UNDERINSURED / UNINSURED MOTORIST ISSUES · – UNDERINSURED / UNINSURED MOTORIST ISSUES – I....

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– UNDERINSURED / UNINSURED MOTORIST ISSUES –

I. Uninsured and Hit and Run Motor Vehicle Coverage: 215 ILCS 5/143a

(1) No policy insuring against loss resulting from liability imposed by law for bodily injury or

death suffered by any person arising out of the ownership, maintenance or use of a motor vehicle that is designed for use on public highways and that is either required to be registered in this State or is principally garaged in this State shall be renewed, delivered, or issued for delivery in this State unless coverage is provided therein or supplemental thereto, in limits for bodily injury or death set forth in Section 7-203 of the Illinois Vehicle Code1 for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured motor vehicles and hit-and-run motor vehicles because of bodily injury, sickness or disease, including death, resulting therefrom. Uninsured motor vehicle coverage does not apply to bodily injury, sickness, disease, or death resulting therefrom, of an insured while occupying a motor vehicle owned by, or furnished or available for the regular use of the insured, a resident spouse or resident relative, if that motor vehicle is not described in the policy under which a claim is made or is not a newly acquired or replacement motor vehicle covered under the terms of the policy. The limits for any coverage for any vehicle under the policy may not be aggregated with the limits for any similar coverage, whether provided by the same insurer or another insurer, applying to other motor vehicles, for purposes of determining the total limit of insurance coverage available for bodily injury or death suffered by a person in any one accident. No policy shall be renewed, delivered, or issued for delivery in this State unless it is provided therein that any dispute with respect to the coverage and the amount of damages shall be submitted for arbitration to the American Arbitration Association and be subject to its rules for the conduct of arbitration hearings as to all matters except medical opinions. As to medical opinions, if the amount of damages being sought is equal to or less than the amount provided for in Section 7-203 of the Illinois Vehicle Code, then the current American Arbitration Association Rules shall apply. If the amount being sought in an American Arbitration Association case exceeds that amount as set forth in Section 7-203 of the Illinois Vehicle Code, then the Rules of Evidence that apply in the circuit court for placing medical opinions into evidence shall govern. Alternatively, disputes with respect to damages and the coverage shall be determined in the following manner: Upon the insured requesting arbitration, each party to the dispute shall select an arbitrator and the 2 arbitrators so named shall select a third arbitrator. If such arbitrators are not selected within 45 days from such request, either party may request that the arbitration be submitted to the American Arbitration Association. Any decision made by the arbitrators shall be binding for the amount of damages not exceeding $75,000 for bodily injury to or death of any one person, $150,000 for bodily injury to or death of 2 or more persons in any one motor vehicle accident, or the corresponding policy limits for bodily injury or death, whichever is less. All 3-person arbitration cases proceeding in accordance with any uninsured motorist coverage conducted in this State in which the claimant is only seeking monetary damages up to the limits set forth in Section 7-203 of the Illinois Vehicle Code shall be subject to the following rules:

18th Annual Civil Trial & Appeals Seminar May 26, 2016

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(A) If at least 60 days' written notice of the intention to offer the following documents in

evidence is given to every other party, accompanied by a copy of the document, a party may offer in evidence, without foundation or other proof:

(1) bills, records, and reports of hospitals, doctors, dentists, registered nurses,

licensed practical nurses, physical therapists, and other healthcare providers; (2) bills for drugs, medical appliances, and prostheses; (3) property repair bills or estimates, when identified and itemized setting forth the

charges for labor and material used or proposed for use in the repair of the property;

(4) a report of the rate of earnings and time lost from work or lost compensation

prepared by an employer; (5) the written opinion of an opinion witness, the deposition of a witness, and the

statement of a witness that the witness would be allowed to express if testifying in person, if the opinion or statement is made by affidavit or by certification as provided in Section 1-109 of the Code of Civil Procedure;2

(6) any other document not specifically covered by any of the foregoing provisions

that is otherwise admissible under the rules of evidence.

Any party receiving a notice under this paragraph (A) may apply to the arbitrator or panel of arbitrators, as the case may be, for the issuance of a subpoena directed to the author or maker or custodian of the document that is the subject of the notice, requiring the person subpoenaed to produce copies of any additional documents as may be related to the subject matter of the document that is the subject of the notice. Any such subpoena shall be issued in substantially similar form and served by notice as provided by Illinois Supreme Court Rule 204(a)(4). Any such subpoena shall be returnable not less than 5 days before the arbitration hearing.

(B) Notwithstanding the provisions of Supreme Court Rule 213(g), a party who proposes to use a written opinion of an expert or opinion witness or the testimony of an expert or opinion witness at the hearing may do so provided a written notice of that intention is given to every other party not less than 60 days prior to the date of hearing, accompanied by a statement containing the identity of the witness, his or her qualifications, the subject matter, the basis of the witness's conclusions, and his or her opinion.

(C) Any other party may subpoena the author or maker of a document admissible under

this subsection, at that party's expense, and examine the author or maker as if under cross-examination. The provisions of Section 2-1101 of the Code of Civil Procedure3 shall be applicable to arbitration hearings, and it shall be the duty of a party requesting


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the subpoena to modify the form to show that the appearance is set before an arbitration panel and to give the time and place set for the hearing.

(D) The provisions of Section 2-1102 of the Code of Civil Procedure4 shall be applicable

to arbitration hearings under this subsection.

(2) No policy insuring against loss resulting from liability imposed by law for property damage arising out of the ownership, maintenance, or use of a motor vehicle shall be renewed, delivered, or issued for delivery in this State with respect to any private passenger or recreational motor vehicle that is designed for use on public highways and that is either required to be registered in this State or is principally garaged in this State and is not covered by collision insurance under the provisions of such policy, unless coverage is made available in the amount of the actual cash value of the motor vehicle described in the policy or $15,000 whichever is less, subject to a $250 deductible, for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured motor vehicles and hit-and-run motor vehicles because of property damage to the motor vehicle described in the policy.

There shall be no liability imposed under the uninsured motorist property damage coverage required by this subsection if the owner or operator of the at-fault uninsured motor vehicle or hit-and-run motor vehicle cannot be identified. This subsection shall not apply to any policy which does not provide primary motor vehicle liability insurance for liabilities arising from the maintenance, operation, or use of a specifically insured motor vehicle.

Each insurance company providing motor vehicle property damage liability insurance shall advise applicants of the availability of uninsured motor vehicle property damage coverage, the premium therefor, and provide a brief description of the coverage. That information need be given only once and shall not be required in any subsequent renewal, reinstatement or reissuance, substitute, amended, replacement or supplementary policy. No written rejection shall be required, and the absence of a premium payment for uninsured motor vehicle property damage shall constitute conclusive proof that the applicant or policyholder has elected not to accept uninsured motorist property damage coverage.

An insurance company issuing uninsured motor vehicle property damage coverage may provide that:

(i) Property damage losses recoverable thereunder shall be limited to damages caused by the actual physical contact of an uninsured motor vehicle with the insured motor vehicle.

(ii) There shall be no coverage for loss of use of the insured motor vehicle and no coverage for loss or damage to personal property located in the insured motor vehicle.

(iii) Any claim submitted shall include the name and address of the owner of the at-fault uninsured motor vehicle, or a registration number and description of the vehicle, or any other available information to establish that there is no applicable motor vehicle property damage liability insurance.


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Any dispute with respect to the coverage and the amount of damages shall be submitted for arbitration to the American Arbitration Association and be subject to its rules for the conduct of arbitration hearings or for determination in the following manner: Upon the insured requesting arbitration, each party to the dispute shall select an arbitrator and the 2 arbitrators so named shall select a third arbitrator. If such arbitrators are not selected within 45 days from such request, either party may request that the arbitration be submitted to the American Arbitration Association. Any arbitration proceeding under this subsection seeking recovery for property damages shall be subject to the following rules:

(A) If at least 60 days' written notice of the intention to offer the following documents in

evidence is given to every other party, accompanied by a copy of the document, a party may offer in evidence, without foundation or other proof:

(1) property repair bills or estimates, when identified and itemized setting forth the charges for labor and material used or proposed for use in the repair of the property;

(2) the written opinion of an opinion witness, the deposition of a witness, and the

statement of a witness that the witness would be allowed to express if testifying in person, if the opinion or statement is made by affidavit or by certification as provided in Section 1-109 of the Code of Civil Procedure;

(3) any other document not specifically covered by any of the foregoing provisions

that is otherwise admissible under the rules of evidence.

Any party receiving a notice under this paragraph (A) may apply to the arbitrator or panel of arbitrators, as the case may be, for the issuance of a subpoena directed to the author or maker or custodian of the document that is the subject of the notice, requiring the person subpoenaed to produce copies of any additional documents as may be related to the subject matter of the document that is the subject of the notice. Any such subpoena shall be issued in substantially similar form and served by notice as provided by Illinois Supreme Court Rule 204(a)(4). Any such subpoena shall be returnable not less than 5 days before the arbitration hearing.

(B) Notwithstanding the provisions of Supreme Court Rule 213(g), a party who proposes

to use a written opinion of an expert or opinion witness or the testimony of an expert or opinion witness at the hearing may do so provided a written notice of that intention is given to every other party not less than 60 days prior to the date of hearing, accompanied by a statement containing the identity of the witness, his or her qualifications, the subject matter, the basis of the witness's conclusions, and his or her opinion.

(C) Any other party may subpoena the author or maker of a document admissible under

this subsection, at that party's expense, and examine the author or maker as if under


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cross-examination. The provisions of Section 2-1101 of the Code of Civil Procedure shall be applicable to arbitration hearings, and it shall be the duty of a party requesting the subpoena to modify the form to show that the appearance is set before an arbitration panel and to give the time and place set for the hearing.

(D) The provisions of Section 2-1102 of the Code of Civil Procedure shall be applicable to

arbitration hearings under this subsection.

(3) For the purpose of the coverage the term “uninsured motor vehicle” includes, subject to the terms and conditions of the coverage, a motor vehicle where on, before or after the accident date the liability insurer thereof is unable to make payment with respect to the legal liability of its insured within the limits specified in the policy because of the entry by a court of competent jurisdiction of an order of rehabilitation or liquidation by reason of insolvency on or after the accident date. An insurer's extension of coverage, as provided in this subsection, shall be applicable to all accidents occurring after July 1, 1967 during a policy period in which its insured's uninsured motor vehicle coverage is in effect. Nothing in this Section may be construed to prevent any insurer from extending coverage under terms and conditions more favorable to its insureds than is required by this Section.

(4) In the event of payment to any person under the coverage required by this Section and

subject to the terms and conditions of the coverage, the insurer making the payment shall, to the extent thereof, be entitled to the proceeds of any settlement or judgment resulting from the exercise of any rights of recovery of the person against any person or organization legally responsible for the property damage, bodily injury or death for which the payment is made, including the proceeds recoverable from the assets of the insolvent insurer. With respect to payments made by reason of the coverage described in subsection (3), the insurer making such payment shall not be entitled to any right of recovery against the tort-feasor in excess of the proceeds recovered from the assets of the insolvent insurer of the tort-feasor.

(5) This amendatory Act of 1967 shall not be construed to terminate or reduce any insurance

coverage or any right of any party under this Code in effect before July 1, 1967. This amendatory Act of 1990 shall not be construed to terminate or reduce any insurance coverage or any right of any party under this Code in effect before its effective date.

(6) Failure of the motorist from whom the claimant is legally entitled to recover damages to

file the appropriate forms with the Safety Responsibility Section of the Department of Transportation within 120 days of the accident date shall create a rebuttable presumption that the motorist was uninsured at the time of the injurious occurrence.

(7) An insurance carrier may upon good cause require the insured to commence a legal action

against the owner or operator of an uninsured motor vehicle before good faith negotiation with the carrier. If the action is commenced at the request of the insurance carrier, the carrier shall pay to the insured, before the action is commenced, all court costs, jury fees and sheriff's fees arising from the action.


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The changes made by this amendatory Act of 1997 apply to all policies of insurance amended, delivered, issued, or renewed on and after the effective date of this amendatory Act of 1997.

(8) The changes made by this amendatory Act of the 98th General Assembly apply to all policies

of insurance amended, delivered, issued, or renewed on and after the effective date of this amendatory Act of the 98th General Assembly.

II. Additional Uninsured Motor Vehicle Coverage: 215 ILCS 5/143a-2

(1) Additional uninsured motor vehicle coverage. No policy insuring against loss resulting

from liability imposed by law for bodily injury or death suffered by any person arising out of the ownership, maintenance or use of a motor vehicle shall be renewed or delivered or issued for delivery in this State with respect to any motor vehicle designed for use on public highways and required to be registered in this State unless uninsured motorist coverage as required in Section 143a of this Code is included in an amount equal to the insured's bodily injury liability limits unless specifically rejected by the insured as provided in paragraph (2) of this Section. Each insurance company providing the coverage must provide applicants with a brief description of the coverage and advise them of their right to reject the coverage in excess of the limits set forth in Section 7-203 of The Illinois Vehicle Code.1 The provisions of this amendatory Act of 1990 apply to policies of insurance applied for after June 30, 1991.

(2) Right of rejection of additional uninsured motorist coverage. Any named insured or

applicant may reject additional uninsured motorist coverage in excess of the limits set forth in Section 7-203 of the Illinois Vehicle Code by making a written request for limits of uninsured motorist coverage which are less than bodily injury liability limits or a written rejection of limits in excess of those required by law. This election or rejection shall be binding on all persons insured under the policy. In those cases where the insured has elected to purchase limits of uninsured motorist coverage which are less than bodily injury liability limits or to reject limits in excess of those required by law, the insurer need not provide in any renewal, reinstatement, reissuance, substitute, amended, replacement or supplementary policy, coverage in excess of that elected by the insured in connection with a policy previously issued to such insured by the same insurer unless the insured subsequently makes a written request for such coverage.

(3) The original document indicating the applicant's selection of uninsured motorist coverage

limits shall constitute sufficient evidence of the applicant's selection of uninsured motorist coverage limits. For purposes of this Section any reproduction of the document by means of photograph, photostat, microfiche, computerized optical imaging process, or other similar process or means of reproduction shall be deemed the equivalent of the original document.

(4) For the purpose of this Code the term “underinsured motor vehicle” means a motor vehicle

whose ownership, maintenance or use has resulted in bodily injury or death of the insured, as defined in the policy, and for which the sum of the limits of liability under all bodily


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injury liability insurance policies or under bonds or other security required to be maintained under Illinois law applicable to the driver or to the person or organization legally responsible for such vehicle and applicable to the vehicle, is less than the limits for underinsured coverage provided the insured as defined in the policy at the time of the accident. The limits of liability for an insurer providing underinsured motorist coverage shall be the limits of such coverage, less those amounts actually recovered under the applicable bodily injury insurance policies, bonds or other security maintained on the underinsured motor vehicle. On or after July 1, 1983, no policy insuring against loss resulting from liability imposed by law for bodily injury or death suffered by any person arising out of the ownership, maintenance or use of a motor vehicle shall be renewed or delivered or issued for delivery in this State with respect to any motor vehicle designed for use on public highways and required to be registered in this State unless underinsured motorist coverage is included in such policy in an amount equal to the total amount of uninsured motorist coverage provided in that policy where such uninsured motorist coverage exceeds the limits set forth in Section 7-203 of the Illinois Vehicle Code. The changes made to this subsection (4) by this amendatory Act of the 93rd General Assembly apply to policies issued or renewed on or after December 1, 2004.

(5) Scope. Nothing herein shall prohibit an insurer from setting forth policy terms and

conditions which provide that if the insured has coverage available under this Section under more than one policy or provision of coverage, any recovery or benefits may be equal to, but may not exceed, the higher of the applicable limits of the respective coverage, and the limits of liability under this Section shall not be increased because of multiple motor vehicles covered under the same policy of insurance. Insurers providing liability coverage on an excess or umbrella basis are neither required to provide, nor are they prohibited from offering or making available coverages conforming to this Section on a supplemental basis. Notwithstanding the provisions of this Section, an insurer shall not be prohibited from solely providing a combination of uninsured and underinsured motorist coverages where the limits of liability under each coverage is in the same amount.

(6) Subrogation against underinsured motorists. No insurer shall exercise any right of

subrogation under a policy providing additional uninsured motorist coverage against an underinsured motorist where the insurer has been provided with written notice in advance of a settlement between its insured and the underinsured motorist and the insurer fails to advance a payment to the insured, in an amount equal to the tentative settlement, within 30 days following receipt of such notice.

(7) A policy which provides underinsured motor vehicle coverage may include a clause which

denies payment until the limits of liability or portion thereof under all bodily injury liability insurance policies applicable to the underinsured motor vehicle and its operators have been partially or fully exhausted by payment of judgment or settlement. A judgment or settlement of the bodily injury claim in an amount less than the limits of liability of the bodily injury coverages applicable to the claim shall not preclude the claimant


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from making an underinsured motorist claim against the underinsured motorist coverage. Any such provision in a policy of insurance shall be inapplicable if the insured, or the legal representative of the insured, and the insurer providing underinsured motor vehicle coverage agree that the insured has suffered bodily injury or death as the result of the negligent operation, maintenance, or use of an underinsured motor vehicle and, without arbitration, agree also on the amount of damages that the insured is legally entitled to collect. The maximum amount payable pursuant to such an underinsured motor vehicle insurance settlement agreement shall not exceed the amount by which the limits of the underinsured motorist coverage exceed the limits of the bodily injury liability insurance of the owner or operator of the underinsured motor vehicle. Any such agreement shall be final as to the amount due and shall be binding upon both the insured and the underinsured motorist insurer regardless of the amount of any judgment, or any settlement reached between any insured and the person or persons responsible for the accident. No such settlement agreement shall be concluded unless: (i) the insured has complied with all other applicable policy terms and conditions; and (ii) before the conclusion of the settlement agreement, the insured has filed suit against the underinsured motor vehicle owner or operator and has not abandoned the suit, or settled the suit without preserving the rights of the insurer providing underinsured motor vehicle coverage in the manner described in paragraph (6) of this Section.

III. PUBLIC POLICY

All statutorily required insurance-motor vehicle liability, uninsured motorist (UM), and underinsured motorist (UIM) – seeks to fulfill the basic purpose of protecting the public by securing payment of their damages. 215 ILCS 5/143a-2(4); 625 ILCS 5/7-601(a). Uninsured-motorist (UM) coverage is required to place a policyholder in substantially the same position he would occupy, so far as his being injured or killed is concerned, if the wrongful driver had had the minimum liability insurance required by the Financial Responsibility Act. 215 ILCS 5/143a, 5/143a-2(1); 625 ILCS 5/7-203 (emphasis added). The purpose of underinsured-motorist (UIM) coverage is not to ensure compensation above the minimum liability amount required by the Financial Responsibility Law; it is to ensure compensation of the insured’s damages to the extent bargained for under his insurance policy. 215 ILCS 5/143a-2(4); 625 ILCS 5/7-203. Motor vehicle liability, uninsured-motorist (UM), and underinsured-motorist (UIM) coverage all serve the same underlying public policy: to place the insured in the same position he would have occupied if the tortfeasor had carried adequate insurance; ensuring adequate compensation for damages and injuries sustained in motor vehicle accidents. Phoenix Ins. Co. v. Rosen, 242 Ill.2d 48 (2011).


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IV. CONSTRUCTION OF INSURANCE POLICY

(1) Basics

A court’s primary objective in construing the language of an insurance policy is to ascertain and give effect to the intentions of the parties as expressed in their agreement. Pekin Ins. Co. v. Precision Dose, Inc. 2012 IL App (2d) 110195, ¶31.

If the policy terms are clear and unambiguous, they must be given their plain and ordinary meaning; but if the terms are susceptible to more than one meaning, they are considered ambiguous and will be construed strictly against the insurer that drafted the policy. Id.

Provisions that limit or exclude coverage will be interpreted liberally in favor of the insured and against the insurer. Id.

A court must construe the policy as a whole and take into account the type of insurance purchased, the nature of the risks involved, and the overall purpose of the contract. Id. If insurance policy terms are clear and unambiguous, they must be enforced as written unless doing so would violate public policy. Schultz v. Illinois Farmers Ins. Co., 237 Ill. 2d 391, 400 (2010). Terms of an insurance policy that conflict with a statute are void and unenforceable. Similarly, terms of an insurance policy cannot circumvent the underlying purpose of a statute in force at the time of the policy's issuance. Schultz v. Illinois Farmers Ins. Co., 237 Ill. 2d 391, 400 (2010).

(2) Setoff Provisions in Illinois

Meaning of the setoff provisions of the underinsured motorist statute and policies written thereunder is to prevent a double recovery by the insured. 215 ILCS 5/143a-2.

Multiple Parties

(a) Insured and Uninsured Motorists

In Hoglund v. State Farm Mut. Auto. Ins. Co., the insured was injured by two motorists at fault, one uninsured and the other insured. The Illinois Supreme Court held that when the insured recovered from the insured motorist, insureds' automobile insurer was entitled to a setoff for uninsured motorist coverage only to extent necessary to prevent double recovery. 148 Ill. 2d 272, 279 (1992).

(b) Multiple Insured Parties

In Allstate Prop. & Cas. Ins. Co. v. Trujillo, Trujillo was injured while a passenger in an automobile accident where both motorists were at fault. Trujilo was the passenger of one of the tortfeasors, who had Allstate insurance with a


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bodily injury limit of $100,000/$300,000. That same policy also contained UIM coverage with the same limit of $100,000/$300,000. The second tortfeasor had American Access (AA) insurance with a bodily injury limit of $20,000 per person. Trujillo accepted the policy limit of $20,000 from AA and the $100,000 bodily injury police limit from Allstate. Trujilo then presented a UIM claim to Allstate for $80,000 stating that since he only received $20,000 from AA, he was entitled to the $80,000 from Allstate. Allstate contended that because he received $20,000 from AA and, $100,000 from Allstate under the bodily injury coverage, the UIM limit of $100,000 was reduced to zero. Trujilo argued that it was a reasonable expectation that by the tortfeasor paying the UIM premium, Allstate would have to pay under the UIM coverage if one was injured by an uninsured motorist. The First District agreed that Allstate’s setoff provision was ambiguous and therefore permitted recovery under both bodily injury and UIM sections of the policy as long as there was no double recovery. Allstate Prop. & Cas. Ins. Co. v. Trujillo, 2014 IL App (1st) 123419.

(c) Multiple Insured Parties – Motorist and Property Owner

In Coulson, the Fifth District Appellate Court held that an insurer providing UIM coverage was not entitled to set off amounts paid by parties unrelated to the driver. The insured was severely injured when a vehicle drove through a restaurant window and struck her and two others inside. The motorist had insurance with a policy limit on bodily injury liability of $50,000, of which $24,000 was paid to the insured and $26,000 was paid to the other bystanders. The property owner and restaurant franchisee settled claims with the insured for $410,000. The insured’s automobile insurance policy included UIM coverage with a limit of $3000,000. The insured made a demand for UIM benefits under the policy but the insurer declined asserting it was entitled to set off the $434,000 received against the $300,000 policy limit. On appeal, the appellate court held the insurer could not set off the amounts paid by the property owner and restaurant franchisee. The court reasoned that regardless of the limits of the motorist’s policy, the insured could have recovered against the property owner and franchisee because their liability was completely independent from the motorist. It also held that an insurer is entitled to set-off for UIM coverage only to the extent necessary to prevent double recovery. Therefore, it was determined the maximum amount of recovery under the UIM coverage would be $276,000 ($300,000 minus the $24,000 paid by the driver’s insurer.). Farmers Auto. Ins. Ass'n v. Coulson, 402 Ill. App. 3d 779 (5th Dist. 2010).


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Hit and Run Accident – Physical Contact Requirement

Insurance code provision requiring hit and run and uninsured motorist coverage in automobile policies permits, but does not require, an automobile policy to require actual contact between the insured's vehicle and the other, unknown vehicle in order for coverage to apply. S.H.A. 215 ILCS 5/143a(2)(i); Cincinnati Ins. Co. v. Pritchett, 2015 IL App (3d) 130809.

It is well established in Illinois that an insured cannot recover under the hit-and-run provision of the uninsured motorist coverage unless there is “a physical contact of the unidentified motor vehicle with the insured or an automobile occupied by the insured.” Ferega v. State Farm Mutual Automobile Insurance Co., 58 Ill.2d 109 (1974).

Therefore, under Illinois law there can be no recovery when an unidentified vehicle forces the insured off the road but makes no contact of any kind with the insured or his vehicle. Id.

(a) Case Law

State Farm Mut. Auto. Ins. Co. v. Benedetto, 2015 IL App (1st) 141521.

Automobile insurer brought action against insured motorcyclist for declaratory judgment that wind shear from passing truck did not satisfy physical contact requirement for accident caused by hit-and-run vehicle, and that motorcyclist was not entitled to arbitrate claim for uninsured motorist (UM) benefits. The insurance policy required the hit-and-run vehicle to strike the insured or the vehicle the insured was occupying, and “strike” required direct or indirect physical contact. S.H.A. 215 ILCS 5/143a(2)(i). The circuit court entered summary judgment in favor of motorcyclist and the insurer appealed.

The First District Appellate Court held that wind shear was not physical contact necessary to recover UM benefits for accident caused by hit-and-run vehicle.

Illinois National Ins. Co. v. Palmer, 116 Ill.App.3d 1067 (4th Dist. 1983).

Plaintiff, Illinois National Insurance Company, argued that it owed no liability for injuries occurring to its insured when an object was propelled by an unidentified motor vehicle through the windshield of the insured vehicle. Defendant, insured, stated that the object was propelled from off the unidentified motor vehicle. The trial court granted judgment on the pleadings, and the Defendant filed for appeal.

The court reversed and remanded the case based on its reliance of case law outside Illinois, which held that where an unidentified vehicle strikes an object in the road propelling it through the air and causing it to strike plaintiff or


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plaintiff's vehicle, coverage is found. Allied Fidelity Insurance Co. v. Lamb, 361 N.E.2d 174 (Ind.App.1977); Barfield v. Ins. Co. of North America, 59 Tenn. App. 631 (1968); Gavin v. Motor Vehicle Accident Indemnification Corp., 57 Misc.2d 335 (Sup. Ct. 1968).

The court stated that in following these cases, if the object which hit the insured's windshield had been a rock kicked up by a tire of the unidentified truck coverage would exist, it would be illogical to deny coverage when the object propelled by the truck was part of the truck itself.

Worker’s Compensation

The purpose of the workers' compensation setoff is to simulate the reimbursement which the Workers' Compensation Act requires when an injured employee recovers both from workers' compensation and from a tortfeasor's liability insurer. See 820 ILCS 305/5(b).

When an accident victim is covered by more than one insurance policy providing underinsured motorist (UIM) coverage, public policy permits only one setoff to that coverage for the amount of workers' compensation benefits received by the insured. S.H.A. 215 ILCS 5/143a-2(4). Roberts v. Northland Ins. Co., 185 Ill. 2d 262, 267 (1998).

When an accident victim is covered by both primary and excess insurance policies providing underinsured motorist (UIM) coverage, the primary insurer is entitled to deduct from its coverage the full amount of workers' compensation benefits received by the insured, after which any remaining setoff may be applied to the excess coverage. S.H.A. 215 ILCS 5/143a-2(4). Roberts v. Northland Ins. Co., 185 Ill. 2d 262, 271 (1998).

(a) Case Law Summary:

In Roberts, the insured trucker, having been injured while on the job in a road accident, sued his primary and excess motor vehicle insurers for a declaration of the extent to which they could apply the set-off provisions of their policies to reduce his underinsured motorist (UIM) coverage by amounts he had recovered from other sources, including worker’s compensation. Both insurers contended that because the insured held two separate insurance policies, two setoffs should be allowed.

The insured argued that allowing both insurance companies to deduct the full amount of his workers' compensation benefits from the coverage limits of the two underinsured-motorist policies would violate public policy. The Supreme Court explained that public policy allows one setoff to prevent the plaintiff from receiving an unfair windfall through his workers' compensation benefits, while still guaranteeing plaintiff the level of coverage he would have received had he been injured by an adequately insured tortfeasor. The court further stated that a


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double setoff would deprive the insured of the level of coverage he would have received if the tortfeasor had been adequately insured, and therefore violates public policy.

The Supreme Court Held: (1) only one setoff for the insured's workers' compensation benefits could be taken, and (2) that the primary insurer was entitled to take the workers' compensation setoff first, after which any remainder could be taken by the excess insurer. Roberts v. Northland Ins. Co., 185 Ill. 2d 262 (1998).

Social Security Disability

A recipient of social security disability benefits who also recovers damages from a tortfeasor as a result of the same accident which occasioned his disability benefits is not required to repay any portion of those benefits to the social security disability system. Roberts v. Northland Ins. Co., 185 Ill. 2d 262 (1998).

Setoff provision in a motor vehicle policy purporting to reduce underinsured motorist (UIM) coverage by the amount of social security disability benefits received by the insured violates public policy and is therefore unenforceable. Social Security Act, §§ 223, 224, as amended, 42 U.S.C.A. §§ 423, 424a; S.H.A. 820 ILCS 305/5(b); Roberts v. Northland Ins. Co., 185 Ill. 2d 262 (1998).

Stacking v. Anti-Stacking

The Illinois Insurance Code allows for the use of antistacking provisions in motor vehicle insurance policies. 215 ILCS 5/143a–2(5). The Illinois Supreme Court has stated that antistacking provisions generally are not contrary to public policy. Hobbs v. Hartford Ins. Co. of the Midwest, 214 Ill. 2d 11, 17-18 (2005). Thus, unambiguous antistacking clauses will be given effect. Bruder v. Country Mutual Insurance Co., 156 Ill.2d 179, 184 (1993).

Whether an ambiguity exists in an insurance policy turns on whether the policy language is subject to more than one reasonable interpretation. Hobbs v. Hartford Ins. Co. of the Midwest, 214 Ill. 2d 11 (2005). Bruder v. Country Mutual Ins. Co., 156 Ill.2d 179, 193 (1993) (emphasis added).

Whether an insurance policy prohibits or permits stacking under Illinois law is a legal issue. Nationwide Agribusiness Ins. Co. v. Dugan, 810 F.3d 446 (2015).

(a) Anti-Stacking Case Law:

Bruder v. Country Mutual Ins. Co., 156 Ill.2d 179 (1993).

Plaintiff, Ruth Bruder, then pregnant, was injured when the automobile she was driving was struck from the rear. The drivers of the two other vehicles involved in the accident were at fault and neither of those drivers was insured. After the


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accident Ruth Bruder prematurely had her daughter, Halie, who suffers from cerebral palsy. The Bruders had uninsured motorist coverage for bodily injury under a personal vehicle insurance policy and a business auto policy for two pickup trucks used in, her husband, John Bruder’s plumbing business. A premium was paid for each truck under that policy. Both John and Ruth were named on the declarations page of the personal vehicle policy. However, only John Bruder’s name appeared on the declarations page of the business auto policy. The uninsured motorist coverage for bodily injury under each policy was limited to $100,000 for each person and to a total of $300,000 per accident. Because both policies provided uninsured motorist coverage, the Bruders asked Country Mutual to aggregate the coverage amounts. Country Mutual declined to aggregate the coverage asserting the antistacking provisions in both policies. The Bruders argued the terms of the policies were ambiguous and therefore the antistacking clause should not apply. Bruder is the seminal case in the interpretation of anti-stacking clauses. What is now known as the “Bruder dicta,” The Illinois Supreme Court stated that “it would not be difficult to find an ambiguity” where an anti-stacking provision ties the limit of liability to the limit shown on the declarations page, and the declaration page lists multiple vehicles along with the separate coverage limit applicable to each vehicle and the separate premium charged for each vehicle. Id., at 192. However, what the Bruder court’s ruling established is that although there may be confusion as to the declarations page, the entire policy must be read with reasonableness. Through the analysis of both auto policies, the Supreme Court held that there was no ambiguity in the limitation of liability provision, and therefore the anti-stacking clause applied.

Hobbs v. Hartford Ins. Co. of the Midwest, 214 Ill. 2d 11 (2005).

Plaintiff, Hobbs, was involved in a motor vehicle accident and sustained injuries and damages in excess of $200,000. Hobbs settled claims against the driver of the other vehicle for the driver’s policy limits of $50,000. At the time of the accident, Hobbs carried underinsured-motorist coverage for two vehicles under a single policy issued by Hartford Insurance Company of the Midwest (Hartford), in the amount of $100,000 per person, $300,000 per occurrence. Pursuant to the underinsured-motorist coverage, Hartford gave Hobbs a check for $50,000. This amount represented the difference between the $100,000 per person UIM coverage afforded under Hobbs’ policy and the $50,000 Hobbs received from the other driver’s insurer. Hobbs maintained, however, that she was entitled to an additional sum from Hartford and argued that the Hartford policy was ambiguous as to the limits of UIM coverage and that she should be allowed to stack the UIM coverage for the two vehicles, thus producing a per-person limit of $200,000. Hartford countered that the policy contained unambiguous antistacking language and that the UIM bodily injury limit was $100,000 per person.


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After analyzing the language of the policy, the Supreme Court held that Hartford’s antistacking clause unambiguously limited underinsured motorist (UIM) coverage to $100,000 per person, regardless of the number of vehicles or premiums shown on the declarations, and that the statement “Coverage was provided only where a premium was shown for the auto and coverage” does not create an ambiguity as to Hartford’s limit of liability. The antistacking clause was enforced as written. Hobbs at 27 (2005).

(b) Stacking Case Law:

Bowers v. Gen. Cas. Ins. Co., 2014 IL App (3d) 130655 (Ill. 2015). Plaintiffs, Marilyn and Robert Bowers, filed a complaint against Defendant, General Casualty Insurance Company, seeking a declaratory judgment that their UIM coverage for three vehicles was not limited to one vehicle. The trial court granted summary judgment in plaintiffs' favor, finding that the $250,000 UIM limit for each vehicle could be aggregated, or stacked, to arrive at a maximum coverage limit of $750,000. General Casualty appealed, claiming that the provisions of the policy were unambiguous and prohibited stacking of UIM coverage.

The Bowers court held that the insurance policy contained contradictory provisions. The underinsured motorist endorsement contained an antistacking provision, which stated that the “limit of liability” is the maximum limit the company would pay for all damages, regardless of the vehicles or premiums shown. On the other hand, the antistacking provision also stated that the limit of liability was to be based on the description in the declarations page, which stated that coverage is provided where a premium and a limit of liability are shown. The declarations page showed three UIM coverages of $250,000 and a UIM premium for each of the three vehicles. The language contained in the declarations page was found to be inconsistent with the endorsement's antistacking provision, which created an ambiguity. The Bowers court held that since the policy contained inconsistent provisions, it must be construed against the drafter, General Casualty, and the stacking of the three UIM premiums was permitted.

(3) Coverage for Passengers

Insurance policies are required to extend UM and UIM coverage to both the “permissive drivers” and “permissive users.” Schultz v. Illinois Farmers Ins. Co., 237 Ill. 2d 391 (2010). Both “permissive drivers” and “permissive users” must be treated as insureds for purposes of liability coverage. Id. at 403. Occupants of a vehicle fall under the definition of “permissive user.” Id. at 401- 402. (a) Case Law:


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In Schultz v. Illinois Farmers Ins. Co., the Illinois Supreme Court consolidated two cases both dealing with the single issue of whether Illinois law permits insurers to issue motor vehicle liability policies in which occupants of a covered vehicle are afforded uninsured motorist (UM) coverage but excluded from underinsured (UIM) coverage. Schultz, 237 Ill.2d 391 (2010). Both actions involved motor vehicle liability policies containing provisions which purported to eliminate UIM coverage for occupants by defining “insureds” more narrowly under the policies’ UIM provisions than they did for purposes of UM coverage. In the first case, Schultz v. Illinois Farmers Insurance Co., the circuit court upheld the exclusion of occupants from UIM coverage and granted summary judgment in favor of the insurance company. 387 Ill.App.3d 622 (2009). In the second case, Illinois Farmers Insurance Co. v. Weglarz, the appellate court found that the attempt to exclude occupants from UIM coverage was rendered ineffective by ambiguity in the policy. Weglarz, 2008 WL 6761616. The Illinois Supreme Court discussed that under Illinois law, liability, UM and UIM provisions are inextricably linked. Schultz, 237 Ill.2d at 404. After reviewing the definition of “permissive user,” the Court held that the term included passengers and were therefore covered under UIM provisions. Id. The Court held that once a person qualifies as an insured for purposes of the policy's bodily injury liability provisions, he or she must be treated as an insured for UM and UIM purposes as well. Id. Accordingly, just as the governing statutes prohibit an insurance company from directly or indirectly denying uninsured-motorist coverage to someone who qualifies as an insured for purposes of liability coverage, it likewise prohibits companies from directly or indirectly denying underinsured coverage to such a person where, as here, the basic liability coverage exceeds statutory minimums. Id. citing, Heritage Insurance Co. of America v. Phelan, 59 Ill.2d 389, 395 (1974).

The Illinois Supreme Court held that the portions of the Farmers insurance policies which purported to exclude occupants of covered motor vehicles from UIM coverage violate Illinois law and are unenforceable. Id. at 408.

V. STANDARD OF REVIEW

Construction of insurance contract is reviewed de novo. Travelers Insurance Co. v. Eljer Mfg., Inc., 197 Ill.2d 278, 292 (2001).

VI. NOTICE

An insured's duties are controlled by the terms and conditions of its insurance contract. American Country Ins. Co. v. Bruhn, 289 Ill.App.3d 241, 247 (2nd Dist. 1997).


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2-Year Statue of Limitations

The statute of limitations (SOL) for a standard automobile accident is two years. This is strictly construed and applies to UM/UIM cases as well. However, the limitations period must be written in the policy. If the policy is silent on the limitations period, the 10-year contractual statute of limitations period governs. Country Preferred Ins. Co. v. Whitehead, 2012 IL 113365, ¶ 29, 979 N.E.2d 35, 43.

A demand for arbitration pursuant to the underinsured motorist coverage of the policy must be sent to the insurance company prior to the two-year SOL, even if the insured does not know it will be a potential underinsured case. Vansickle v. Country Mut. Ins. Co., 272 Ill. App. 3d 841, 651 N.E.2d 706 (4th Dist. 1995); Hermanson v. Country Mut. Ins. Co, 267 Ill.App.3d 1031 (1st Dist. 1994); Hannigan v. Country Mut. Ins. Co., 264 Ill.App.3d 336 (1st Dist. 1994); Wancho v. Country Mutual Ins. Co., 275 Ill.App.3d 936 (2nd Dist. 1995).

Sufficiency of Arbitration Demand

For an insured’s letter to an insurer to commence an arbitration process within meaning of a limitations provision of insurance contract, the letter must satisfy the express terms of the limitations provision. Rein v. State Farm Mut. Auto. Ins. Co., 407 Ill.App.3d 969, 975 (1st Dist. 2011) (emphasis added). This requirement is compelled by the well-established rule that a clear and unambiguous insurance policy provision is applied “ ‘according to the plain and ordinary meaning of its terms.’ ”Rein, 407 Ill. App. 3d at 975, citing, Shelton, 161 Ill.App.3d 652, 655 (1st Dist. 1987), quoting Dora Township v. Indiana Insurance Co., 78 Ill.2d 376, 378 (1980); Buchalo v. Country Mut. Ins., 83 Ill.App.3d 1040, 1045 (1st Dist. 1980), citing Dora Township, 78 Ill.2d at 378.

(a) Case Law – SOL & Sufficiency of Arbitration Demand

1) Rein v. State Farm Mut. Auto. Ins. Co., 407 Ill.App.3d 969 (1st Dist. 2011). On April 5, 2007, Rein, was injured in a hit-and-run, two-vehicle accident where the other driver was never identified. Rein was insured by a State Farm auto policy which provided coverage for bodily injury caused by the driver of an uninsured vehicle, including a “hit-an-run” motor vehicle whose owner or driver remains unknown. On March 30, 2009, Rein’s attorney gave notice to State Farm via fax and certified mail stating that he represented Rein with regard to the auto accident asking for the insurance company to contact him. The attorney’s letter made no demand to arbitrate the uninsured claim. State Farm received the fax on March 30, 2009 and the certified letter on April 2, 2009. State Farm subsequently denied Rein’s claim.


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Rein filed a declaratory action on July 9, 2009 to compel State Farm to arbitrate her uninsured motorist claim. December 1, 2009 State Farm moved for summary judgment, contending Rein was barred from seeking arbitration by an express provision of the policy:

“Under the uninsured motor vehicle coverages, any arbitration or suit against us will be barred unless commenced within two years after the date of the accident.”

State Farm argued Rein’s letter did not “commence” arbitration within two years of the accident. Rein responded that although the letter was “not perfect” her implied intent to commence arbitration was sufficient. State Farm’s policy required a request or arbitration which also required the insured to name an arbitrator in the request for arbitration, stating: “If the insured requests arbitration, each party to the dispute shall select an arbitrator.” The court held that Rein’s letter did not constitute the “first step” in the arbitration process because it did not mention arbitration. Rein argued the letter implied arbitration and therefore it should constitute a request for arbitration. The court held that even if such a reading were reasonable, the State Farm policy also required that within two years of the accident, an arbitrator be selected by Rein to commence the arbitration process. No plausible claim can be made that her selection of an arbitrator was implicitly and timely made based on the contents of her letter. Therefore, the court held that summary judgment in favor of State Farm was proper because the arbitration process was not commenced within two years following the accident. Rein’s letter, sent six days before the expiration of the two-year period, failed to expressly request arbitration and did not “select” an arbitrator on Rein’s behalf as required by the limitations provision of the State Farm Policy.

*** It is important to note that Rein explicitly distinguished Hale v. Country Mutual Ins. Co., 334 Ill.App.3d 751 (5th Dist. 2002), which had held that an attorney’s letter suggesting arbitration was sufficient to demand arbitration, even though the letter did not use the precise wording which was required by the insurance policy.

Hale is no longer good law. Your letter demanding arbitration must satisfy the express terms of the limitations provision found in the insured’s insurance policy.

2) Memberselect Ins. Co. v. Ferdinand Luz, 2016 IL App (2st) 141947 The issue in this case was whether a letter sent by an insured, Defendant Ferdinand Luz, to Plaintiff MemberSelect Insurance Company (MemberSelect) was a sufficient demand for arbitration under the underinsured motorist provision of Defendant's car insurance policy with MemberSelect. The policy contained a


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limitations provision that barred any arbitration of an underinsured motorist claim unless it was “commenced within three years after the date of the accident.” Less than two months after the accident, defendant's attorney sent MemberSelect a letter requesting arbitration of the underinsured motorist claim. There was no subsequent correspondence between the parties in the more than three years that passed while the underlying personal-injury suit progressed and ultimately settled. Defendant then sought arbitration of his underinsured motorist claim, and MemberSelect filed a declaratory-judgment action seeking a declaration that it did not have to cover defendant's claim because the limitations period had run. On cross-motions for summary judgment, the trial court found that defendant's letter had not sufficiently demanded arbitration because it was not unequivocal and because Defendant failed to select an arbitrator.

The language of the insurance policy pertaining to arbitration read as follows:

“ARBITRATION If we and an insured person do not agree:

1. whether that person is legally entitled to recover damages from the owner or operator of an uninsured motor vehicle or an underinsured motor vehicle; or

2. as to the amount of damages; Either party may demand, in writing, that the issues, excluding matters of coverage. In this event, each party will select an arbitrator. The two arbitrators will select a third. If such arbitrators are not selected within 45 days, either party may request that the arbitration be submitted to the American Arbitration Association.”

MemberSelect argued Defendant’s letter was insufficient to commence arbitration because Defendant was required to both “demand” arbitration and select an arbitrator, stating that both a demand and the selection of an arbitrator were mentioned in the arbitration provision. MemberSelect Ins. Co. v. Luz, 2016 IL App (1st) 141947, ¶ 26.

MemberSelect first argued that Defendant did not sufficiently “demand” arbitration, citing Rein v. State Farm Mut. Ins. Co. The court found Rein distinguishable from the present case, stating that in Rein the insured merely notified the insurance company of the insured’s intention to pursue an Uninsured/Underinsured Motorist claim, even failing to use the word arbitration in his letter. Whereas in the present case, the Defendant in bold letters set apart from the remainder of his letter, stated that he “Requests Arbitration of the Underinsured Motorist Claim.” (Emphasis in original.) Therefore, the court held that this request for a contractual right available to him under the insurance policy was an unequivocal demand for arbitration.


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MemberSelect next argued that Defendant’s failure to select an arbitrator created an insufficient demand for arbitration. In support of its argument, MemberSelect cited Rein, which the court again found to be distinguishable. In Rein, the arbitration language stated that, “If the insured requests arbitration, each party to the dispute shall select an arbitrator.” Rein, 407 Ill.App.3d 969, 974 (1st Dist. 2011). The court found that the language in Rein was stated in mandatory form and did not permit or even contemplate the insured's failure to select an arbitrator. Whereas the language in the present case makes it clear that the selection of an arbitrator was not mandatory. The court held that the provision in Defendant’s policy contemplates a scenario where the insured never selects an arbitrator and does not remotely hint at any fatal consequences for that failure. Thus, while Rein found that the selection of an arbitrator was a condition precedent to “commencing” the arbitration, it did so based on different language in a different arbitration provision. Holding: The court held that neither the use of the word “demand” in its letter, nor the selection of the arbitrator was necessary to “commence” the arbitration under the limitations provision in the insurance policy. It was therefore held that defendant's right to seek arbitration was not barred by the three-year limitations provision in the policy. *** This case has not been released for publication in the permanent law reports. Until Released, it is subject to revision or withdrawl.

Minors

The two-year SOL for automobile accident cases does not apply to minors. Severs v. Country Mut. Ins. Co., 89 Ill.2d 515 (1982). In Illinois, a minor has two years after attaining age 18 to file suit. 735 ILCS 5/13–211 (2015).

(a) Case Law

Severs v. Country Mut. Ins. Co., 89 Ill.2d 515 (1982).

In Severs, the Illinois Supreme Court held that a two-year contractual limitation against a minor was unenforceable because it shortened the time within which the minor was required to file suit. Severs, 89 Ill.2d at 519–20. The court explained that the uninsured motorist statute required that the minor ‘be allowed the same period of time within which to bring suit that she would have had if the driver had been insured.’ Id. at 519. The two-year policy provision restricted that limitations period and placed the minor in a substantially different position than she would have been in if the tortfeasor had carried insurance. Id. at 520.

Therefore, the two-year limitation in the policy deprived the minor of the uninsured motorist coverage required by statute and could not be used against the minor. Id.


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VII. VEXATIOUS AND UNREASONABLE DELAY

If insurer vexatiously delays or rejects legitimate claims, it is responsible for expense resulting from insured's efforts to prosecute claim. 215 ILCS 5/155.

When an insured must resort to bringing a declaratory action against the insurer in order to enforce its right to coverage in an underlying lawsuit, the insured may recover section 155 attorney fees incurred in both the underlying case and the declaratory action. Estate of Price v. Universal Cas. Co., 334 Ill. App. 3d 1010, 1012 (1st Dist. 2002) citing, Mobil Oil Corp. v. Maryland Cas. Co., 288 Ill.App.3d 743 (1997). 215 ILCS 5/155 indicates as follows:

(1) In any action by or against a company wherein there is in issue the liability of a

company on a policy or policies of insurance or the amount of the loss payable thereunder, or for an unreasonable delay in settling a claim, and it appears to the court that such action or delay is vexatious and unreasonable, the court may allow as part of the taxable costs in the action reasonable attorney fees, other costs, plus an amount not to exceed any one of the following amounts:

(a) 60% of the amount which the court or jury finds such party is entitled to recover

against the company, exclusive of all costs;

(b) $60,000;

(c) the excess of the amount which the court or jury finds such party is entitled to recover, exclusive of costs, over the amount, if any, which the company offered to pay in settlement of the claim prior to the action.

(2) Where there are several policies insuring the same insured against the same loss whether issued by the same or by different companies, the court may fix the amount of the allowance so that the total attorney fees on account of one loss shall not be increased by reason of the fact that the insured brings separate suits on such policies.

(a) Case Law

Price v. Universal Casualty Co., 334 Ill.App.3d 1010 (1st Dist. 2002).

Plaintiff, Norma Price was involved in a hit-and-run accident and obtained an

arbitration award for uninsured motorist benefits. Defendant, Universal Casualty, refused to pay the arbitration award. Plaintiff, the estate of Norma Price, filed a two-count complaint seeking: (1) confirmation of the arbitration award plus interest and costs pursuant to section 11 of the Uniform Arbitration Act (710 ILCS 5/11 (2016)) and (2) statutory penalties, costs, and attorney fees pursuant to section 155 of the Illinois Insurance Code (215 ILCS 5/155 (2016)) alleging that the Defendant failed to participate in the arbitration and refused to pay the award, which constituted vexatious and unreasonable conduct under section 155.


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The trial court granted Plaintiff’s motion to dismiss. Defendant appealed. The First

District Appellate Court reversed and remanded for further proceedings, finding that Plaintiff presented sufficient evidence of a section 155 violation to withstand Defendant's section 2-1110 motion. In so finding, the court stated:

“Specifically, defendant's attitude was to delay settlement and payment of this claim; defendant required plaintiff to bring suit; defendant did not offer any settlement until the trial court ruled against it; and defendant refused to comply with the court's order awarding plaintiff interest from the date of the arbitration award.” Estate of Price, 322 Ill.App.3d at 518.

On remand, the trial court found that Defendant’s conduct was vexatious and

unreasonable and allowed Plaintiff to file a fee petition. Plaintiff filed a brief and argument in support of her petition for penalties, attorney fees and costs and Defendant filed a response to the petition. The trial court conducted a hearing on the petition and awarded plaintiff $5,000 in penalties pursuant to section 155 and $31,226.50 in attorney fees, which included $596.50 in costs.

The Defendant appealed the trial court’s award of attorney fees, which the First District

affirmed, finding that the Plaintiff had sustained her burden of proof pursuant to Section 155.

VIII. STEPS TO HANDLING AN UNINSURED MOTORIST CLAIM

1. It must be determined that the tortfeasor is uninsured.

- This can be accomplished in one of three ways: • Sending a letter to the Illinois Secretary of State;• Mailing in the Illinois Traffic Accident Report to the Illinois Secretary of

State; or • Obtaining an affidavit from the tortfeasor.

A response in writing from the Secretary of State stating that the totfeasor is uninsured is prima facie evidence of the uninsured status of the tortfeasor, which may be used as evidence in the arbitration proceedings. Once this certification of uninsured status is obtained, forward it to your client’s insurance company.

2. Immediately request from your client’s insurance agent or company a full copy of the text of the insurance policy

- That policy along with the Code and common law will control UM/UIM proceedings.

3. A “Demand for Arbitration” must be sent within two years of the date of accident. - The letter must designate an arbitrator, require that the insurer’s arbitrator contact

the plaintiff’s arbitrator within 45 days, and refer to the uninsured motorist provision of the subject policy. (215 ILCS 5/143a(1); 215 ILCS 5/143a(2)). • Send this letter via certified mail.


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• The terms of the insurance policy will dictate what is required in the letter demanding arbitration. Be sure to comply with the terms explicitly in order to ensure that your demand takes effect.

- Once the arbitration demand is made, it is recommended that the you also file a

lawsuit against the uninsured or underinsured motorist, to protect the insurance company’s subrogation rights.

IX. ARBITRATION

Required By Statute – 215 ILCS 143a(1)

“No policy shall be renewed, delivered, or issued for delivery in this State unless it is provided therein that any dispute with respect to the coverage and the amount of damages shall be submitted for arbitration to the American Arbitration Association and be subject to its rules for the conduct of arbitration hearings as to all matters except medical opinions.” “Alternatively, disputes with respect to damages and the coverage shall be determined in the following manner: Upon the insured requesting arbitration, each party to the dispute shall select an arbitrator and the 2 arbitrators so named shall select a third arbitrator.”

“If such arbitrators are not selected within 45 days from such request, either party may request that the arbitration be submitted to the American Arbitration Association.”

Validity of Arbitration Agreement – 710 ILCS 5/1

“A written agreement to submit any existing controversy to arbitration or a provision in a written contract to submit to arbitration any controversy thereafter arising between the parties is valid, enforceable and irrevocable save upon such grounds as exist for the revocation of any contract, except that any agreement between a patient and a hospital or health care provider to submit to binding arbitration a claim for damages arising out of (1) injuries alleged to have been received by a patient, or (2) death of a patient, due to hospital or health care provider negligence or other wrongful act, but not including intentional torts, is also subject to the Health Care Arbitration Act.”

Trial de novo Clause

“Any decision made by the arbitrators shall be binding for the amount of damages not exceeding $75,000 for bodily injury to or death of any one person, $150,000 for bodily injury to or death of 2 or more persons in any one motor vehicle accident, or the corresponding policy limits for bodily injury or death, whichever is less.” 215 ILCS 5/143a(1).

- If the damages awarded in the arbitration are equal to or below the minimal

amount of liability insurance required of an at-fault driver, the arbitration is binding.


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- However, if the arbitration award is above that amount, either the insured or the insurer can seek a trial de novo, notwithstanding the arbitration award.

The public policy does not merely condone the use of trial de novo provisions in uninsured-motorist (UM) policies; the public policy is that such provisions must be included. Phoenix Insurance Co., v. Rosen, 242 Ill.2d 48 (2011) (emphasis added) citing, 215 ILCS 5/143a(1).

If an insurance policy does not contain a trial de novo provision in its uninsured-motorist (UM) coverage, it is contrary to statute requiring such provisions and unenforceable as against public policy. Id.

(a) Case Law:

In Phoenix Ins. Co., v. Rosen, the Illinois Supreme Court held that the trial de novo provision in an underinsured-motorist (UIM) policy, which allowed either party to reject an arbitration award over the statutory minimum for liability coverage, did not violate public policy. The court held that because the uninsured motorist (UM) statute required trial de novo provisions, and legislative considerations behind the UIM statute were the same as those underlying the UM statute, then the trial de novo provision was also enforceable under UIM policies. Phoenix, 242 Ill. 2d 48, 65 (2011). *** Phoenix Ins. Co. v. Rosen overruled the following cases:

Fireman's Fund Insurance Cos. v. Bugailiskis, 278 Ill.App.3d 19 (2nd Dist. 1996), Parker v. American Family Insurance Co., 315 Ill.App.3d 431 (3d Dist. 2000), Kost v. Farmers Automobile Insurance Ass'n, 328 Ill.App.3d 649 (5th Dist. 2011), and Samek v. Liberty Mutual Fire Insurance Co., 341 Ill.App.3d 1045 (1st Dist. 2003).

Timeline for Rejection/Modification of Arbitration Award

(a) Policy Language

Always look to the specific language in the policy – it will control.

A court’s primary objective in construing the language of an insurance policy is to ascertain and give effect to the intentions of the parties as expressed in their agreement. Pekin Ins. Co. v. Precision Dose, Inc. 2012 IL App (2d) 110195, ¶31.

An agreement will not be invalidated unless it is clearly contrary to what the constitution, the statutes, or the decisions of the courts have declared to be the public policy of Illinois or unless it is “manifestly injurious to the public welfare.” Phoenix Insurance Co., v. Rosen, 242 Ill.2d 48, 55 (2011), citing, Progressive Universal Insurance Co. of Illinois v. Liberty Mutual Fire Insurance Co., 215 Ill.2d 121, 129–30 (2005); Mohanty M.D. v. St.


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John Heart Clinic, S.C., 225 Ill.2d 52, 65 (2006); Schumann–Heink v. Folsom, 328 Ill. 321, 330 (1927).

(b) If Policy Does Not Specify Time – Look to Uniform Arbitration Act

1) Vacating the Arbitration Award (710 ILCS 5/12)

“An application under this Section shall be made within 90 days after delivery of a copy of the award to the applicant, except that if predicated upon corruption, fraud or other undue means, it shall be made within 90 days after such grounds are known or should have been known.” (710 ILCS 5/12(b)), emphasis added.

“If the application to vacate is denied and no motion to modify or correct the award is pending, the court shall confirm the award.” (710 ILCS 5/12(d)).

2) Modification or Correction of Awards (710 ILCS 5/13)

(a) Upon application made within 90 days after delivery of a copy of the award to the applicant, the court shall modify or correct the award where:

(1) There was an evident miscalculation of figures or an evident mistake in the description of any person, thing or property referred to in the award; (2) The arbitrators have awarded upon a matter not submitted to them and the award may be corrected without affecting the merits of the decision upon the issues submitted; or (3) The award is imperfect in a matter of form, not affecting the merits of the controversy.

(b) If the application is granted, the court shall modify and correct the award so as to effect its intent and shall confirm the award as so modified and corrected. Otherwise, the court shall confirm the award as made. (c) An application to modify or correct an award may be joined in the alternative with an application to vacate the award.

3) Case Law Schultz v. Atalantic Mut. Ins. Co, 367 Ill.App.3d 1 (1st Dist. 2006)

Insured brought action against underinsured motorist (UIM) carrier to confirm arbitration award in excess of policy limits since carrier did not challenge award within 90-days or request trial within 60-days.


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The parties in Schultz submitted only the issue of damages to arbitration, with the issue of policy limits excluded. Additionally, plaintiff's counsel even admitted, in his October 9, 2002, letter, that “the court [should] determine the applicability of the personal umbrella coverage of the other $315,000.” Thus, the court found that the 90–day rule applied only to that issue.

Holding: Issues not submitted to arbitration are not subject to the rules of the Uniform Arbitration Act, including the 90-day time limit for motion to vacate, modify, or correct arbitration award.

Hough v. Howington, 254 Ill. App. 3d 452 (1st Dist. 1993)

Mere filing of petition to confirm arbitrator's award in circuit court by opposing party does not extend 90-day period within which request for vacatur of arbitrator's opinion must be presented under Uniform Arbitration Act; thus, if grounds to vacate are raised in response to petition to confirm, they are timely only if asserted within 90-day period. Id. citing, 710 ILCS 5/12.

X. STATUTORY AMENDMENTS

“Rights under a contract become ‘vested,’ for purposes of the retroactive application of a statute, when the contract is entered into, rather than when the rights thereunder are asserted.” American Family Mut. Ins. Co. v. King, 375 Ill.App.3d 791 (2nd Dist. 2007) quoting, Weisberg v. Royal Ins. Co. of America, 124 Ill.App.3d 864, 870 (1st Dist. 1984).

a) Amendments to 215 ILCS 5/143a(1) Public Act 93-485

“Any decision made by the arbitrators shall be binding for the amount of damages not exceeding $50,000 for bodily injury to or death of any one person, $100,000 for bodily injury to or death of 2 or more persons in any one motor vehicle accident, or the corresponding policy limits for bodily injury or death, whichever is less.” IL LEGIS 93-485 (2003).

− Effective Date January 1, 2004 to December 31, 2013

Public Act 98-242

“Any decision made by the arbitrators shall be binding for the amount of damages not exceeding $75,000 $50,000 for bodily injury to or death of any one person, $150,000 $100,000 for bodily injury to or death of 2 or more persons in any one motor vehicle accident, or the corresponding policy limits for bodily injury or death, whichever is less.”


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− Effective Date January 1, 2015 to Present

b) Case Law

Amendments are Not Retroactive

American Family Mut. Ins. Co. v. King, 375 Ill.App.3d 791 (2nd Dist. 2007)

Plaintiff, American Family Mutual Insurance Company, filed a complaint in the circuit court (pursuant to trial de novo clause) against Defendant, Lorraine King, seeking a trial on defendant's claim under the uninsured motorist coverage of a policy that plaintiff issued to her on June 5, 2003. The claim arose from a motor vehicle accident on July 22, 2003, and according to the complaint, it was submitted to a private arbitration proceeding that resulted in an award of $39,000 to defendant. Defendant moved to dismiss the complaint on the basis that, under the terms of the policy, the arbitration award was binding. The trial court granted Defendant’s motion and Plaintiff appealed.

In Defendant’s motion to dismiss, King asserted that “at the time of the arbitration award, the Illinois Safety Responsibility Law's minimum limits were $50,000.00.” In support of this assertion, however, defendant did not cite the Illinois Safety and Family Financial Responsibility Law. Instead, she cited section 143a(1) of the Illinois Insurance Code (215 ILCS 5/143a(1) (West 2006)).

At the time the policy was issued and at the time of the accident, section 143a(1) provided that the decision of a panel of arbitrators on an uninsured motorist coverage claim “shall be binding for the amount of damages not exceeding the limits for bodily injury set forth in Section 7–203 of the Illinois Vehicle Code.” 215 ILCS 5/143a(1) (West 2002). However, pursuant to an amendment that took effect after the accident (see Pub. Act 93–485, § 5, eff. January 1, 2004), section 143a(1) now provides that “any decision made by the arbitrators shall be binding for the amount of damages not exceeding $50,000 for bodily injury to or death of any one person.” 215 ILCS 5/143a(1) (West 2004).

The court held enactments that take effect after the issuance or renewal of an insurance policy do not become a part of the policy, “even if the subject matter of those enactments may be characterized as affecting matters of remedy or procedure under the policy.” Id., citing, Accord Boyd v. Madison Mutual Insurance Co., 146 Ill.App.3d 420 (5th Dist. 1986).

It has been established that parties have a constitutional right to preserve the terms of the contract. Because the parties bargained for the right to a trial on all issues if arbitration produced an award exceeding the minimum policy limit under the Illinois Safety and Family Financial Responsibility Law, the


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appellate court held that the subsequent amendment to section 143a(1) of the Illinois Insurance Code could not to be given effect to impair the contractual right. The case was reversed and remanded.

Retroactive Exception

Coronado v. Fireman's Fund Ins. Co., 131 Ill. App. 3d 450 (1st Dist. 1985)

The inclusion of certain express language in the statute may present an exception to the general rule that statutes which are in force at the time a contract is issued are controlling throughout the term of the contract. Such an exception is present where a statute contains express language declaring an amendatory act to be retroactive. Coronado, at 453-54 (1st Dist. 1985) citing, General Motor Corp., Fisher Body Division v. Industrial Commission, 62 Ill.2d 106 (1975). However, a legislative enactment cannot, be given retroactive effect in the absence of a clear expression of legislative intent to do so. Id.

XI. LIENS

(1) Basics

Lien Created; limitation - 770 ILCS 23/10(a)

Every health care professional and health care provider that renders any service in the treatment, care, or maintenance of an injured person, except services rendered under the provisions of the Workers' Compensation Act1 or the Workers' Occupational Diseases Act, shall have a lien upon all claims and causes of action of the injured person for the amount of the health care professional's or health care provider's reasonable charges up to the date of payment of damages to the injured person. The total amount of all liens under this Act, however, shall not exceed 40% of the verdict, judgment, award, settlement, or compromise secured by or on behalf of the injured person on his or her claim or right of action. 770 ILCS 23/10(a)

Items to Which Lien Attaches – 770 ILCS 23/20

“The lien of a health care professional or health care provider under this Act shall, from and after the time of the service of the lien notice, attach to any verdict, judgment, award, settlement, or compromise secured by or on behalf of the injured person. …” 770 ILCS 23/20

Liens Attach to UM/UIM Benefits

Liens filed pursuant to the Health Care Services Lien Act by health care providers who provided services to insured driver and passengers who were injured in a motor vehicle accident applied to the underinsured motorist (UIM) benefits recovered by driver and passengers, and thus providers were entitled to 40% of the UIM


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benefits; UIM benefits was a contractual claim, the resolution of which could properly be labeled a “settlement” to which a lien could attach. McRoberts v. Porter, 2013 IL App (5th) 120017 citing, 770 ILCS 23/10(a), 23/20.

(2) Medicare/Medicaid

Recovery by United States – 42 U.S.C.A § 2651(a)

“In any case in which the United States is authorized or required by law to furnish or pay for hospital, medical, surgical, or dental care and treatment (including prostheses and medical appliances) to a person who is injured or suffers a disease, after the effective date of this Act, under circumstances creating a tort liability upon some third person (other than or in addition to the United States and except employers of seamen treated under the provisions of section 249 of this title) to pay damages therefor, the United States shall have a right to recover (independent of the rights of the injured or diseased person) from said third person, or that person's insurer, the reasonable value of the care and treatment so furnished, to be furnished, paid for, or to be paid for and shall, as to this right be subrogated to any right or claim that the injured or diseased person, his guardian, personal representative, estate, dependents, or survivors has against such third person to the extent of the reasonable value of the care and treatment so furnished, to be furnished, paid for, or to be paid for. The head of the department or agency of the United States furnishing such care or treatment may also require the injured or diseased person, his guardian, personal representative, estate, dependents, or survivors, as appropriate, to assign his claim or cause of action against the third person to the extent of that right or claim.”

(3) VA Hospital

Recovery by United States – 42 U.S.C.A § 2651(c)

(1) If, pursuant to the laws of a State that are applicable in a case of a member of the

uniformed services who is injured or contracts a disease as a result of tortious conduct of a third person, there is in effect for such a case (as a substitute or alternative for compensation for damages through tort liability) a system of compensation or reimbursement for expenses of hospital, medical, surgical, or dental care and treatment or for lost pay pursuant to a policy of insurance, contract, medical or hospital service agreement, or similar arrangement, the United States shall be deemed to be a third-party beneficiary of such a policy, contract, agreement, or arrangement.


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(2) For the purposes of paragraph (1) --

(A) the expenses incurred or to be incurred by the United States for care and treatment for an injured or diseased member as described in subsection (a) of this section shall be deemed to have been incurred by the member; (B) the cost to the United States of the pay of the member as described in subsection (b) of this section shall be deemed to have been pay lost by the member as a result of the injury or disease; and (C) the United States shall be subrogated to any right or claim that the injured or diseased member or the member's guardian, personal representative, estate, dependents, or survivors have under a policy, contract, agreement, or arrangement referred to in paragraph (1) to the extent of the reasonable value of the care and treatment and the total amount of the pay deemed lost under subparagraph (B).

(4) Case Law

Gov't Employees Ins. Co. v. Andujar, 773 F. Supp. 282, 283 (D. Kan. 1991)

This case arises out of an automobile accident caused by the negligence of Donald Good, an uninsured motorist. The accident resulted in the death of Good and all of the occupants of the car with which he collided. The other car, driven by Nereida Andujar, was covered by an automobile insurance policy issued by the Government Employees Insurance Co. (GEICO), which included uninsured motorist coverage. This action was filed by GEICO to determine its rights and obligations under the insurance contract.

As a result of injuries caused by the accident, the United States Army (United States), as authorized and required by law, furnished hospital, medical and surgical care and treatment to Nereida Andujar, Yaritza Andujar and Carmen Sara Alicea. The United States, under the Federal Medical Care Recovery Act, (FMCRA) 42 U.S.C. § 2651, et seq., claims that it is entitled to recover from GEICO the reasonable value of the care and treatment it furnished.

GEICO named Allstate Insurance Company (Allstate) as a defendant in its complaint as that company “may claim a right of subrogation for payments made to or on behalf of Carmen Sara Alicea and/or Brenda Omayra Alicea, pursuant to its policy of insurance.” GEICO named Dairyland Insurance Company (Dairyland) as a defendant in its complaint as that company “may claim a right of subrogation for payments made to or on behalf of Carmen Sara Alicea and/or Brenda Omayra Alicea, pursuant to its policy of insurance.”

This case comes before the court upon the motions of defendants for summary judgment. Andujar (Defendant), filed a memorandum in which the other defendants moving for summary judgment join. In these motions, the defendants argue that the United States is not entitled to any portion of the proceeds of the uninsured motorist


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insurance. The United States opposes the defendants' motion for summary judgment, contending that it is entitled under the FMCRA and the terms of the insurance agreement to the reasonable value of the medical services provided. Gov't Employees Ins. Co. v. Andujar, 773 F. Supp. 282, 283 (D. Kan. 1991).

Under the facts of the case at bar, the court stated that FMCRA does not provide the United States with a direct right to the proceeds of Defendant’s uninsured motorist policy. Defendant was not a “third person” nor was she the tortfeasor. GEICO is not liable in tort. Donald Good, the uninsured motorist, was the tortfeasor. The FMCRA only provides the United States with a right to recover from Donald Good.

The United States' right to recover as a third party beneficiary is governed by the language of the insurance policy and by state law. Id. citing, Gov't Employees Ins. Co. v. Andujar, 773 F. Supp. 282, 288 (D. Kan. 1991), citing, United States v. Dairyland Ins. Co., 485 F.Supp. 539, 542 (D.N.D.1980), aff'd 674 F.2d 750 (8th Cir.1982).

“In determining the intent of the contracting parties as to the rights of third party beneficiaries, the general rules applicable to the construction of contracts are applied. The intention of the parties and the meaning of the contract are to be determined from the instrument itself where the terms are plain and unambiguous.” Id. citing, Cornwell v. Jespersen, 238 Kan. 110, Syl. ¶ 5, 708 P.2d 515 (1985). See Noller v. General Motors Corp., 244 Kan. 612 (1989).

The court held that because the express terms of the insurance policy did not make the United States an insured or a third party beneficiary, it was not entitled to any portion of defendants’ proceeds of uninsured motorist benefits.

VX. SAMPLE FORMS Included are three sample forms you will use when handling UM/UIM cases:

1. Letter to Secretary of State 2. Letter Demanding Arbitration 3. Petition to Enforce Arbitration Award and Damages


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March 14, 2016

Accident Records Section Illinois Department of Transportation Division of Traffic Safety 1340 N. 9th Street Springfield, Illinois 62766-0002 RE: Our Client: Theon Greyjoy Requesting Insurance Info. on: Ramsay Bolton VIN: KN8SD83D416009629 Date of Accident: 08/12/2015 Illinois Motorist Report No.: C110179696 Dear Sir or Madam: Our office has been retained by and represents Theon Greyjoy, relating to injuries he received as a result of an automobile accident which occurred on August 12, 2015. We are trying to determine whether the at fault driver, Ramsay Bolton, had any insurance on the date of the accident. I have enclosed a copy of the Illinois Motorist Report for your review. Please forward to my attention any information you may have regarding whether or not Mr. Bolton had any insurance. I have enclosed a self-addressed, postage paid envelope for your convenience.

If you have any questions regarding the foregoing, please do not hesitate to contact me. Thank you for your cooperation in this matter.

Sincerely,

Stannis Baratheon Enc.


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March 23, 2016 VIA CERTIFIED MAIL Jaime Lannister Progressive P.O. Box 512926 Westernlands, CA 90051 Re: My Client: Jon Snow Your Insured: Jon Snow Claim No.: 12-3456789 Date of Loss: 6/14/2015 Dear Mr. Lannister: Please be advised that I represent Jon Snow in the above-referenced matter. Please accept this as our notice of intention to pursue an uninsured/underinsured motorist claim as well as a claim for medical payment benefits. Demand for arbitration is hereby made. We appoint Petyr Baelish from Baelish & Associates, 210 Coin Drive, Kings Landing, IL as our arbitrator. I would ask that you forward to me a certified copy of the applicable policy and declaration page thereto. You may hold this claim in abeyance until I resolve the claim against the adverse driver. Feel free to give me a call if you have any questions.

Sincerely,

Sansa Stark


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STATE OF ILLINOIS) ) SS LAKE COUNTY )

IN THE CIRCUIT COURT OF THE NINETEENTH JUDICIAL CIRCUIT LAKE COUNTY, ILLINOIS

MICHAEL SCOTT, )

) Petitioner, ) ) No. 16 L 123

) v. )

) DUNDER MIFFLIN INSURANCE, ) )

Respondent. )

PETITION TO ENFORCE ARBITRATION AWARD AND DAMAGES

NOW COMES the Plaintiff, MICHAEL SCOTT, by and through his attorneys, Dwight

Schrute & Associates, and for his Petition to Enforce Arbitration Award and Damages states

as follows:

1. Pursuant to a Commercial Auto Policy ("Policy") between Plaintiff, MICHAEL

SCOTT, and Defendant, DUNDER MIFFLIN INSURANCE (“DUNDER”), an

Arbitration hearing was held on January 28, 2016.

2. After a full hearing relating to Plaintiff's underinsured motorist claim, an Arbitration

Award in the total sum of $220,000 (subject to any statutory or contractual setoffs)

was awarded to, Plaintiff, MICHAEL SCOTT. See Exhibit A: Arbitration Award.

3. Pursuant to the Policy, in the event of an arbitration award over $50,000 for bodily

injury, "either party may demand the right to a trial. This demand must be made in

writing within sixty (60) days of the arbitrators' decision. If the demand is not made


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within sixty (60) days, the amount of damages agreed to by the arbitrators will be

binding." See Policy, excerpt p.38-39.

4. More than sixty (60) days have passed since the Arbitration Award and Defendant

has failed to either 1) tender the Arbitration Award to Plaintiff or 2) properly demand

the right to a trial pursuant to the Policy.

5. Illinois law repeatedly holds "a party seeking review of an arbitration award must

either 1) file a petition in the circuit court...or 2) raise the grounds upon which review

is sought in answer to another party's petition to confirm the award." Konicki v. Oak

Brook Racquet Club, Inc., 110 III.App.3d 217 (2nd Dist. 1982). See also Mayflower

v. Ins. Co. v. Mahan, 180 Ill.App.3d 213 (1st Dist. 1988), (exhibiting a party may

"demand the right to a trial" by "filing its complaint in the circuit court...within the

specified time period).

6. The filing of a "petition to confirm an award in the circuit court does not extend" the

time period in "which the other party must raise grounds for its vacation or

modification." Konicki, 110 Ill.App.3d at 220.

7. Moreover, in various other contexts of Illinois law, a "demand for trial" consists of

"an affirmative statement in the record." People v. A.F., 282 Ill.App.3d 930, 932 (1st

Dist. 1996).

8. Merely "stating readiness for trial by itself does not equal a formal trial demand." Id.

9. There must be "affirmative conduct on the record clearly and unequivocally putting

the court" on notice of the trial demand. Id.

10. Defendant has failed to properly reject the Arbitration Award within sixty (60) days

as dictated by the provisions of its own Policy.


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11. Defendant has failed to demand a trial by putting any affirmative statement in the

record Defendant has failed to file a petition in the circuit court and has failed to put

the Court on notice of its trial demand within sixty (60) days as required by its own

Policy.

12. For all of the above reasons, the Arbitration Award entered on January 28, 2016 is

now binding according to the provisions set forth in Defendant's own Policy.

WHEREFORE, Plaintiff prays this Court will:

1. Enter a Judgment against DUNDER MIFFLIN INSURANCE in the amount of

$170,000 which represents the Arbitration Award of $220,000 minus the appropriate

setoffs in this case.

DAMAGES

1. Plaintiff, MICHAEL SCOTT, has demanded payment of the Arbitration Award from

the Defendant, DUNDER.

2. Defendant, DUNDER, has refused payment to Plaintiff, MICHAEL SCOTT, while

also failing to comply with the timely rejection procedures of the Arbitration Award

outlined in its own Policy.

3. Plaintiff, MICHAEL SCOTT, has put Defendant, DUNDER, on Notice, pursuant to a

formal letter with this Petition attached, that the time to reject the Arbitration Award

has passed and any further delay in payment constitutes an unreasonable and

vexatious delay in settling the claim.

4. Defendant, DUNDER, still has not paid the Arbitration Award as required by

Defendant's own policy.


CH. 3 Page 36

5. Section 155 of the Insurance Code, "provides a remedy for an insured who encounters

unnecessary difficulties when an insurer withholds policy benefits." Bedoya v. Illinois

Founders Insurance Co., 293 Ill.App.3d 668 (1997).

6. Section 155 of the Insurance Code provides in pertinent part:

(1) In any action by or against a company wherein there is in issue the liability of a company or a policy or policies of insurance or the amount of the loss payable thereunder, or for an unreasonable delay in settling a claim, and it appears to the court that such action or delay is vexatious and unreasonable, the court may allow as part of the taxable costs in the action reasonable attorney fees, other costs, plus an amount not to exceed any one of the following amounts:

(a) 25% of the amount which the court or jury finds such party is entitled

to recover against the company, exclusive of all costs;

(b) $ 25,000;

(c) the excess of the amount which the court or jury finds such party is entitled to recover, exclusive of costs, over the amount, if any, which the company offered to pay in settlement of the claim prior to the action." 215 ILCS 5/155.

7. Defendant, DUNDER’s, continued delay in payment of the Arbitration Award is

unreasonable and vexatious.

8. As such, Plaintiff, MICHAEL SCOTT, is entitled to reasonable attorney fees plus

costs. In addition, Plaintiff, MICHAEL SCOTT, is entitled to damages in an amount

not less than $25,000 and not greater than $55,000.

WHEREFORE, Plaintiff prays this Court will:

1. Add to the Judgment as additional damages reasonable attorney fees plus costs for

bringing this action and for all efforts to try to enforce the terms of the Policy.

2. Add to the Judgment as additional damages an amount not less than $25,000 and not

greater than $55,000 pursuant to Section 155 of the Insurance Code.


CH. 3 Page 37

Respectfully submitted,

By: _____________________________ One of his attorneys

Dwight Schrute & Assoc. Andrew Bernard ARDC No. 1234567 1725 Slough Avenue Scranton, PA 18503 (847)984-3672


CH. 3 Page 38


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