue Erie, because it refused to pay benefits. He elaborated that Oaks had done the right thing—she had purchased insurance coverage so that she wouldn’t have to file suit, but Erie’s refusal to pay benefits forced her to do so.

Oaks also focused on the fact that Erie had not presented any witnesses or evidence during the course of the trial because it wanted to “save money.” He emphasized that Erie had not had Oaks examined by a neutral doctor and, instead, had relied upon the IME performed by the doctor hired by Austin. He implied that there could have been other IME reports that were either destroyed or never presented because they may have been unfavorable to the defendants. Counsel also noted that Erie’s counsel was sitting with Austin and his attorney, as opposed to its insured. He told jurors that there was no rule that required Erie’s counsel to sit with the tortfeasor, as opposed to its insured. Finally, counsel encouraged the jury to make insurance companies more responsible and warned, if they give Erie a “pass” this time, “who knows what will happen the next time.”

Immediately following Oaks’ closing argument, defense counsel requested a sidebar with the judge. Following the sidebar, Judge Bratton provided the jury with curative instructions. He described Oaks’ counsel’s closing argument as advocacy “gone a little too far.” The judge explained that counsel’s suggestion that there may have been other IME reports that were destroyed by defense counsel was inappropriate. Counsel’s suggestion that Erie’s counsel should have sat with Oaks’ counsel was also inappropriate, since all defense counsel sit at the same table at trial. Finally, Judge Bratton explained that the jury’s job was not to change the way insurance companies do business. Their job was to render a verdict based upon the facts of this case, and the facts of this case alone.

Immediately following these curative instructions, Judge Bratton charged the jury. He explained that this case involved two claims in one—one against Austin for negligence and one against Erie for breach of contract. He stated that the jury’s job was to focus only on the negligence claim since their decision with respect to the negligence claim would necessarily resolve the breach of contract claim. After they returned their verdict, the judge explained that he would mold the verdict to resolve the remaining breach of contract claim against Erie. Judge Bratton also explained that the breach of contract count was “in the shadows,” as far as the jury was concerned, and was not openly contested in this case. While the judge reviewed the elements of negligence with the jurors, he did not discuss the elements for breach of contract (presumably because the juror’s decision with respect to the negligence claim would also resolve the breach of contract claim). The verdict slip only dealt with negligence and did not discuss breach of contract.

During the course of deliberations, the jurors returned with two questions (paraphrased):

1. Did defendant Austin’s insurer cover Oaks’ car damage in full or did Oaks have to pay anything?
2. How much money had Oaks requested from Erie and what did Erie exclude?

Based upon the jury’s questions, which dealt directly with insurance, as well as the issues raised by Oaks’ closing argument, the court determined that the jury may have concluded that Austin had insurance coverage. As a result, the defendants made a motion for a mistrial, which was granted. The judge also commented that he would reconsider the motion to sever, in the event that the case were to be retried.

This case raises a number of issues that will inevitably arise whenever a UIM claim and bodily injury claim are tried together with the jury hearing about insurance. In such cases, the plaintiff is permitted to tell the jury that the UIM carrier did not pay the claim, but the UIM carrier is unable to explain why, i.e., because the damages did not exceed the tortfeasor’s bodily injury limits. The UIM carrier is also unlikely to have a representative from the insurance company testify since they are unable to discuss the basis for its refusal to pay. This, in turn, puts the plaintiff in the desirable position of pointing this out to jurors during the closing argument, i.e., the insurance company wants to try this case as cheaply as possible and didn’t even present any witnesses during the course of this trial. These and many other issues arose during the course of the Oaks trial and are likely to arise in future cases.

Given the Supreme Court’s denial of allowance of appeal in Stepanovich, it may be some time before counsel and trial courts are provided concrete direction regarding the litigation of UIM/bodily injury claims. In the meantime, counsel and the courts will continue to struggle with the complications and hurdles raised in these types of cases. As more and more of these hybrid UIM/bodily injury cases are litigated before Pennsylvania trial courts, however, we should begin to identify a more appropriate way to handle them or, at the very least, rule out those litigation models that do not work.

*Allison is an associate in our Harrisburg, Pennsylvania office who can be reached at 717.651.3510 or alkrupp@mdwcg.com.

Defense Digest, Vol. 20, No. 3, September 2014

Defense Digest is prepared by Marshall Dennehey Warner Coleman & Goggin to provide information on recent legal developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. Copyright © 2014 Marshall Dennehey Warner Coleman & Goggin, all rights reserved. This article may not be reprinted without the express written permission of our firm.