The Appellate Court of Maryland Holds That an Anti-assignment Clause Can Void the Attempted Assignment of an Insurance Claim.

In re Featherfall Restoration, LLC., 261 Md. App. 105 (2024)

This matter is about an insurance policy dispute between Travelers and two (2) insurance policy holders G.K. and K.K. (the Insured). The insurance policy had a provision expressly stating that “[a]ssignment of this policy will not be valid unless we [Travelers] give our written consent.” On May 20, 2020, the Insured notified Travelers of purported wind and hail damage to their home’s roof that they believed occurred on June 2, 2019. On May 20, 2020, prior to filing a claim, the Insured hired Featherfall Restoration, LLC (“Featherfall”) to repair the roof. On June 2, 2020, Travelers sent a claim representative to inspect and evaluate the damages. On June 19, 2020, Travelers sent a letter to the Insured notifying them of the denial of the claim, because the Travelers representative identified signs of wear to the roof shingles but did not find wind or hail damage on the roof or other exterior portions of the house. On that same day, Featherfall emailed Travelers an assignment of claims document and a legal opinion that the assignment was lawful despite the anti-assignment provision drafted by Featherfall’s legal counsel. Featherfall tried to discuss the denial with Travelers representatives, but they declined to discuss the denial and took the position that the anti-assignment clause meant  Featherfall had no interest in the claim.

Featherfall filed an administrative complaint against Travelers with the Maryland Insurance Administration (“MIA”). Featherfall argued that it had the same rights under the policy as the insured including the right to discuss the denial of the claim. Travelers again took the position that the anti-assignment clause was valid, enforceable, and consistent with Maryland insurance law. MIA found that Travelers was only obligated to pay and adjust claims in accordance with Maryland laws and the policy. Further, the MIA found that Travelers actions were not arbitrary and capricious, lacking in good faith, or in violation of the insurance article. On judicial review, the Circuit Court for Baltimore City affirmed MIA’s decision and denied Featherfall’s request for a declaratory judgment.

        On appeal Featherfall argued that the anti-assignment clause only applied to the entire policy, not a claim; and that Maryland allows post-loss assignments because they are the same as any chosen action. Travelers argued that the plain language in the contract invalidated the assignment, and if the Court found that it was legal to assign the claim without prior approval it would make the contract toothless.

        The Appellate Court of Maryland held that the anti-assignment clause provision was enforceable and did not run afoul of Maryland insurance law. First, the Court found that in the most recent cases considered by the Maryland Supreme Court it found that anti-assignment clauses were valid even if it was a post-loss assignment. For comparison, the Court also noted that the Maryland General Assembly added provisions in the Insurance Article that expressly require health insurers to recognize all assignments but did not create a similar provision for property insurance companies. Additionally, the Court found that Travelers’ interpretation was correct and reading the contract to allow for any assignment as long as it was not the whole policy, would make the clause meaningless, which violates Maryland law that forbids courts from interpreting a clause in contracts in such a way that it is rendered meaningless.  Finally, the Court found that Featherfall did not have standing to bring a MIA claim in this matter, because if the assignment was void, than any interest and rights that flowed from that assignment, including the right to a MIA hearing, were not valid.

Fernando D. Kirkman, Esquire (Associate)

Congratulations to Ashley Bond on her promotion to Partner at RSRM!

Ashley Bond joined RSRM as an Associate in 2017.  She graduated from the University of Baltimore School of Law in 2016, where she was a competing member of her school's National Trial Competition Team, placing as a regional semi-finalist, as well as serving as a Rule 16 attorney in the Bronfein Family Law Clinic. 

After law school, Mrs. Bond was a trial attorney at a criminal defense firm representing clients in both the district and circuit courts of Maryland before joining RSRM.  She has been named a Maryland Rising Star Attorney consistently since 2021 focusing on insurance coverage and defense, construction litigation, appellate cases, and workers' compensation. 

Mrs. Bond  has litigated hundreds of matters throughout Maryland District and Circuit Courts, as well as matters in the District of Columbia and the United States District Court for the District of Maryland.  We are proud of her success and to have her as a partner at RSRM. 

Congratulations Ashley!

 

Appellate Court of Maryland Holds that Appeals of IN § 27-1001 Claims to the OAH do not Preclude CJP § 3-1701 Claims and that Tortfeasors can be Liable for Subsequent Negligent Actions of Medical Providers.

Tami Browne v. State Farm Mutual Automobile Insurance Co., No. 1825, Sept. Term, 2021.

            Tami Browne was injured in an automobile accident where the at-fault driver fled the scene. Browne reported low back, hip, and neck pain and received non-surgical treatment. Subsequently, after continuing pain, Browne underwent an MRI which revealed a Tarlov cyst near her spine and a protruding disc. Browne underwent a surgical procedure to remove the cyst and later complained of worsening symptoms due to the surgery. Browne filed a claim with her insurer, State Farm, who refused to provide coverage for Browne’s subsequent treatment as there was no documentation connecting the cyst surgery to the accident. The parties were unable to settle the claim; therefore, Browne filed a breach of contract action against State Farm in the Circuit Court for Montgomery County. While the breach of contract case was pending, she filed an administrative complaint against State Farm for failure to act in good faith under Insurance Article (“IN”) § 27-1001 and Courts and Judicial Proceedings (“CJP”) § 3-1701.

The Maryland Insurance Administration (MIA) determined that State Farm did not owe Browne the entire $50,000 within her policy limits, and that State Farm had not failed to act in good faith. Browne subsequently appealed the decision to the Office of Administrative Hearings (OAH), which affirmed the previous MIA decision. Browne then amended her breach of contract action to include the statutory lack of good faith claim under CJP § 3-1701. Both parties then moved for summary judgment, where the circuit court ultimately granted summary judgment in favor of State Farm, determining that the OAH decision collaterally estopped Browne from litigating a civil action that involved the same issues at question in the OAH decision. The court then denied Browne’s motion as moot.

Writing for the Appellate Court of Maryland, formally known as the Maryland Court of Special Appeals, Judge Adkins first determined that a CJP § 3-1701 action is not a direct appeal of the OAH decisions as it is an independent civil claim. Although a civil action authorized by CJP § 3-1701 is reviewed de novo of MIA decisions, courts have repeatedly stated that this cause of action is not an appeal. Thompson v. State Farm Mut. Auto. Ins. Co., 196 Md. App. 235, 238 (2010). The court did not agree with State Farm’s assertion that collateral estoppel must apply to the circuit court action as it is a separate judicial proceeding on issues presented before the OAH.  The court looked at the requirements for a CJP § 3-1701 action including receiving a final decision under IN § 27-1001. To receive a final decision under IN § 27-1001, one must either: (1) not appeal to OAH within 30 days of a MIA decision or (2) appeal to OAH and wait for a final decision. CJP § 3-1701 does not distinguish between either of these final decisions, therefore the statute allows a cause of action under CJP § 3-1701 regardless of which path the insured takes.

The Appellate Court of Maryland then examined whether the circuit court abused its discretion in denying Browne’s motion for summary judgment. State Farm argued that Browne’s subsequent surgical treatment was negligent and, thus, a superseding cause. Browne argued that the automobile collision was the cause of her injuries, and the surgery should be included as it was an attempt to treat her original injuries. The court ultimately reversed the denial of Browne’s motion for summary judgment and provided guidance to the circuit court through § 457 of the Restatement (Second) of Torts, and Maryland case law requiring medical bills to be fair, reasonable, and necessary.

The subsequent negligence doctrine, as defined in Section 457, explains that negligent actors are subject to liability for any additional harm resulting from third parties’ normal efforts to tender aid regardless of if the acts are done properly or negligently. Per the comments to Section 457, if a person’s actions cause harm requiring medical intervention, the negligent actor remains liable for harm resulting from the medical services. The purpose for this rule is that the original tortfeasor should be held responsible for the inherent risks in treatment of injuries. The key question in subsequent negligent medical treatment cases is whether the original tortfeasor should have foreseen the general harm, not the specific manifestation of that harm.

The Appellate Court of Maryland looked to other jurisdictions for guidance to determine the extent of fair, reasonable, and necessary medical treatment, and bills. The court ruled that plaintiffs must first have proper foundation to introduce medical bills as evidence of damages. This is usually done by expert testimony discussing the bills’ fairness, reasonableness, and necessity. Once the evidence is admitted, the necessity of medical treatment is a question of fact for a jury. The jury can determine that the plaintiff was feigning injury, the treatment was for an ailment unrelated to the original tort, or the treatment goes beyond what is required by the injury.

On remand, the Appellate Court of Maryland provided some additional guidance to the circuit court. The burden is on the defendant to assert and provide evidence of subsequent negligent medical treatment. As such, the defendant must show that the subsequent negligence was so extraordinary or unusual that it is a superseding cause alleviating the defendant’s liability. Ultimately, the court identified five (5) instances where subsequent negligent treatment could be beyond the scope of the original tortfeasor’s liability: (1) extraordinary misconduct by medical professionals, (2) intentional torts committed by medical professionals against the victim, (3) a victim’s elected treatment of an ailment known to be unrelated to the injuries caused by the negligent actor, (4) treatment by a medical professional the victim was negligent in selecting, and (5) aggravation of the injury due to the victim’s negligence in carrying out the treatment of their injures.

- Sean Delaney, Law Clerk

Ship Owners Seek cap on Non-economic Damages in Federal Court for Claims relating to the Francis Scott Key Bridge Collapse.

        On March 26, 2024, shortly before 1:30 am, the M/V Dali, a containership with a length of 299.92 meters, lost power while traveling at eight (8) knots, causing the ship to strike Baltimore's Key Bridge, causing the 47-year-old structure to collapse into the Patapsco River.  The bridge's collapse has resulted in the complete closure of the Port of Baltimore, one of the nation's busiest ports.  As a result of the collision or "casualty", two (2) construction workers lost their lives, four (4) are missing but presumed dead, and two (2) suffered unknown injuries but survived. 

       The ship's owners want a cap on their exposure.  Grace Ocean Private Limited and Synergy Marine PTE, ltd., as Manager of the M/V Dali, have filed a Petition for Exoneration from or Limitation of Liability in the United States District Court of Maryland, Northern Division, seeking "exoneration from liability for any and all losses or damages arising out of the casualty and from any claims for damages that have been or may be filed."  Petitioners further "claim the benefits of limitation of liability provided by 46 U.S.C. § 30501, et seq." (aka "Limitation Act").  Basically, the ship's owners are asking the Court to cap their potential exposure at $43,670,000.00 (value of ship, aka 'sound value' of $90,000,000.00) plus its pending freight ($1,170,000.00) minus the repair and salvage costs ($28,000,000.00 and $19,500,000.00 respectively). 

      The M/V Dali owners will likely prevail in their request.  The Limitation Act states:

Except as provided in section 30524 in this title, (a) the liability of the owner of a vessel for any claim, debt or liability described in subsection (b) shall not exceed the value of the vessel and pending freight.  If the vessel has more than one owner, the proportionate share of the liability of any one owner shall not exceed that owner's proportionate interest in the vessel and pending freight.

46 U.S.C. § 30523.  Maryland's cap on non-economic damages, for an occurrence date in 2023, limits the amount of pain and suffering damages for injuries and wrongful death lawsuits at $935,000.00 if the victim survived and $1,402,000.00 if the victim died and there are two (2) or more wrongful death beneficiaries (Limitation of Non-Economic Damages, Courts & Judicial Proceedings Articles 3-2A-09, Md. Ann. Code).  A "survival action" cap is likewise, $935,000.00. This can be added to the aforementioned wrongful death claim cap to a combined total of $2,375,000.00

        The Port of Baltimore has suspended all maritime traffic until further notice.  The Port, our Port, handled 37 million tons of cargo in 2021 and is in the top 20 ports in the U.S., according to the Bureau of Transportation Statistics.  Container cargo trucks are still taking cargo in the port, but there are no maritime vessel imports or exports.  Truckers are especially hard, Maryland plated truckers that is, i.e., in order to transport container cargo out of the Port of Baltimore, a driver and his truck must have "apportioned plates" in order to leave the state of Maryland and deliver said cargo to other states. Unfortunately, many Port of Baltimore container haulers have Maryland plates only.  Consequently, these drivers cannot simply relocate to other ports, i.e., Port of Wilmington, Port of New York and New Jersey, and/or the Port of Virginia. 

        For automobile shipments, the Port of Baltimore was the nation's busiest,  handling 847,158 vehicles in 2023.  These vehicles, including the revenue generated by the handling of this particular type of cargo, is being diverted to other ports.  It remains to be seen whether this business and/or revenue will ever return to the Port of Baltimore and the Marylanders who work there. 

- Milton Warren, Associate

RSRM Welcomes Associate Milton Warren!

Milton P. Warren is a 2000 graduate of the University of Maryland Francis King Carey School of Law.  While attending law school, Mr. warren completed the Access to Bail and Justice clinical law program providing access to pre-trial release and legal representation to indigent clients in Baltimore City pursuant to Maryland Rule 16 as a student-attorney.  Mr. Warren also spent time interning at the States Attorney office located in Northumberland County, Virginia. 

Immediately after graduating law school, Mr. Warren began working at a local Baltimore County law firm gaining experience in general practice civil litigation where he prosecuted auto torts, premises liability, estate probate and alternative dispute resolution cases. 

Mr. Warren became a solo practitioner in 2003, building his private law firm as a general practitioner in addition to handling referral cases from other law firms in the State of Maryland and, recently, in North Carolina. 

Outside of the office, Mr. Warren enjoys playing tennis, cooking, spending time with his wife Julie and family in Harford County, Maryland. 

For Hearing Loss Claims, the Last Injurious Exposure Rule does not Apply to Insurers

For Hearing Loss Claims, the Last Injurious Exposure Rule does not Apply to Insurers

Pennsylvania Manufacturers Association v. William Cree, et. al.

Claimant William Cree filed a claim with the Workers’ Compensation Commission for binaural hearing loss with a date of disablement of August 31, 2018, noting Prince George’s County as the Employer. 

Prince George’s County impleaded Cree’s prior employers, The Town of Riverdale and the City of Laurel, which they claimed also contributed to Claimant’s hearing loss.  The City of Laurel impleaded Pennsylvania Manufacturers Association (“PMA”), which insured the City during the first half of Claimant’s employment with the City of Laurel.

The Workers’ Compensation Commission held a hearing to determine liability for Claimant’s hearing loss.  At that hearing, PMA argued that it would not be considered the last insurer chronologically of the City, and therefore should be relieved of any liability pursuant to the last injurious exposure rule.  Subsequently, the Commission issued an Order finding that the last injurious exposure rule did not apply to Claimant’s claim, and therefore also finding that all three of Claimant’s employers were liable for Claimant’s hearing loss, as was the insurer, PMA.

PMA initiated an on-the-record appeal in the Circuit Court for Prince George’s County.  The Circuit Court for Prince George’s County affirmed the Commission’s decision.  PMA then initiated an appeal to the Appellate Court of Maryland.  The Appellate Court of Maryland also affirmed the Commission’s decision.

In coming to their decision, The Appellate Court of Maryland looked at the history of the law, and the legislative intent for such laws.  They noted that while the last injurious exposure rule applies to employers and insurers for occupational diseases, it clearly does not apply to employers in hearing loss cases.  The question, then, was whether the last injurious exposure rule applies to insurers of employers in hearing loss cases.

PMA put forth two arguments at The Appellate Court of Maryland: (1) the statutes that deal with hearing loss (Labor and Employment §9-651 and §9-652) do not use the term “insurer” and therefore these provisions do not apply to insurers – only employers; and (2) the statute that deals with the last injurious exposure rule (Labor and Employment §9-502) has two separate paragraphs -  one applying to employer, and one applying to insurers - therefore the last injurious exposure rule applies independently to insurers, even when it does not apply to the employers that they insure. 

The Appellate Court of Maryland was not convinced by either of these arguments.  Instead, noting that there was no indication in the available legislative history that the General Assembly believed that a claim for occupational hearing loss would be subject to the last injurious exposure rule.  Further, the last injurious exposure rule directly contradicts the method for determining liability for a claimant’s hearing loss, and accordingly to Yox v. Tru-Rol Co., 380 Md. 326 (2004), a general provision governing occupational diseases is not controlling when it is inconsistent with the approach that the General Assembly has specified for claims of occupational hearing loss.

- Ashley Bond, Associate

RSRM Welcomes Associate Audreina Blanding!

Audreina J. Blanding graduated summa cum laude from the University of Baltimore School of Law in 2023 and graduated from the University of North Carolina, Chapel Hill in 2016 with a B.A. in Economics.  While attending law school, Audreina clerked for the Office of the Maryland Attorney General, Court and Judicial Affairs Division, as well as served as the 2022-23 Linda Kennedy Economic Justice Fellow with the Homeless Persons Representation Project ("HPRP"). 

Ms. Blanding was also a competing member of the National Trial Competition Team and helped her team place 2nd at the 2022 Buffalo-Niagara Trial Competition.  During her final semester of law school, Audreina had the unique opportunity to prepare a comprehensive assessment of North Korea's human rights obligations on behalf of the United Nations - a paper for which she was awarded 1st Place in the 2023 Center for International and Comparative Law Essay Competition. 

Upon graduation, Ms. Blanding was inducted into the Heuisler Honor Society for graduating within the top 10% of her class.  Immediately following law school, Audreina briefly served as the judicial law clerk for the Honorable Shirley M. Watts of the Maryland Supreme Court.  Outside of the office, Ms. Blanding enjoys traveling, cooking, and trying new restaurants.