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Judge argues ruling puts form over substance

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The chief judge of the Indiana Court of Appeals dissented from his colleagues in an insurance dispute because he believes the decision leads to "an inequitable result."

Chief Judge John Baker wrote in his dissent that Judges Melissa May and Michael Barnes elevated form over substance when concluding that American Family Insurance wasn't entitled to a setoff to reduce jury verdicts by the amounts the insurer had previously paid as medical expense coverage for injuries Tamatha and Hannah Nealy suffered in a car accident. The Nealys won a default judgment of liability against the driver and the owner of the car that hit them; neither person had insurance, so American Family provided coverage under the Nealys' uninsured motorist and medical expense coverage.

The Nealys then sued American Family for the uninsured motorist coverage. The trial court granted American Family's motion for a setoff based on the amount of medical expenses it paid before trial.

In Tamatha M. Nealy, et al. v. American Family Mutual Insurance Co., No. 49A02-0812-CV-1096, the majority reversed the grant of the motion for setoff and remanded for the entry of judgment in the amount of the verdicts the jury originally returned. Judges May and Barnes ruled the trial court erred by basing the grant of the setoff on the advance payment statute, Indiana Code Section 34-44-2-3, because the payments the insurer made couldn't be characterized as "advance payments." American Family isn't the defendant's insurance company, as required by statute, and the statute doesn't apply when there is more than one defendant, wrote Judge May. There are three defendants in this action - the driver of the car that hit the Nealys, that car's owner, and American Family.

In addition, there's no language in the Nealys' policy to include setoffs for amounts paid under medical expense coverage to reduce the amount paid under the uninsured motorist coverage. The prior payments made by American Family were made under the medical expense provisions, not the uninsured motorist coverage, which does provide for a deduction of payments from the limits of liability. The majority also ruled the original jury verdict wouldn't give the Nealys a double recovery.

Chief Judge Baker believed the advance payment statute applies to this case. He also wrote that because there were multiple defendants and American Family was the plaintiffs' insurer, this decision "elevates form over substance to a degree that leads to an inequitable result." There were multiple defendants, but only American Family played any role in the litigation whatsoever, he wrote. Although American Family was the Nealys' insurer, it was litigating against them.

"I cannot believe that the legislature intended these facts to stand in the way of the application of the advance payment statute," he wrote. "Here, American Family has already paid over $10,000 for the Nealys' medical expenses; it is inequitable and unjust - and antithetical to the purpose of the advance payment statute - to ask the insurer to pay that amount a second time."

Chief Judge Baker also wrote the majority faulted American Family because it didn't say the "magic words" of "uninsured motorist coverage" when it paid the Nealys' medical expenses.

The chief judge did concur with the majority's resolution of the Nealys' additur argument, in which the majority affirmed the denial of their motion for additur.

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  1. What a fine article, thank you! I can testify firsthand and by detailed legal reports (at end of this note) as to the dire consequences of rejecting this truth from the fine article above: "The inclusion and expansion of this right [to jury] in Indiana’s Constitution is a clear reflection of our state’s intention to emphasize the importance of every Hoosier’s right to make their case in front of a jury of their peers." Over $20? Every Hoosier? Well then how about when your very vocation is on the line? How about instead of a jury of peers, one faces a bevy of political appointees, mini-czars, who care less about due process of the law than the real czars did? Instead of trial by jury, trial by ideological ordeal run by Orwellian agents? Well that is built into more than a few administrative law committees of the Ind S.Ct., and it is now being weaponized, as is revealed in articles posted at this ezine, to root out post moderns heresies like refusal to stand and pledge allegiance to all things politically correct. My career was burned at the stake for not so saluting, but I think I was just one of the early logs. Due, at least in part, to the removal of the jury from bar admission and bar discipline cases, many more fires will soon be lit. Perhaps one awaits you, dear heretic? Oh, at that Ind. article 12 plank about a remedy at law for every damage done ... ah, well, the founders evidently meant only for those damages done not by the government itself, rabid statists that they were. (Yes, that was sarcasm.) My written reports available here: Denied petition for cert (this time around): http://tinyurl.com/zdmawmw Denied petition for cert (from the 2009 denial and five year banishment): http://tinyurl.com/zcypybh Related, not written by me: Amicus brief: http://tinyurl.com/hvh7qgp

  2. Justice has finally been served. So glad that Dr. Ley can finally sleep peacefully at night knowing the truth has finally come to the surface.

  3. While this right is guaranteed by our Constitution, it has in recent years been hampered by insurance companies, i.e.; the practice of the plaintiff's own insurance company intervening in an action and filing a lien against any proceeds paid to their insured. In essence, causing an additional financial hurdle for a plaintiff to overcome at trial in terms of overall award. In a very real sense an injured party in exercise of their right to trial by jury may be the only party in a cause that would end up with zero compensation.

  4. Why in the world would someone need a person to correct a transcript when a realtime court reporter could provide them with a transcript (rough draft) immediately?

  5. This article proved very enlightening. Right ahead of sitting the LSAT for the first time, I felt a sense of relief that a score of 141 was admitted to an Indiana Law School and did well under unique circumstances. While my GPA is currently 3.91 I fear standardized testing and hope that I too will get a good enough grade for acceptance here at home. Thanks so much for this informative post.

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