PIP insurer refuses to pay benefits for one year; not liable for insured's attorney fees
Kirtine Karmol sued her health insurer, Paramount Care, Inc., and Encompass Property and Casualty, after they disputed for a year over who should pay her son's motor vehicle accident medical claims. The medical added up to more than $100,000.00 in caring for fractures of the hip, femur and ankle, but both the ERISA health insurer and the no fault insurer maintained that the other was "first in priority" to pay the medical. When their 'debate' neared the one-year statute of limitations, Karmol sued them to decide the dispute. At the same time, Paramount sued the no fault insurer in Ohio seeking resolution. Ultimately, the no fault insurer agreed it was responsible for benefits, and then asked the Circuit Court judge to dismiss Karmol's suit after it re-paid the health insurer's costs.
Karmol maintained that the no fault insurer "unreasonably delayed" in paying benefits and that it therefore owed fees and costs to Karmol. The trial judge agreed and the insurer appealed. The Court of Appeals recognized that since the 1993 holding in Auto Club v. Frederick & Herrud that "an unambiguous coordination of benefits clause in an ERISA plan trumpts similar language in a no fault policy." Thus, Karmol's auto insurer was a year late in recognizing a duty that has been clearly established for 18 years. Nevertheless, the Court of Appeals overturned the award of fees and costs to Karmol. It apparently made this decision because Karmol's attorneys had not entered into evidence any billing notices, overdue creditor claims or other evidence of harassment, lien claims, or assertion of liability against Karmol and her son. On this basis, the Court concluded that the Karmols did not establish exposure to "personal liability" sufficient to justify incurring attorneys fees.