Kentucky Court of Appeals
Insurance - No-Fault - Examinations Under Oath
Adams v. State Farm Mutual Automobile Insurance Company, 2015 WL 3638004 (Ky.App. June 12, 2015), motion for discrtetionary review filed July 8, 2015 (2015-SC-366-D)

This opinion deals with an issue that has been much discussed in the context of the rampant fraud associated with Kentucky's no-fault system. State Farm included in its policy a provision requiring cooperation including participation in an examination under oath if requested. Adams refused to participate, and her claim for no-fault benefits was dismissed by the trial Court. Adams appealed and argued that the no-fault statutes did not permit the insurer to require such an examination.

The Court of Appeals, without much analysis, held that the exclusive mechanism for obtaining testimony from the claimant in a no-fault claim is KRS 304.39-280, which provides that:

In case of dispute as to the right of a claimant or reparation obligor to discover information required to be disclosed, the claimant or reparation obligor may petition the Circuit Court in the county in which the claimant resides for an order for discovery including the right to take written or oral depositions.

While the "in case of dispute" language could, by itself, suggest that this provision is the exclusive means of obtaining testimony, the statute does not use mandatory language. It allows the insurer to secure a deposition, but the language does not support the conclusion that it compels it. The Court relied on Miller v. United States Fidelity & Guaranty Company, 909 S.W.2d 339 (Ky. App. 1995), which limited the circumstances under which a circuit court could grant leave for an IME. Miller involved a different statute which specified that an IME could occur only for good cause shown. While KRS 304.39-280(3) also contains a good cause shown requirement, its scope is limited by section one which identifies specific documents that are required to be disclosed. It really has nothing to do with communications with the claimant or attempting to determine if the claim is fraudulent. As argued by Adams, any attempt to limit claims to valid ones is considered harassment, annoyance, embarrassment or oppression. It appears that at least one panel agrees. We can expect the Supreme Court to take a look at this, but ultimately a remedy to fraud will likely lie with the legislature as the Court is generally in denial about the problem.

Kentucky Supreme Court
Exclusive Remedy
Falk v. Alliance Coal, LLC, ___ S.W.3d ___, 2015 WL 3631695 (Ky. June 11, 2015)

Alliance Coal is the parent of two subsidiaries, River View and Webster. Alliance had secured self-insured status with the Department of Workers' Claims in accordance with the statutory procedure. In that process River View and Webster were listed as subsidiaries. Two employees of Webster and one employee of Riverview dies in two mining accidents, and the employers accepted the workers' compensation claims of each and Alliance paid the benefits due. The estates filed a civil case against Alliance. The trial Court granted Alliance's motion for summary judgment and the Court of Appeals affirmed.

The Supreme Court noted at the outset that a similar case in federal court had been decided in a way contrary to this one. The federal judge, relying on the Sixth Circuit opinion in Boggs v. Blue Diamond Coal Co., 590 F.2d 655 (6th Cir. 1979), in which the Court held that merely being the parent did not satisfy the up-the-ladder immunity available to a statutory employer. While the Court approved of the decision in Boggs, it also found it inapposite to the facts at issue in this and the federal case. The Boggs deal with the parent company's role as an employer, but the issue here was whether it was an insurer. The Court held that a company that complied with the self insured statute and procedures was an insurer as defined by the Workers' Compensation Act, and as an insurer was entitled to the immunity established by KRS 342.690.