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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. Hysteria? Really Ben? Tell the young lady reported on in the link below that worrying about the sexualizing of our children is mere hysteria. Such thinking is common in the Royal Order of Jesters and other running sex vacays in Thailand or Brazil ... like Indy's Jared Fogle. Those tempted to call such concerns mere histronics need to think on this: http://www.msn.com/en-us/news/us/a-12-year-old-girl-live-streamed-her-suicide-it-took-two-weeks-for-facebook-to-take-the-video-down/ar-AAlT8ka?li=AA4ZnC&ocid=spartanntp

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  3. This is happening so much. Even in 2016.2017. I hope the father sue for civil rights violation. I hope he sue as more are doing and even without a lawyer as pro-se, he got a good one here. God bless him.

  4. JLAP and other courtiers ... Those running court systems, have most substance abuse issues. Probably self medicating to cover conscience issues arising out of acts furthering govt corruption

  5. I whole-heartedly agree with Doug Church's comment, above. Indiana lawyers were especially fortunate to benefit from Tom Pyrz' leadership and foresight at a time when there has been unprecedented change in the legal profession. Consider how dramatically computer technology and its role in the practice of law have changed over the last 25 years. The impact of the great recession of 2008 dramatically changed the composition and structure of law firms across the country. Economic pressures altered what had long been a routine, robust annual recruitment process for law students and recent law school graduates. That has, in turn, impacted law school enrollment across the country, placing upward pressure on law school tuition. The internet continues to drive significant changes in the provision of legal services in both public and private sectors. The ISBA has worked to make quality legal representation accessible and affordable for all who need it and to raise general public understanding of Indiana laws and procedures. How difficult it would have been to tackle each of these issues without Tom's leadership. Tom has set the tone for positive change at the ISBA to meet the evolving practice needs of lawyers of all backgrounds and ages. He has led the organization with vision, patience, flexibility, commitment, thoughtfulness & even humor. He will, indeed, be a tough act to follow. Thank you, Tom, for all you've done and all the energy you've invested in making the ISBA an excellent, progressive, highly responsive, all-inclusive, respectful & respected professional association during his tenure there.

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