Kentucky Court of Appeals
Arbitration - Appeals
Stephen D. Prater Builder, Inc. v. Larmar Lodging Corporation, 441 S.W.3d 133, 2014 WL 4116799 (Ky.App. August 22, 2014)

A construction dispute was submitted for arbitration and the trial Court vacated the arbitration decision and remanded it for a new hearing. An appeal was taken, but was dismissed. Under KRS 417.160 the appellate jurisdiction is defined, and a distinction is drawn between denial of confirmation and vacating the award. An appeal can be brought from a vacated award only if it is not remanded for a rehearing, and thus the appellate Court was without jurisdiction to hear the appeal.

Kentucky Supreme Court
Professional Liability - Discovery of Peer Review
Tibbs v. Bunnell, ___ S.W.3d ___, 2014 WL 4115912 (Ky. August 21, 2014)

In 2005, Congress stepped in by passing the Patient Safety and Quality Improvement Act of 2005, codified in 42 U.S.C. § 299b-21. Its purpose was to promote improved medical care by permitting the free collection and analysis of data and the free assessment of an institutions failures or shortcomings with a view towards improving medical processes.

This case arose out of claim alleging medical malpractice in the performance of elective spine surgery at the University of Kentucky Hospital [UKH]. In that case a discovery dispute arose concerning a post event report generated by a surgical nurse through the hospital's Patient Safety Evaluation System. The trial judge ordered production of the report if it was prepared by "someone involved in or with actual knowledge of the medical care". A Petition for a Writ of Prohibition was filed by the physicians and the Writ was granted but the issue was remanded to the trial Court with instructions to determine whether was a document containing a "self-examining analysis". The physicians then filed an appeal with the Supreme Court. The Court limited its review to the narrow question of whether the federal privilege was limited to documents containing a "self-examining analysis", and if not, what constitutes "patient safety work product"? The Court easily determined that the Court of Appeals had erred by applying a federal case from New York that applied a different privilege, leaving the second issue and the meaning of the statutory language as dispositive.

By affidavit, UKH established that it had established a Patient Safety Evaluation System, which provided their Patient Safety Net [PSN] system. Incident reports such as the one at issue are created for and reported directly to the PSN. The Court, however, found that incident reports came within the exceptions found in 42 U.S.C.A. § 299b-21(7)(B)(i)(iii). By regulation, 902 K.A.R. 20:016(3)(3)(a)(5), Kentucky hospitals are required to maintain administrative records including incident investigation reports. In reaching this conclusion the Court either assumed that incident reports are necessary or ignored that additional requirement in the regulation. Accordingly, the Court reasoned that since incident reports are required, they are prepared for a reason other than the patient safety evaluation system, and are excepted from the protections of the Act. This again plays fast and loose with the statutory language, since the exception in question only requires that the document be separate from the PNS, which in this case it was not. If the issue arises in federal court it is best to either conduct one's own analysis or begin with the dissent.

Kentucky Court of Appeals
Insurance - UM/UIM - Accrual of Limitations
Hensley v. State Farm Mutual Automobile Insurance Company, ___ S.W.3d ___, 2014 WL 3973115 (Ky.App. August 15, 2014), motion for discretionary review filed September 15, 2014 (2014-SC-551-D)

In this case the Court of Appeals revisits it earlier opinion in Riggs v. State Farm Mut. Auto. Ins. Co., __ S.W.3d __, 2013 WL 3778143 (Ky.App. July 19, 2013), which currently pending before the Supreme Court. Oddly or interestingly, depending on one's point of view, this panel approaches the issue of contractual limitations in underinsured motorists policies from a totally different angle. In fact, the Supreme Court could hold that this analysis makes Riggs obsolete and unnecessary. The opinion also suggest that the General Assembly enact a statute in order to clear up this confusion.

The policy in this case had the precise same provision as did the policy in Riggs. The contract required that any action be brought within two years of the injury or death, or the last payment of Basic Reparation Benefits. The .Riggs Court held that the provision was unreasonable because it could have run before a claimant knew there was an uninsured motorist. In this case, however, the panel changed the date of accrual, leaving the rest of the provision intact. It held that the limitations did not begin to run until the claim was denied. Of course, this in effect rewrites the policy provision because the provision specifies a time for accrual.

The opinion is actually well written and well thought out to a point, but belies a lack of practical understanding how these policies work. If a carrier does not dispute coverage but rather challenges the underlying value of the tort claim, it may never actually deny the claim. As written then, there would almost never be a limitations period. Part of the problem is a theoretical error made by the Court in deeming it a breach of contract case. While a UIM case can be for breach of contract, until there is a judgment in excess of the liability policy limits there is really nothing to breach. It is really just a claim on the policy, and where the tortfeasor settles it is just a dispute as to the amount owed and the plaintiff must prove his claim. But for now, we are left with no answer but to await the Supreme Court's decision creating whatever rule they see fit.

Kentucky Court of Appeals
Employment - Police Officers - Failure to Exhaust Administrative Remedies
Pearce v. Whitenack, 440 S.W.3d 392, 2014 WL 3882952 (Ky.App. August 8, 2014)

A police officer was issued a notice of verbal counseling for violation of department policy relating to social media. Subsequently, a citizen filed a complaint against him for conduct that occurred while he was off duty. He was then issued a notice of interview, and following that was suspended with pay pending the internal investigation. A few days later, the officer tendered his resignation and filed a grievance against his supervisor. He was thereafter advised that his resignation was accepted and his grievance was procedurally defective. He then filed suit against a number of city officials, alleging a number of torts (invasion of privacy, wrongful discharge, intentional interference with contractual relations, and civil conspiracy) and violations of his due process rights as set out in KRS 15.520, known as the Policemen's Bill of Rights.

The Court held that the claims relating to KRS 15.520 were barred by the failure to exhaust administrative remedies, as were the tort claims that concerned his employment status (wrongful discharge, intentional interference with contractual relations, and civil conspiracy). The Court found that the invasion of privacy claim, however, required a different analysis because the incident in question did not result in a suspension or other adverse event. Instead, it was based on the social media violation which the officer claimed was private since it occurred in his home while off duty. This was rejected since there is no expectation of privacy in a Facebook posting, regardless of the location from which it was posted or whether it was posted on a public or private section.