Many auto accident cases come to an end with the acceptance of a case evaluation settlement. But could saying yes to a case evaluation award cut your client off from other insurance benefits? An unpublished Michigan Court of Appeals case says yes.
As a trial attorney, you have the sometimes difficult job of advising your clients about settlement offers and case evaluation awards. Often, these settlements involve a careful dance between parties, court rules, and conflicting interests. But if you aren’t careful, accepting one case settlement award could cut your client off from other benefits, they would otherwise be entitled to.
In Bakri v Sentinel Insurance Company, the Michigan Court of Appeals considered how a case evaluation acceptance interacted with an underinsured motorist policy. Ali Bakri was seriously injured in an auto accident on March 8, 2012. Bakri sued the other motorist, Youssef Ftouni, and his insurance company, Sentinel Insurance Company, based on his underinsured motorist policy (UIM). The matter went to case evaluation and the panel recommended two awards: $100,000 to plaintiff from Ftouni (his insurance policy limit), and $100,000 to plaintiff from Sentinel.
Bakri and Ftouni accepted the first award, but neither Bakri nor Sentinel accepted the second award. Instead, Sentinel claimed that its UIM policy precluded coverage of the claim because it was settled without the company’s consent.
The court interpreted the underinsured motorist policy exceptions, which said:
2. With respect to damages resulting from an “accident” with . . . [an] “uninsured motor vehicle,” we will pay under this coverage only if Paragraph a. or b. below applies:
* * *
b. A tentative settlement has been made between an “insured” and the insurer of . . . [an] “uninsured motor vehicle” and we:
(1) Have been given prompt written notice of such tentative settlement; and
(2) Advance payment to the “insured” in an amount equal to the tentative settlement within 30 days after receipt of notification.
* * *
This insurance does not apply to any of the following:
1. Any claim settled without our consent. However, this exclusion does not apply to a settlement made with the insurer of . . . [an] “uninsured motor vehicle,” in accordance with the procedures described in Paragraph A.2.b
The court identified two requirements under the policy:
- That Sentinel needed to receive written notice of any tentative settlement; and
- That Sentinel advanced payment of the tentative settlement to the insured.
Bakri’s trial attorney argued that the written notice of results provided by the Case Evaluation Mediation Tribunal satisfied the contract’s notice requirement. Counsel also sent a letter to Sentinel a few days later.
The court said that these notices could not be construed as a tentative settlement. The court quoted the Merriam-Webster’s Collegiate Dictionary definition of the term “tentative” as “not fully worked out or developed. Since case evaluation acceptance serves as a final adjudication and is binding on the parties in the same way as a consent judgment or settlement agreement, it can’t be considered tentative.
Further, there was no question that Sentinel did not advance Bakri the settlement award. So even if the notice requirement had been met, the UIM policy’s exclusion would still kick in.
What Bakri Means for Trial Attorneys
Bakri can put trial attorneys in a bind. The time limits on accepting case evaluation awards are already short. Now, under Bakri, it appears plaintiff’s lawyers will need to engage in negotiations with the defendants before accepting or rejecting a case evaluation summary. Particularly, they will need to provide written notice to the insurance defendant that it may accept the case evaluation summary before actually filing a formal acceptance. Even then, it is not clear whether a plaintiff has any recourse if an insurance company unreasonably refuses to pay the advance required by the policy. Taken together, the requirements of this UIM policy appear to give the insurance company complete control over the plaintiff’s ability to settle his or her case.
Trial attorneys should remember that the MCR 2.403(H)(3)(b) allows for conditional acceptance of case evaluation awards. It says:
“(b) A party who accepts all of the awards may specifically indicate that he or she intends the acceptance to be effective only if (i) all opposing parties accept, and/or (ii) the opposing parties accept as to specified co-parties.
If such a limitation is not included in the acceptance, an accepting party is deemed to have agreed to entry of judgment, or dismissal as provided in subrule (M)(1), as to that party and those of the opposing parties who accept, with the action to continue between the accepting party and those opposing parties who reject.”
This tool may be a good way to combat the insurance company’s UIM policy exclusions. By making your acceptance of the at-fault driver’s award, you could argue the acceptance is tentative and satisfies the policy’s requirements.
For Bakri, though, accepting the case evaluation award against Sentinel may not have covered his damages. If that is the case trial attorneys will need to take the extra steps to protect their clients’ claims before accepting a case evaluation award. Otherwise they could find their benefits cut short.
David Christensen is an auto accident attorney at Christensen Law in Southfield, Michigan. He has been fighting auto insurance companies for over 25 years. If your client has a difficult no-fault or third party claim, contact Christensen Law today for a referral.