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Erie Ins. Co. v. Kaltenbach12/10/1998
g.
I respectfully dissent.
At issue in this case is the effect of and the enforceability of a provision in Erie Insurance Company's policy that requires:
"Anyone receiving payment from us and from someone else for the same accident or loss will reimburse us up to our payment."
Erie Insurance Company paid $5,000 in medical pay benefits to a chiropractor who had treated John J. Kaltenbach II. The value of the total claim was such that Kaltenbach chose not to sue the driver who had caused his injuries. Instead, he chose to have his attorney attempt to resolve the matter without incurring the costs of litigation. The Allstate Insurance Company, which represented the driver who was at fault, was unwilling to pay more than $4,462 to resolve the claim. Finally, Kaltenbach and his counsel accepted the sum offered. Erie then claimed the full sum offered.
First, I do not believe that Kaltenbach should be considered as having received payment of $4,462. Instead, he should be considered as having received payment of the gross amount tendered less any costs incurred in the process of acquiring the funds. In most circumstances, this would be the gross amount received less the costs of attorney fees, expert reports, court costs, and similar expenses. This interpretation of the payment received prevents Erie from collecting far more from its policyholder directly than it would have received had it pursued its subrogation rights against the tortfeasor. Under the theory pursued by the trial court, Kaltenbach receives none of the funds paid by Allstate but faces a potential liability to his attorney for the effort and funds expended to acquire the funds.
Second, on the issue of the measure of damages, Erie should not receive more money that it would have received if it had pursued litigation directly. Erie's actual damages were no more than $5,000 less the costs of recovering the $5,000 from Allstate and its insured. The breach of contract by Kaltenbach for signing a release could not have harmed Erie any more than that sum. If Allstate were correct and a court would have determined that not all of Kaltenbach's medical bills were necessary and reasonable, then Erie could have recovered less than $5,000 (reduced further yet by the costs of collecting the actual value of the claim).
Finally, the Supreme Court of Ohio has on more than one occasion, determined that policy provisions similar to the provision in the Erie policy should be enforced only where the injured party has received full and fair compensation. The Supreme Court of Ohio could decide that this policy provision is unenforceable under the circumstances. However, that determination is best made by the Supreme Court itself.
Again, I respectfully dissent.
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