I am tired of seeing all the attack ads on TV. I evaluate the race for Governor based upon something that the TV ads never talk about: the Governor’s job duties. Our Governor is responsible for appointing the Director of the Department of Insurance. While banking is controlled federally through the Federal Reserve, insurance is controlled by each state’s Department of Insurance. For an insurance company to sell insurance in a state, the company must be licensed with the Department of Insurance. Any policy an insurance company wants to sell must be approved by the Department of Insurance. In prior newsletters, we have talked about the erosion of coverage in the average person’s insurance policy. All of those eroded policies have been approved by the Department   of Insurance. Who the Governor will appoint as the Director of Ohio’s Department of Insurance is a big deal from where I sit, dealing with insurance on a daily basis. Insurance companies donate huge amounts of money to campaigns in order to have a say in choosing the Governor’s appointee. I would like to see the Governor choose a Director who cares about the citizens of Ohio as opposed to an appointee who is nothing but an insurance industry insider. 

Another important function of the Governor is to appoint a replacement for any state judgeship opening. This includes openings in Municipal Courts, Common Pleas Courts, Courts of Appeals, and the Ohio Supreme Court. These positions probably number in the thousands, and are filled solely by appointment of the Governor. Many judges get their start this way. In the past, governors assembled a commission to find and vet qualified candidates to fill the vacant judgeships. More and more often, however, governors simply hand out judgeships as political patronage; as a reward for supporting the governor’s campaign. My understanding is that, as Governor, Richard Cordray would go back to appointing judges based upon merit and ability, and not based upon how much they have done for the party.

It is interesting that both candidates for Governor have served as Attorney General in the State of Ohio. If the Attorney General’s Office was    a private law firm, it would be the largest law firm in the state, by far. The AG’s office is tasked with many duties and functions; one of which is protecting consumers. Under Richard Cordray, the Consumer Protection Bureau of the Ohio Attorney General’s Office was robust. Under Mike DeWine, it has been anemic.   

I found it interesting that as the Attorney General who is charged with overseeing the legal landscape of the State of Ohio, Mike DeWine recently stated in an interview that we will “make Ohio the best place in the Midwest to start and run a business” and that we will “limit regulation that kills job creation.” In essence, Mike DeWine has stated that it is his intent to protect Ohio businesses and not protect Ohio’s individual citizens. Second, the “regulations” that he wishes to limit have already been manipulated as much as possible in order to support big business. That was all accomplished over the last few decades under the guise of “tort reform” with the intent of turning Ohio into a Utopia for big business and causing big business to set up shop in Ohio in droves. The ultimate intent has not come to fruition. There is nothing further to do through regulations to make Ohio more big business friendly short of eliminating the right to sue big business in the State of Ohio. Interestingly, the State of North Carolina, which has enjoyed much economic success over the last few decades, has been expanding regulations that protect people at the expense of big business, including the insurance industry.

At the end of the day, I have to support Richard Cordray as the candidate for the next Governor of Ohio because I believe that he will appoint a Director of Insurance who will be more concerned with the rights of Ohio’s citizens and less concerned with the political pull to be pleasing to the insurance industry’s big business lobbyists.

I believe Cordray will appoint judges using a process to find good judicial candidates as opposed to simply passing out political patronage. Finally, from an ideological standpoint, I believe Cordray cares more about individuals than he does about big business. I am certainly not against business; our law firm is a business. Ultimately, though, I don’t believe that business should take precedence over individual rights. Business doesn’t bleed, humans do.

Our office recently tried a case in Judge Lanzinger’s court in the Summit County Court of Common Pleas. Judge Lanzinger is a relatively new judge and is running for re-election. I give her credit for taking a week out of her time as well as her staff’s time to try our case. She was concerned about the facts, she was concerned about what happened, she did her homework, and she put effort, time and thought into the process. These are all things you would expect a judge to do. Unfortunately, it doesn’t always happen that way. Some judges don’t put forth that energy. We support her in her re-election campaign and wish we had more judges that were as concerned about individuals as Judge Lanzinger.

The process to resolve a personal injury claim has only grown longer and more complicated and much of that has to do with subrogation and reimbursement.

Although the legal concepts of subrogation and reimbursement are not new, their application in the personal injury field is relatively new. Subrogation means “The substitution of one person in place of another with reference to a lawful claim.” Recently, health insurers and auto insurers have added subrogation rights into their contracts such that they have the right to stand in an injured person’s stead for a claim. For example, health insurers pay medical bills that are related to injuries a person received in a collision. Technically, the health insurer then has the right to bring a lawsuit or make a claim directly against the responsible party to be paid for the claim. In essence, they substitute themselves in place of the injured party in the legal claim. While their policy gives them this subrogation right, rarely do they use it. The reason is that they do not want to incur any expense for prosecuting the claim; they merely want to be reimbursed. So additionally, they have liberally sprinkled reimbursement rights in their contracts.

Reimbursement is exactly what it sounds like.  Insurers claim the right to be paid back from their insured, any monies that are recovered for things the health insurer paid. In a typical injury case where an injured party receives medical care from hospitals, doctors, etc. the bills are submitted to the health insurer who pays them, the health insurer then seeks reimbursement for those bills.  The injured party has the right to bring a claim against the responsible party.  So it now becomes the injured party’s job to go out and collect money on behalf of the health or auto insurer if they paid bills, for example, under the auto policy’s medical payment coverage.

At first blush that may sound reasonable. The problem is, as consumers, you have paid for these coverages and then the coverages are watered down.  In essence subscribers are punished for purchasing the coverage. I’ll discuss further how insureds are punished for buying insurance later in this letter.

Folks who have health insurance should be entitled to the coverage purchased. If someone falls down the steps at home and requires medical attention, health insurers would have to pay those bills.  No one would bring a legal claim because it was the individual’s fault that he or she fell down the steps.  The insurance company would just have to pay the bills. However if someone else may be responsible, the insurance company wants to be paid back. Do injured parties get a refund in premium dollars for coverage if monies are recovered?  No.

If a subscriber did not use health coverage in a particular month and asks the health insurer to be reimbursed for the premiums paid that month; will they comply? Certainly not!  Why should insurers be reimbursed for the very activity they are paid to do?  

The insurance industry will tell you that having these rights allows them to control costs and keep their premiums down. Over the last decade or so as the insurance industry invoked reimbursement and subrogation rights, premiums have not gone down, they haven’t even held steady; they’ve only gone up.  I would argue that subrogation and reimbursement rights have done nothing to curb the cost of insurance. But let’s say the insurance industry is correct that these rights help them control costs. Consider the following scenario: A routine rear-end auto collision occurs where someone is transported by an ambulance to the hospital for some bumps and bruises and then follows up with a primary care doctor, receives some physical therapy and is then released from medical care. A reasonable person might understand why insurance companies make reimbursement claims. The medical bills total $10,000.00, the health insurance through negotiated rates with the medical providers, pays $6,000.00 to cover the $10,000.00 in bills and the company wants their $6,000.00 back.

Under current law they can be entitled to the $6,000 back. If the case settles and the company is not paid back, the repercussions could be that the health insurer bring suit against their insured to collect their money or suspend or cancel coverage.

Consider a more complex case: one in which there is an argument about who’s at fault in the collision or possibly an argument about the medical treatment received whether it can be related to the collision or to some pre-existing medical condition.

Think about the following scene: two people collide in an intersection, there are no witnesses and both claim they had the green light and the other person had the red light. According to the reimbursement/subrogation claims explained earlier, the health insurance company will want all of their money back from their insured. But the other driver’s auto insurer will not pay because they argue it is not their insured’s fault. That fact won’t stop the health insurer from seeking reimbursement.

Another potential scenario: consider that a person has knee surgery a week before a collision and that follow up care and physical therapy are already scheduled except the collision aggravates the knee and prolongs recovery. The health insurance company will claim every dollar spent for post-collision treatment even though treatment was scheduled as a result of the knee surgery. How much should they get? They want it all. Their subrogation and reimbursement rights allow them to get the first dollar and every dollar until their claim is paid. Another scenario to help sway you: a collision victim incurs serious injuries resulting in $100,000.00 in medical bills but the person who caused the accident only has $50,000.00 in coverage. The injured victim could not work for six months and ends up with plates and screws to repair a broken bone and has some permanent injuries. The health insurance company will claim the entire $50,000.00 that the victim is entitled to collect from the responsible person. The injured person would get nothing for pain, suffering, lost wages or permanent injury.

Changing the facts a little: the victim has a $100,000.00 auto policy that includes under insured motorists coverage and the person who causes the collision has a $50,000.00 policy. The victims sustain injuries costing $100,000.00 in medical bills.  The responsible auto insurance company will pay their $50,000.00, and the victim’s insurance coverage would cover another $50,000.00 available from their own auto policy (this brings up another discussion about why only $50,000.00 is available — that would be because in Ohio consumers who purchased $100,000.00 are forced to set off any amount of coverage that the responsible person has. Many states do not allow that set-off… if consumers pay for $100,000 in coverage they get $100,000 in coverage in addition to whatever else the other party has.) Now the victim’s health insurance company wants the $50,000.00 collected from the responsible person and they want the $50,000.00 in under insured motorist coverage. Again, the injured person gets nothing.

Stop and think about that situation, both health coverage and under insured motorist coverage were purchased in good faith. The victim will derive no benefit from either of those purchases because one pays the other. That is the ultimate rip off in insurance coverage, the consumer pays for both coverages and one is used to pay off the other.

Some states have come along and outlawed this subrogation and reimbursement nonsense. The reality is at the end of the day, we see no benefits to the insurance companies over this subrogation and reimbursement process. The insurance companies have platoons of employees that spend an inordinate amount of time tracking who owes whom money. Today State Farm may pay to reimburse Allstate and tomorrow Allstate will pay to reimburse State Farm. At the end of the day they’re both spending a lot of money figuring how much each one should be paying each other. They worry about that a lot. At the conclusion of every case one of the last hurdles we go through with insurance companies is verifying with each individual insurance company the exact amount of money each claimed so that each one can make sure the other got paid. They spend more energy, time and concern making sure that they pay each other than they do paying the injured human person whose life was affected by the carelessness of one of their insureds.

The last state that I know of to legislate out this subrogation and reimbursement nonsense was North Carolina and I applaud them for doing so. 

Consumers should receive the coverage for which they pay. People who have the wherewithal and the foresight to pay for health coverage, automobile coverage or medical payment coverage or any coverages chosen ought to get the benefit of those.

The processes that Ohio insurance companies have created are ultimately enforced by the Ohio Supreme Court (made up of 7 statewide elected Justices) and are drafted by the Ohio Legislation made up of 99 state representatives and 33 senators. The governor signs legislation into law. As we head into an election season consider the amount of money spent on these elected positions for the state senate, state legislature, governorship and Ohio Supreme Court then think about where the millions and millions of dollars originate.  Special interests (like the insurance industry) are to thank.

We have a client, we will call her Amanda. She just graduated from college and was looking for a job. She went on vacation with her boyfriend to Virginia Beach. On the way to Virginia Beach her boyfriend who was driving ran into the back of another vehicle. In the collision Amanda broke her leg. Amanda’s boyfriend was insured by State Farm and the car he was driving was insured by State Farm. Amanda had been staying with an aunt and uncle while at college and was on their State Farm policy. She had a car of her own which was also insured by State Farm. Amanda had also an apartment near school which was insured by State Farm. As Amanda’s medical bills began to roll in, she sought help from State Farm. State Farm told her that the coverage her boyfriend and the car he was driving had lapsed a few hours before the collision. Amanda sought our help. We told State Farm if their position was that the driver and his car were not covered at the time of the collision because it lapsed a few hours earlier then surely he was uninsured and Amanda should be covered under the uninsured provisions of the policy of which she was on. State Farm responded by telling us Amanda was not covered at that time for uninsured motorist coverage because she was not a named insured on the policy. She was only a named driver on the policy. The difference being that a named insured was provided full coverage. A named driver had to be a “resident relative”. A resident relative was defined as a blood relation that resided in the same house. Since Amanda had an apartment near school, she technically did not live in the same house as her aunt and uncle. Therefore, she was not covered. When we pressed State Farm on whose idea it was to name her as a “driver” as opposed to an “insured”, State Farm clammed up. We attempt to get this information from the State Farm agent who sold the policy and she refused to respond. The next thing we knew Amanda had been sued in Federal court by State Farm.  The basis of the lawsuit was State Farm wanted the Federal court to declare that State Farm had no obligation to provide her any coverage. In that Federal court lawsuit, we are able to ascertain that it was the agent’s decision to name Amanda as a mere “driver” as opposed to an “insured”. Had she been named as an “insured” there would’ve been full coverage and no questions. The cost difference between naming her as a “driver”  as opposed to an “insured?” None. Zero. Not a penny. So why have two classes of people covered under a policy? Those as a first class insured, that get full coverage and those who are only a driver and get some second tier of coverage? Seems to me it creates the opportunity for State Farm to deny coverage.  I believe their desire to sue in Federal court was an effort to gain some backing for their position. This, however, failed and at the end of the day State Farm had to pay Amanda for her injuries under the uninsured motorist coverage of the policy under which she was covered.

I would suggest, especially if you’re insured by State Farm, that you demand that State Farm list all people in your family as “insureds” and not allow State Farm to spin them off as a “driver” that would get some second tier of coverage. Frankly, I think the agent involved in Amanda’s case really didn’t understand the difference. I believe many agents do not have the full knowledge of the workings of the policy they sell. Many agents are just doing what they’re told by the company who writes the policy.