2013 Edition Vol.

2010 Edition

A Guide to General
West Virginia
Litigation Principles
TABLE OF CONTENTS
I.

II.

West Virginia Tort Law 7

A. Basic Elements

B. Comparative Negligence

C. Agency

D. Independent Contractor Defense

Property Damage Claims

A. Personal Property 9
B. Realty 9
C. Adjusting Property Damage Claims 9
III. Damages

10

A. Overview of Damages10
B. Non-Economic Damages 11
C. Future Economic Damages 12
D. Wrongful Death Damages 13
E. Punitive Damages 13
F. Fee Shifting Statutes 17
IV.

Governmental Tort Claims & Insurance Reform Act 17

A. Immunities 18
B. Special Duty Doctrine20
C. Insurance 21
D. Judgments 21
E. Defense of Employees 21
F. Indemnification of Employees22
G. Procedure22

V.

Qualified Immunity 23

VI.

Deliberate Intent 24

VII. Joint & Several Liability29

VIII. Collateral Sources30
2

IX.

Procedural Strategies 31
A. Offers of Judgment 31
B. Third Party Practice

32

X.

Uninsured/Underinsured Motorist 32

XI.

Unfair Trade Practices 34

A. Statutory Law 34
B. Regulatory Law37

XII. Insurance Related Case Law 45

XIII. Coverage Principles64
XIV. Handling Indemnity Issues.

66

A. Implied Indemnity

66

B. Rules for Interpreting Contractual Indemnity Language

67

C. Fault Based Indemnity 67

D. No-Fault Contractual Indemnity 68
E. Liability v. Indemnity 69
F. Enforcing the Right of Indemnity 69
G. What to Do if a Tender Has Been Submitted to You or Your Insured 70
H. Insured Additional Insured and Certificates of Insurance 70
XV. Medicare Secondary Payer Act71
XVI. Employment Law for Public Entities
A. Malice in Employment Termination

72
72

B. Whistleblower 73
C. 42 U.S.C. 1983 74
D. Americans with Disabilities Act 77
XVII. Alternative Dispute Resolution

77

A. Arbitration77
B. Mediation 79
XVIII. Privacy and Social Media in the Workplace 80
XIX. The West Virginia Judiciary 82
A. The Supreme Court of Appeals of West Virginia 82
B. Circuit Courts 82
C. Other Courts

83

*This handbook is not intended to be legal advice. You should consult with an
attorney before taking any action that could result in legal liability.
3

About Our Firm

Bailey & Wyant, PLLC was formed in 2000. Since its
inception, the firm has grown from only a handful of
attorneys to its current mark of thirty. We have offices
in both Charleston and Wheeling, West Virginia, and
provide representation to clients throughout West Virginia, Ohio, Kentucky, and Pennsylvania.

Our philosophy is simple. We provide aggressive and

effective legal representation, while being ever mindful
of each client's individual needs, goals, and economic
interests. No matter how complex or novel, our focus
in a case is always to reach the right resolution for our
client.

Bailey & Wyants litigation department focuses its efforts in representing individuals, businesses and governmental entities in a variety of claims, including
general civil litigation and insurance defense, governmental liability, labor and
employment law, product liability and personal injury, medical and other professional liability, construction and design defect, administrative and regulatory
law, environmental law and natural resources, insurance coverage and extracontractual matters, and corporate litigation.

In addition to providing litigation-related services, Bailey & Wyant also serves

as general counsel to several state and county agencies and commissions.

The lawyers at Bailey & Wyant frequently conduct instructional seminars and
conferences to lawyers and non-lawyers on a variety of issues, including employment-related matters, insurance claims handling and extra-contractual issues, and public contracts and procurement. Our attorneys are also heavily
committed to participating in philanthropic endeavors and community projects.

www.baileywyant.com
Wheeling Oce
1219 Chapline Street
Wheeling, WV 26003
T: 304.233.3100
F: 304.233.0201

Charleston Oce
500 Virginia Street East, Suite 600
Charleston, WV 25301
T: 304.345.4222
F: 304.343.3133
6

I. WEST VIRGINIA TORT LAW

A.

The Basic Elements

West Virginia employs a traditional English common-law tort system, with most of the
well-recognized rules and principles intact. Negligence is the failure to exercise ordinary
care, and ordinary care is that kind and degree of care or caution which an ordinary
prudent and careful person would exercise under the same or similar circumstances.
Negligence is doing something a reasonably prudent person would not do in the same or
similar circumstances, or the failing or refusing to do something a reasonably prudent
persons would have done in the same, or similar circumstance. A negligence claim
requires a claimant to prove by a preponderance of the evidence that a breach of duty
occurred which proximately caused injury to him or her. Negligence cannot be presumed;
it must be proven.
Contributory negligence means negligence of the plaintiff, which together with negligence
of the defendant, proximately caused the accident. Where contributory negligence is
charged by a party, it must be proven by a preponderance of the evidence by the party
asserting it.
Assumption of risk means that the plaintiff, knowing full well the hazards involved, failed
to take precautions to protect himself from those known or reasonably to be expected
hazards.
The proximate cause of an event is the negligent act contributing to the accident, without
which the accident would not have occurred. The proximate cause of an event is that
cause which in actual sequence, unbroken by any independent cause, produces an event,
and without which, the event would not have occurred.
B.

Comparative Negligence

West Virginia follows a version of comparative negligence, the modified comparative fault
50% rule system. A plaintiff is barred from recovery if his or her negligence equals or
exceeds 50% of the total negligence of all parties to the accident, which total negligence
equals 100%. However, if Plaintiff is 49% or less at fault for the accident, then they may
be eligible to recover damages. A plaintiffs recovery is offset by the percentage of
negligence attributable to him or her.
For example, if a jury determines that a plaintiffs total damages are
$100,000, and further finds that the plaintiff was 20% at fault, then
the plaintiff would be entitled to recover only 80%, or $80,000.
In Bradley v. Appalachian Power Co, 163 W.Va. 332, 341-42, 256 S.E.2d 879, 885
(1979), the Supreme Court of Appeals in discussing contributory and comparative
negligence noted:
We do not accept the major premise of pure
comparative negligence that a party should
recover his damages regardless of his fault, so
long as his fault is not 100 percent. Without
embarking on an extended philosophical
discussion of the nature and purpose of our legal
system, we do state that in the field of tort law
we are not willing to abandon the concept that
where a party substantially contributes to his
own damages, he should be permitted to recover

for any part of them. We do recognize that the

present rule that prohibits recovery to the
plaintiff if he is at fault in the slightest degree is
manifestly unfair, and in effect rewards the
substantially negligent defendant by permitting
him to escape any responsibility for his
negligence.
Our present judicial rule of contributory
negligence is therefore modified to provide that
a party is not barred from recovering in a tort
action so long as his negligence or fault does not
equal or exceed the combined negligence or fault
of the other parties involved in the accident.
Under Bradley, it is not initially necessary for the jury to make a comparison of each
individual defendants negligence. The first determination is whether the plaintiffs
percentage of contributory negligence bars recovery. On this issue, the jury is instructed
to determine if the defendants are liable to the plaintiff. Then the percentage, or degree
of the plaintiffs contributory negligence is compared to that of all of the other parties
involved in the accident. King v. Kayak Mfg. Co., 182 W.Va. 276, 280, 279, 387 S.E.2d
511, 515 (1989). In Adkins v. Whitten, 171 W.Va. 106, 297 S.E.2d 881 (1982), the
Supreme Court of Appeals held that a trial court has a duty to instruct the jury as to the
effect of the doctrine of comparative negligence when requested. (Quoting Sitzes v.
Anchor Motor Freight, Inc., 169 W.Va. 698, 713, 289 S.E.2d 679, 688 (1882)).
C.

Agency

An agent is one who acts on behalf of another and subject to his or her control. With
respect to an employee/employer relationship, an employer is liable for all damages
proximately caused by the negligence of his agent employee who is acting within the
scope of his employment. An employee is acting within the course of his employment
when he is engaged in doing, for his employer, either the act directed by the employer or
any act which can fairly and reasonably be deemed to be a natural, direct and logical
result of the act directed by the employer. If in doing such an act the employee acts
negligently, that is negligence within the course of the employment.
In order to recover against a tortfeasors employer, the plaintiff has the burden of
proving by preponderance of the evidence that the tortfeasor was the employee of the
employer, that the employee tortfeasor was negligent while acting within the scope of his
employment, and that this negligence proximately caused damage to the plaintiff.
Under West Virginia law, a corporation acts by and through its officers, agent, and
employees. If an officer, agent or employee of a defendant corporation is found negligent
in the performance of his or her duties, then any such negligence is attributable to the
corporation and considered negligence on the part of the corporation, including the
failure to comply with automobile and road safety laws.
D.

Independent Contractor Defense

If a tortfeasor was acting as an independent contractor, then an employer has no

responsibility for the tortfeasor's acts. Whether or not a tortfeasor is an independent
contractor or agent depends on whether the employer controlled, or had the right to
control, the work of the tortfeasor. Control in this sense means the right to determine
where and in what manner the work would be done. It does not matter that the employer
never actually exercised control over the tortfeasor, as long as the employer reserved to
itself the right to do so.

II.

PROPERTY DAMAGE CLAIMS

A.

Personal Property

Generally, the proper measure of damages for loss or destruction of personal property,
other than that which has a peculiar value to its owner, such as an heirloom or a
particular portrait, is the fair market value of the property at time of its loss or
destruction.
The proper measure of damages for injury to personal property is the difference between
its fair market value immediately before the damage and its fair market value
immediately after the damage, plus necessary reasonable expenses incurred by the
owner in connection with the damage. However, when damaged personal property can be
restored to is previous condition, the measure of damages should be the amount required
to restore such property to its previous condition. Thus, when personal property is
injured, the owner may recover costs of repairing it, plus his expenses stemming from
the injury, including loss of use during repair.
If the injury cannot be repaired or the cost of repair would exceed property's market
value, then the owner may recover its lost value, plus his expenses stemming from the
injury, including loss of use during time he has been deprived of his property. Testimony
regarding the value of articles of personal property to a plaintiff and of the price the
plaintiff paid for such personal property is inadmissible to show market value of such
personal property.
If the owner of a vehicle which is damaged and subsequently repaired can show
diminution in value based upon structural damage after repair, then recovery is permitted
for that diminution in addition to the cost of repair, but total shall not exceed market
value of vehicle before it was damaged. In order to recover for diminution in value, in
addition to costs of repairing a damaged vehicle, there must be actual proof that value is
diminished following repair, diminution in value must be due to structural damage, and
vehicle must have had significant value prior to accident.
B.

Realty

When realty is injured the owner may recover the cost of repairing it, plus his expenses
stemming from the injury, including loss of use during the repair period. If the injury
cannot be repaired or the cost of repair would exceed the property's market value, then
the owner may recover its lost value, plus his expenses stemming from the injury
including loss of use during the time he has been deprived of his property. Annoyance
and inconvenience can be considered as elements of proof in measuring damages for loss
of use of real property.
C.

Adjusting Property Damage Claims

In West Virginia, it is imperative that denials of first-party claims, particularly those

involving property damage, are effectuated with caution. When an insurer wrongfully
withholds or unreasonably delays payment of an insured's claim, the insurer is liable for
all foreseeable, consequential damages naturally flowing from the delay. When a
policyholder substantially prevails in a property damage suit against an insurer, the
policyholder is entitled to damages for net economic loss caused by the delay, as well as
an award for aggravation and inconvenience.

The question of whether an insured has substantially prevailed against his or her
insurance company on a property damage claim is determined by the status of
negotiations between the insured and the insurer prior to the institution of the law suit.
Where the insurance company has offered an amount materially below the damage
estimates submitted by the insured, and the jury awards the insured an amount
approximating the insured's damages, the insured has substantially prevailed.
In addition, an insured substantially prevails in a property damage action against his or
her insurer when the action is settled for an amount equal to or approximating the
amount claimed by the insured immediately prior to the commencement of the action, as
well as when the action is concluded by a jury verdict for such an amount. In either of
these situations the insured is entitled to recover reasonable attorney's fees from his or
her insurer, as long as the attorney's services were necessary to obtain payment of the
insurance proceeds.
When a policyholder substantially prevails on a first-party insurance claim against an
insurer and becomes entitled to a reasonable attorney's fee, the amount of the attorney's
fee is determined by the circuit judge and not by a jury. A reasonable contingent
attorney's fee is presumed to be one-third of the recovery, unless the face value of the
policy is extremely small or enormously largeunder $20,000.00 or over $1,000,000.00.
It is up to the circuit court to make an inquiry into what a reasonable fee might be.
Whatever the award, that amount is unliquidated and unsettled until the circuit court
issues its ruling. Only after the circuit court approves the policyholder's attorney's fee
does the amount become liquidated and established. As such, prejudgment interest is not
available.
A circuit court may shift a policyholder's attorney's reasonable litigation expenses to the
insurance carrier as well. However, in most cases, those litigation costs are not out-ofpocket expenditures because under a contingent fee agreement, the policyholder does
not become responsible for these costs until after the insurance carrier pays the verdict
or settlement. Accordingly, as with attorneys fees, a policyholder usually may not
recover prejudgment interest on litigation expenses incurred by his attorney.
III.

DAMAGES
A.

Overview of Damages

It is the purpose of the law to compensate a person who has sustained injuries through
the fault of another, as fully and as completely as it is possible in dollars and cents to
make compensation for such injuries. However, damages which are purely speculative
cannot be recovered. It is the uncertainty as to the fact of damages, and not as to the
amount of damages, that is to be considered. Where it is certain that the damages
resulted, uncertainty as to the amount does not justify the jury in refusing recovery.
If a jury believes from a preponderance of the evidence that a plaintiff is entitled to
recover a verdict, then it has a duty to take into consideration any or all of the following
items:
1.

Any and all bodily injuries sustained by the plaintiff and the extent
and duration of such bodily injuries;

2.

Any and all physical pain the plaintiff has suffered in the past;

10

3.

Any and all physical pain the plaintiff, with reasonable certainty, shall
suffer in the future, and the probable duration or permanency of
such pain;

4.

Any and all suffering or mental anguish the plaintiff has suffered in
the past;

5.

Any and all suffering or mental anguish the plaintiff, with reasonable
certainty, shall suffer in the future because of any such injuries, and
the probable duration or permanency of such suffering or mental
anguish;

6.

Any and all effects the bodily injuries, pain, inconvenience or

suffering have had in the past upon plaintiffs health and plaintiffs
ability to enjoy life, the extent of such losses of his health and ability
to enjoy life, and any and all losses of health and ability to enjoy life,
which with reasonable certainty plaintiff will suffer in the future
because of the effects of said injuries;

7.

The just, reasonable, and necessary doctor, hospital, and medical

expenses incurred by plaintiff as a result of his injuries;

8.

The reasonable and necessary doctor, hospital, and medical

expenses plaintiff shall with reasonable certainty incur in the future
as a result of his injuries;

9.

Any and all past losses of earnings or caning capacity which plaintiff
has lost in the past by reason of being unable to work as a result of
said injuries;

10.

Any and all loss of earnings or earning capacity and fringe benefits
which plaintiff shall with reasonable certainty lose in the future by
reason of being unable to work as a result of said injuries, and the
probable extent and duration of any such future loss of earnings or
earning capacity;

11.

The reasonable value of household services, if any, provided to or for

plaintiff by reason of plaintiffs injuries, and the reasonable value of
household services that with reasonable certainty shall be necessary
for plaintiff in the future and the probable extent and duration of any
such future household services or expenses; and

12.

In considering the duration or permanency of any such injuries, pain,

suffering, or losses, a jury may take into consideration the plaintiffs
probable life expectancy.

B.

Non-economic Damages

Compensation for pain, suffering, loss of enjoyment of life, and loss of consortium are
general items of damages. There is no rule or measure upon which these damages can
be based. The amount of compensation to be awarded for such injuries is left by law to
the sound discretion of the jury as to what is fair and just.

11

Loss of the enjoyment of life, or of the ability to enjoy life, refers to how the injury has
affected the plaintiffs ability to perform and enjoy the ordinary functions of life. The
degree of such an injury is measured by ascertaining how the injury has deprived the
plaintiff of his or her customary activities as a whole person. Accordingly, in assessing
damages for loss of the ability to enjoy life, a jury considers the customary activities of
the plaintiff prior to the incident giving rise to the claim, and how, if at all, the injuries he
or she suffered affects his or her ability to perform and enjoy these activities.
Consortium is defined generally as the society, companionship, comfort, guidance, kindly
offices and advice existing between a husband and a wife or between a parent and a
child. If a jury determines from the evidence that there has been an interference with the
consortium rights of a plaintiffs husband, wife or child, damages may be assessed
against the defendant.
In determining the damage suffered by a plaintiff, a jury may consider as an element of
damages any aggravation of any preexisting condition which proximately results from the
incident. Even if the jury believes that the plaintiff was afflicted with some condition at
the time of the injury from which he or she might have a predisposition, but was
otherwise in good health, and the injuries received in the collision developed or
aggravated this condition and predisposition, then the defendant is liable for the plaintiffs
condition or his or her aggravation.
The extent or seriousness of a permanent injury is measured by ascertaining how the
injury has deprived a plaintiff of his customary activities and has reduced the capacity of
the plaintiff to function as a whole person.
C.

Future Economic Damages

In determining the loss of earning capacity, it is unnecessary that the jury find that the
plaintiff would actually have worked at a particular job or have earned a certain sum of
money. All the plaintiff is required to prove is that he could have performed a particular
job or work but is unable to do so now, and will with reasonable certainty be unable to do
such work in the future.
The jury is to reduce the claim of plaintiff for future loss of earnings and future fringe
benefits, if any, to present dollar value. However, since there is no definite measure to
use to determine indefinite damages, such as pain, suffering, loss of enjoyment of life,
and loss of consortium, a jury is not to make a similar reduction for those general
damages.
In deliberating the present value of the future income and benefits of the plaintiff, the
jury should use that rate of interest which, in the jury's considered judgment, is
reasonable, just, and right under the circumstances, taking into consideration the
evidence presented, the jury's knowledge of the prevailing interest rates, and what rate
of interest could fairly be expected from safe investments that a person of ordinary
prudence, but without particular financial experience or skill, could earn in the area.
The fact that the actual cost of future medical care for plaintiff could not be stated to an
absolute certainty does not defeat his right to recover for such fixture medical expenses.
It is sufficient that the projected expenses were not speculative or conjectural, are
reasonably probable, and were indicated within an approximate range.

12

D.

Wrongful Death Damages

In awarding damages for wrongful death, it is the jurys duty to award, pursuant to West
Virginia Code 55- 7-6(c)(1), monetary damages for the following:
1.

The sorrow and mental anguish suffered by the decedent's family

members and his or her other beneficiaries;

2.

The loss of solace, which may include society, companionship,

comfort guidance, kindly offices and advice, which has been suffered
by the decedent's family members and other beneficiaries as a result
of his death;

3.

Compensation for the reasonably expected loss of (i) income of the

decedent, and (ii) services, protection, care and assistance provided
by the decedent;

4.

Expenses for the care, treatment and hospitalization of decedent

incident to the injury which resulted in his or her death; and

5.

Reasonable funeral expenses.

The reasonably expected loss of income is the total amount, properly discounted to
present value that a decedent would reasonably have been expected to earn had he or
she lived out a normal life span. It is not merely the amount of his or her future earnings
which his family and other beneficiaries might reasonably have expected to receive from
had he lived out a normal life span.
E.

Punitive Damages

A jury may award punitive damages against a defendant as punishment for willfulness,
wantonness, malice, gross negligence or other like aggravation of the wrong done to the
plaintiff. Punitive damages are something in addition to full compensation, given with a
view to the gravity of the offense, to punish the defendant and to make them an
example, so that others will be deterred from engaging in similar conduct.
The law awards compensatory damages when the unlawful act is done without intent to
do wrong or where there is no malice or where the offense is not oppressively or
recklessly committed, while punitive damages are awarded where the wrongful act is
done with a bad motive, or in a manner so wanton or reckless as to manifest a willful
disregard of the rights of others.
In awarding punitive damages, a jury may consider the following factors:
1.

The harm that is likely to occur from the defendant's conduct as well
as to the harm that actually has occurred. If defendant's actions
caused or would likely cause in a similar situation only slight harm,
the damages should be relatively small. If the harm is grievous, the
damages should be greater.

2.

Whether defendants conduct was reprehensible, and in doing so

should take into account how long defendant continued in his
actions, whether defendant was aware that its actions were causing
or were likely to cause harm, whether defendant attempted to
conceal or cover up his actions or the harm caused by such actions,
whether/how often defendant engaged in similar conduct in the past.

13

3.

Whether defendant profited from' his wrongful conduct, and if you

find defendant did profit from his conduct you may remove the profit
and your award should be in excess of the profit, so that the award
discourages future bad acts by defendant.

4.

As a matter of fundamental fairness, punitive damages should bear a

reasonable relationship to compensatory damages.

5.

In determining the amount of punitive damages, the financial

position of defendant is relevant.

It is worth noting that it is well settled in West Virginia that it is not against public policy
for an insurance contract to cover punitive damages. Hensley v. Erie Ins. Co., 283
S.E.2d 227 (1981). Barring a conspicuous exclusion, courts in West Virginia will find
coverage for such awards.
In addition, in practice, it is not uncommon for trial courts in West Virginia to backdoor
punitive damage awards. Basically, judges will hold in abeyance any ruling on punitive
damages issues until after evidence is presented at trial. In doing so, they let in every
piece of incriminating evidence. After the evidence is presented, they will dismiss the
punitive damages claim. The result is an inflated compensatory damages award by the
jury. By allowing backdoor punitive damages, the judge avoids being overruled by the
Supreme Court of Appeals, and the jury gets an opportunity to punish the defendant.
A plaintiff is prohibited from seeking punitive damages from a government
agency in any action. W. Va. Code 55-17-4(c). Government agency includes a
constitutional officer or public official named as a defendant or respondent in his or her
official capacity, or a department, division, bureau, board, commission or other agency or
instrumentality within the executive branch of state government that has the capacity to
sue or be sued. W. Va. Code 55-17-2(2). However, we have seen compelling
arguments to the contrary under a state constitutional tort theory of liability.
In any civil action involving a political subdivision or any of its employees as a party
defendant, an award of punitive or exemplary damages against such political
subdivision is prohibited. W. Va. Code 29-12A-7(a).
The seminal punitive damages cases in West Virginia are as follows:
Garnes v. Fleming Landfill, Inc., 413 S.E.2d 897 (1991)
In this matter, the Supreme Court of Appeals exhaustively set forth the law in West
Virginia as it pertains to awards of punitive damages:

Allowing a jury to return punitive damages without finding compensatory

damages is overruled. Punitive damages must bear a reasonable relationship to
the potential of harm caused by the defendant's actions.

Under our system for an award and review of punitive damages awards, there
must be: (1) a reasonable constraint on jury discretion; (2) a meaningful and
adequate review by the trial court using well-established principles; and (3) a
meaningful and adequate appellate review, which may occur when an
application is made for an appeal.

When the trial court instructs the jury on punitive damages, the court should,
at a minimum, carefully explain the factors to be considered in awarding
punitive damages. These factors are as follows:

14

(1)

Punitive damages should bear a reasonable relationship to the harm that

is likely to occur from the defendant's conduct as well as to the harm that
actually has occurred. If the defendant's actions caused or would likely
cause in a similar situation only slight harm, the damages should be
relatively small. If the harm is grievous, the damages should be greater.

(2)

The jury may consider (although the court need not specifically instruct on
each element if doing so would be unfairly prejudicial to the defendant),
the reprehensibility of the defendant's conduct. The jury should take into
account how long the defendant continued in his actions, whether he was
aware his actions were causing or were likely to cause harm, whether he
attempted to conceal or cover up his actions or the harm caused by them,
whether/how often the defendant engaged in similar conduct in the past,
and whether the defendant made reasonable efforts to make amends by
offering a fair and prompt settlement for the actual harm caused once his
liability became clear to him.

(3)

If the defendant profited from his wrongful conduct, the punitive damages
should remove the profit and should be in excess of the profit, so that the
award discourages future bad acts by the defendant.

(4)

As a matter of fundamental fairness, punitive damages should bear a

reasonable relationship to compensatory damages.

(5)

The financial position of the defendant is relevant.

When the trial court reviews an award of punitive damages, the court should,
at a minimum, consider the factors given to the jury as well as the following
additional factors:

The costs of the litigation;

Any criminal sanctions imposed on the defendant for his conduct;
Any other civil actions against the same defendant, based on the
same conduct; and

The appropriateness of punitive damages to encourage fair and

reasonable settlements when a clear wrong has been committed. A
factor that may justify punitive damages is the cost of litigation to
the plaintiff. Because not all relevant information is available to the
jury, it is likely that in some cases the jury will make an award that
is reasonable on the facts as the jury know them, but that will
require downward adjustment by the trial court through remittitur
because of factors that would be prejudicial to the defendant if
admitted at trial...

Upon petition, this Court will review all punitive damages awards. In our
review of the petition, we will consider the same factors that we require the
jury and trial judge to consider, and all petitions must address each and every
factor set forth in Syllabus Points 3 and 4 of this case with particularity,
summarizing the evidence presented to the jury on the subject or to the trial
court at the post-judgment review stage. Assignments of error related to a
factor not specifically addressed in the petition will be deemed waived as a
matter of state law.

15

TXO Production Corp. v. Alliance Resources Corp., 419 S.E.2d 870 (W.Va. 1992)
In this case, the Supreme Court of Appeals offered advice as to a reasonable punitive
damages award: The outer limit of the ratio of punitive damages to compensatory
damages in cases in which the defendant has acted with extreme negligence or wanton
disregard but with no actual intention to cause harm and in which compensatory
damages are neither negligible nor very large is roughly 5 to 1. However, when the
defendant has acted with actual evil intention, much higher ratios are not per se
unconstitutional. Ironically, notwithstanding its suggested ratio, the Court upheld and
found reasonable the verdict against TXO for $19,000 in compensatory damages and
$10,000,000 in punitive damages for TXOs acts of slander and libel. The Court noted:
[T]he jury may reasonably have determined that TXO set out on a malicious and
fraudulent course to win back, either in whole or in part, the lucrative stream of royalties
that it had ceded to Alliance. The punitive award is certainly large, but in light of the
millions of dollars potentially at stake, TXO's bad faith, the fact that TXO's scheme was
part of a larger pattern of fraud, trickery, and deceit, and TXO's wealth, the award cannot
be said to be beyond the power of the State to allow.
State Farm v. Campbell, 538 U.S. 408 (2003)
In this seminal case, the Supreme Court of the United States set forth the following
holding regarding ratio of punitive damages awards: We have been reluctant to identify
concrete constitutional limits on the ratio between harm, or potential harm, to the
plaintiff and the punitive damages award. We decline again to impose a bright-line ratio
which a punitive damages award cannot exceed. Our jurisprudence and the principles it
has now established demonstrate, however, that, in practice, few awards exceeding a
single-digit ratio between punitive and compensatory damages, to a significant degree,
will satisfy due process. In [Pacific Mut. Life Ins. Co. v.] Haslip, [499 U.S. 1(1991)] in
upholding a punitive damages award, we concluded that an award of more than four
times the amount of compensatory damages might be close to the line of constitutional
impropriety. We cited that 4-to-1 ratio again in [BMW of North America, Inc. v.] Gore,
[517 U.S. 559 (1996)]. The Court further referenced a long legislative history, dating
back over 700 years and going forward to today, providing that sanctions of double,
treble, or quadruple damages to deter and punish. While these ratios are not binding,
they are instructive. They demonstrate what should be obvious: Single-digit multipliers
are more likely to comport with due process, while still achieving the State's goal of
deterrence and retribution, than awards with ratios in range of 500 to 1, or, in this case,
145 to 1.
Boyd v. Goffoli, 608 S.E.2d 169 (W.Va. 2004)
In this case, the Supreme Court of Appeals encountered a similar situation, but declined
to overturn the award, finding the ratio of damages, even with potentially inflated
compensatory damages, to be acceptable: In addition, even if we were to consider a
portion of the compensatory damages in this case to be punitive damages so as to result
in a ratio of 8.4:1, such a ratio is by no means necessarily unconstitutional. As the
Supreme Court noted in Campbell, while single-digit multipliers (meaning a ratio of up to
9 to 1) are more likely to comport with due process, there are no rigid benchmarks that a
punitive damages award may not surpass. In sum, there is nothing in our jurisprudence
or that of the United States Supreme Court that renders the ratio of the punitive
damages award to the compensatory damages award in this case improper.

16

Perrine, et al. v. E.I. du Pont de Nemours and Co., et al., No. 34333, 34334,
34335 (W.Va. 2010)
This environmental class action case featured an appeal from a judgment of the Circuit
Court of Harrison County, which denied defendants motions for judgment as a matter of
law or, in the alternative, to decertify the class, for a new trial, and to vacate or reduce
the award of punitive damages. Defendants were found liable to plaintiffs in the amount
of $381,737,522 for off-site arsenic, cadmium, and lead contamination which emanated
from defendant's zinc smelter facility in Spelter, West Virginia. Among other findings, the
Supreme Court of Appeals held that punitive damages may not be awarded on a cause of
action for medical monitoring. The verdict was conditionally affirmed, but the punitive
damages award was reversed and the case was remanded.
F.

Fee Shifting Statutes

West Virginia code contains seven fee shifting statutes. In Workers Compensation cases
the Workers Compensation an attorney representing a claimant who prevails on his/her
claim is entitled to a twenty percent (20%) attorneys fee award, determined by the base
award amount. W. Va. Code 23-5-16.
The West Virginia Surface Mining and
Reclamation Act also allows for the recovery of attorneys fees. W. Va. Code 22-3-1, et
seq. A plaintiff who substantially prevails under the West Virginia Human Rights
Act is also entitled to recover attorneys fees. W. Va. Code 5-11-1, et seq. Under
the West Virginia Whistleblower statute a plaintiff who substantially prevails on his/her
claims may also recover attorneys fees. W. Va. Code 6C-1-1, et seq. Any individual
who requests the release of documents pursuant to a Freedom of Information request
may recover attorneys fees if the circuit court rules the documents should be released.
W. Va. Code 29B-1-1, et seq.
There is no recovery limitation set forth in the statutes. Even a $500 verdict is sufficient
to trigger the fee shifting statute. The fee shifting provision potentially opens up
the recovery to substantially more than the jury verdict. The Court determines the
appropriate attorneys fees, which can vary and is determined by the judge on a case-bycase basis.
For example, a jury finds that a Plaintiff was terminated due to her age
and awards the Plaintiff $500.00. Even though Defendant incurred
$100,000 in defense costs at a rate of $175 per hour, a Judge may
find that Plaintiff reasonably incurred $250,000 at a rate of $250 per
hour, in prevailing on her claim
Under Federal law there are several provisions allowing for the recovery of attorneys fees
to a plaintiff who substantially prevails on his her claims. This includes claims filed
pursuant to 42 U.S.C. 1983 and 42 U.S.C. 1988. An individual who prevails on a
claim under the ADA is also entitled to recover attorneys fees. 42 U.S.C. 2205. Such
fees are also available in Family Medical Leave Act violation cases. 29 U.S.C. 2617(a)
(3). An plaintiff in a Fair Labor Standards Act claim may also recover attorneys fees. 29
U.S.C. 216. Federal statutes also permit the recovery of attorneys fees in Civil Rights
Act of 1964 public accommodation cases (42 U.S.C. 2000a-3(b)), Equal Employment
Opportunity Commission (42 U.S.C. 2000e-5(k)), Fair housing Act (42 U.S.C. 3613
(c)), Age Discrimination in Employment Act (42 U.S.C. 2000e(k)), Voting Rights Act (42
U.S.C. 1973l(e)), and Age Discrimination Act (42 U.S.C. 1997a(b)).
IV.

Governmental Tort Claims and Insurance Reform Act

Article 12A of Chapter 29 of the West Virginia Code is the statute that regulates actions
against political subdivisions (i.e., not the State or its agencies). According to its stated
purpose, the Governmental Tort Claims and Insurance Reform Act (Tort Immunities
Act), was enacted to limit liability of political subdivisions and provide immunity to
political subdivisions in certain instances and to regulate the costs and coverage of
insurance available to political subdivisions for such liability. The Legislature found that

17

the political subdivisions of this state were unable to procure adequate liability insurance
coverage at a reasonable cost due to: The high cost in defending such claims, the risk of
liability beyond the affordable coverage and the inability of political subdivision to raise
sufficient revenues for the procurement of such coverage without reducing the quantity
and quality of traditional governmental services. The Tort Immunities Act applies to
most county or municipal public bodies that are charged by law with the performance of a
government function. Both governmental and proprietary functions are covered by the
provisions of the Tort Immunities Act.
"Employee" means an officer, agent, employee, or servant, whether compensated or not,
whether full-time or not, who is authorized to act and is acting within the scope of his or
her employment for a political subdivision."Employee" includes any elected or appointed
official of a political subdivision."Employee" does not include an independent contractor of
a political subdivision.
"Municipality" means any incorporated city, town or village and all institutions, agencies
or instrumentalities of a municipality.
"Political subdivision" means any county commission, municipality and county board of
education; any separate corporation or instrumentality established by one or more
counties or municipalities, as permitted by law; any instrumentality supported in most
part by municipalities; any public body charged by law with the performance of a
government function and whose jurisdiction is coextensive with one or more counties,
cities or towns; a combined city- county health department created pursuant to article
two, chapter sixteen of this code; public service districts; and other instrumentalities
including, but not limited to, volunteer fire departments and emergency service
organizations as recognized by an appropriate public body and authorized by law to
perform a government function: Provided, That hospitals of a political subdivision and
their employees are expressly excluded from the provisions of this article.
"Scope of employment" means performance by an employee acting in good faith within
the duties of his or her office or employment or tasks lawfully assigned by a competent
authority but does not include corruption or fraud.
"State" means the state of West Virginia, including, but not limited to, the Legislature,
the supreme court of appeals, the offices of all elected state officers, and all
departments, boards, offices, commissions, agencies, colleges, and universities,
institutions, and other instrumentalities of the state of West Virginia."State" does not
include political subdivisions.
A.

Immunities

Subject to certain exclusions, addressed herein, a political subdivision cannot be held

liable for damages in any civil action for injury, death, or loss to person or property
allegedly caused by an act or omission of the public entity or an employee of the public
entity. Actions for prospective or extraordinary relief (mandamus, injunction, prohibition,
etc.) are not restricted by the provision of the Tort Immunities Act.
Generally speaking, a public entity can be held liable for injury, death, or loss to
person or property caused by a negligent act or omission of an employee who is
acting within the scope of his or her authority.
A political subdivision enjoys absolute immunity, irrespective of the presence of
negligence, for losses or claims resulting from any of the following:

Legislative or quasi-legislative functions;

Judicial, quasi-judicial or prosecutorial functions;
Execution or enforcement of the lawful orders of any court;
Adoption or failure to adopt an ordinance, policy, statute, rule, regulation
or other law;

18

Civil disobedience or the method of providing police, law enforcement or

fire protection.

Snow or ice conditions or temporary or natural conditions on any public

way or other public place due to weather conditions, unless the condition
is affirmatively caused by the negligent act of a political subdivision;

Natural conditions of unimproved property of the political subdivision;

Licensing powers or functions including, but not limited to, the issuance,
denial, suspension or revocation of or failure or refusal to issue, deny,
suspend or revoke any permit, license, certificate, approval, order or
similar authority;

Inspection powers or functions, including failure to make an inspection, or

making an inadequate inspection, of any property, real or personal, to
determine whether the property complies with or violates any law or
contains a hazard to health or safety;

Any claim covered by any worker's compensation law or any employer's

liability law;

Misrepresentation, if unintentional;

Provision, equipping, lawful operation or maintenance of any prison, jail or

correctional facility, or injuries resulting from the parole or escape of a
prisoner;

Any claim or action based on the theory of manufacturer's products

liability or breach of warranty or merchantability or fitness for a specific
purpose, either expressed or implied;

The operation of dumps, sanitary landfills, and facilities where conducted

directly by a political subdivision; or

The issuance of revenue bonds or the refusal to issue revenue bonds.

Assessment or collection of taxes lawfully imposed or special

assessments, license or registration fees or other fees or charges imposed
by law;

Any court-ordered or administratively approved work release or treatment

or rehabilitation program;

An employee of a political subdivision is immune from liability unless one of the

following applies:
1.
2.
3.

If the employees acts or omissions were manifestly outside the

scope of employment or official responsibilities;
If the employees acts or omissions were performed with malicious
purpose, in bad faith, or in a wanton and reckless manner; or
If liability is imposed upon the employee by a provision of the West
Virginia Code.

It should be noted that the immunity afforded an employee does not affect or limit
the liability of the political subdivision for an act of the employee.
The Tort Immunities Act contains a strict prohibition against awards of punitive or
exemplary damages. W. Va. Code 29-12A-7(a). Damages for economic losses are
not capped. Non-economic damages are capped at five hundred thousand
dollars ($500,000.00). W. Va. Code 29-12A-7(b).
As a practical consequence of the expansion of government and the proliferation of
bodies charged with conducting the States business, we have recognized that
proceedings against boards and commissions, created by the Legislature, as agencies of
the State, are suits against the state within the meaning of Article VI, Section 35, of the
Constitution of West Virginia, even though the State is not named as a party in such
proceedings.

19

Hamill v. Koontz, 134 W.Va. 439, 443 S.E.2d 879, 882 (1950); see also Hesse v. State
Soil Conservation Committee, 153 W.Va. 111, 115, 168 S.E.2d 293, 295 (1969)
(constitutional immunity relates not only to the State of West Virginia but extends to an
agency of the state to which it has delegated performance of certain of its duties.)
Arnold Agency v. W. Va. Lottery Comm'n, 206 W. Va. 583, 590-91, 526 S.E.2d 814, 82122 (1999) (emphasis added).
B.

Special Duty Doctrine

Some immunities are statutory, such as the immunity contained in West Virginia Code
29-12A-5(a)(9), which provides that a political subdivision is immune from liability if a
loss or claim results from licensing powers or functions including, but not limited to, the
issuance, denial, suspension or revocation of or failure or refusal to issue, deny, suspend
or revoke any permit, license, certificate, approval, order or similar authority.
Another immunity is contained in West Virginia Code 29-12A-5(a)(10), which provides
immunity for inspection powers or functions, including failure to make an inspection, or
making an inadequate inspection, of any property, real or personal, to determine whether
the property complies with or violates any law or contains a hazard to health or safety.
In Syllabus Point 4, Hose v. Berkeley County Planning Commission, 194 W.Va. 515, 460
S.E.2d 761 (1995), the court held:
Pursuant to W. Va. Code 29-12A-4(c)(2)
(1986) and W. Va. Code 29-12A-5(a)(9)
(1986), a political subdivision is immune from
liability if a loss or claim results from licensing
powers or functions such as the issuance, denial,
suspension or revocation of or failure or refusal
to issue, deny, suspend or revoke any permit,
license, certificate, approval, order or similar
authority, regardless of whether such loss or
claim is caused by the negligent performance of
acts by the political subdivisions employees
while acting within the scope of employment.
Generally, [t]he duty imposed upon a governmental entity is one owed to the
general public, and unless the injured party can demonstrate that some special
relationship existed between the injured person and the allegedly negligent
entity, the claim is barred. Jeffrey v. West Virginia Dept of Pub. Safety, Div. of Cor.,
198 W.Va. 609, 614, 482 S.E.2d 226, 231 (1996). [T]he public duty doctrine is a
principle independent of the doctrine of governmental immunity, although in practice it
achieves must the same result. Benson v. Kutsch, 181 W.Va. 1, 2, 380 S.E.2d 36, 37
(1989). The public duty doctrine is not an immunity; but rests on the principle
that recovery may be had for negligence only if a duty has been breached which
was owed to the particular person seeking recovery. Parkulo w. West Virginia Bd.
of Probation & Parole, 199 W.Va. 161, 172, 483 S.E.2d 507, 518 (1996). Under the
public duty doctrine the governmental entitys liability for nondiscriminatory
governmental functions may not be predicated upon the breach of a general duty owed to
the public as a whole; instead, only the breach of a duty owed to the particular person
injured is actionable. Wolfe v. City of Wheeling, 182 W.Va. 252, 256, 387 S.E.2d 307,
310 (1989). The linchpin of the public duty doctrine is that some governmental acts
create duties to the public as a whole and not to the particular private person or private
citizen who may be harmed by such acts. Parkulo, 199 W.Va. at 172, 482 S.E.2d at 518.
A special relationship only exists when there exists:

20

(1) An assumption by the state governmental

entity, through promises or actions, of an
affirmative duty to act on behalf of the party
who was injured; (2) knowledge on the part of
the state governmental entitys agents that
inaction could lead to harm; (3) some form of
direct contact between the state governmental
entitys agents and the injured party; and (4)
that partys justifiable reliance on the state
governmental entitys affirmative undertaking.
Syllabus Point 10, Id., 199 W. Va. At 164, 483
S.E.2d at 510.
The determination of a special duty is generally a question of fact for the trier of fact.
Syllabus Point 11, Id.
C.

Insurance

When a public entity or its employee is insured under a liability insurance policy, the
terms of the policy govern rights and obligations of the public entity and the insurer with
respect to the investigation, settlement, payment, and defense of suits against the public
entity, or its employees covered by the policy. W. Va. Code 29-12A-5. Many policies
incorporate by reference the language of any applicable West Virginia statutes
and expressly mandate that statutory language supersedes policy language
where conflicts between the two are present. Parkulo v. West Virginia Bd. of
Probation and Parole, 199 W.Va. 161, 483 S.E.2d 507 (1996). This, of course, requires
diligence on the part of the underwriter to know and understand the statutory and
regulatory provisions of West Virginia law. W. Va. Code 33-11-1, et seq.
A public entity has a right of indemnity against an insurer up to the limits of the
policy. A public entity and its employees cannot be held liable for any costs, judgments
or settlements paid through an applicable policy of insurance. WV Code 29-12A-9.
D.

Judgments

Any judgment entered against a political subdivision for a loss caused by an act or
omission of the political subdivision or its employee cannot be satisfied by execution,
judicial sale, garnishment, or attachment of the political subdivisions real or personal
property, money, accounts or investments. W. Va. Code 29-12A-10(a). Judgments
can only be paid from funds allocated by the political subdivision allocated for that
purpose. W. Va. Code 29-12A-10(b). If insufficient funds have been allocated, the
taxing authority of the political subdivision will place the item on the next annual fiscal
year budget. Id.
E.

Defense of Employees

A political subdivision must provide for the defense of an employee in any state
or federal court in any civil action or proceeding to recover damages for injury,
death, or loss to persons or property caused by an act or omission of the
employee if the act or omission is alleged to have occurred while the employee
was acting in good faith and not manifestly outside the scope of his employment
or official responsibilities. W. Va. Code 29-12A-11. Funds expended by a public
entity in defending its employees can be apportioned from funds appropriated for such a
purpose or pursuant to a contractual agreement between the public entity and its insurer.
Id. Thus, when it is plead that an officer or employee of a public entity has acted
maliciously, criminally or in bad faith, a compelling argument can be presented that
neither the political subdivision, nor its insurer, has a duty to defend the employee. Id. If
a political subdivision refuses to provide a defense to an employee, an employee may file
an action for declaratory relief to determine the veracity of such refusal. W. Va. Code
29-12A-11(c). In West Virginia the duty to defend is broader than the duty to
indemnify. Bower v. Hi-Lad. Inc., 216 W.Va. 634, 651 609 S.E.2d 895, 912 (2004).

21

Under this rule, if one allegation of the complaint would be covered under the applicable
terms of the insurance policy then the insurance company is required to defend the
insured on all claims although the company may ultimately not owe any duty to
indemnify.

F.

Indemnification of Employees

With respect to indemnification, the Tort Immunities Act provides that an employee is
to be indemnified for the amount of any judgment rendered against the
employee in a state or federal court that is for damages for injury, death, or loss
to persons or property caused by an act or omission of the employee, if the
employee was acting in good faith and within the scope of his employment or
official responsibilities. Thus, unless and until such a determination has been made,
no duty to indemnify arises on the part of the political subdivision. Be mindful, however,
an insurer has a greater obligation to defend than indemnify.
It has been argued that, although this provision of the Tort Immunities Act expressly
notes that there is no obligation on the part of the political subdivision to indemnify an
employee for acts committed in bad faith or outside the scope of employment, the
employee indemnify provisions contain no similar protection for an insurer of a public
entity. We are aware, however, of no instances in which the proposition was successfully
mounted because, as stated before, the terms of the applicable policy govern the rights
and obligations of the public entity with respect to settlement, payment, and defense of
suits against the public entity or its employees covered by the policy. In most instances,
an applicable policy will contain an intentional or criminal acts exclusion whereby
coverage is precluded in the event the insured has acted intentionally or criminally to
bring about the harm caused.
A public entity has the right to seek recoupment for fees, costs, and payments made on
behalf of an employee if it is shown that the conduct of the employee which gave rise to
the claim or action as outside the scope of his employment or if the employee fails to
cooperate in good faith in the defense of the claim or action. In 42 U.S.C. 1983 actions
state and local officials may be sued in their personal capacity where the suit seeks to
impose individual, personal liability on the government officer for actions taken under
color of state law with the badge of state authority. Hafer v. Melo, 502 U.S. 21 (1991).
There may be instances in which the position of the public entity and an employee are
adverse and additional counsel will need to be retained for each.
G.

Procedure

From a procedural standpoint, actions against a public entity are located or where the
cause of action arose. When a suit is instituted under the authority of the Tort
Immunities Act, the public entity must be named as a defendant. An employee acting
within the scope of his employment cannot be named as a defendant. Thus, if an
employee of the public entity is named as a defendant, it can be argued that
circumstantial evidence exists that the plaintiff believes the employee was acting outside
the scope of employment. In that event, coverage for the employees acts or omissions
would be precluded under the provisions of the Tort Immunities Act. As matter of
practice, however, the term scope of employment should be broadly construed.
On the other hand, we have successfully argued that if an employee is named without
specific allegations that their actions were manifestly outside the scope of their
employment or performed with malicious purpose, in bad faith, or in a wanton and
reckless manner, that the employee is immune and must be dismissed.

22

V.

Qualified Immunity

The common law immunity of the State in suits brought under the authority of W. Va.
Code 29-12-5 with respect to judicial, legislative, and executive (or administrative)
policy-making acts and omissions is absolute and extends to the judicial, legislative, and
executive (or administrative) officials when performing those functions. Syllabus Point 7,
Parkulo, 199 W.Va. at 161, 483 S.E.2d at 507.
A public executive official who is acting within the scope of this authority and is not
covered by the provisions of the Governmental Tort Claims and Insurance Reform Act, W.
Va. Code 29-12A-1, et seq., is entitled to qualified immunity from personal liability for
official acts if the involved conduct did not violate clearly established laws of which a
reasonable official would have known. There is no immunity for an executive official
whose acts are fraudulent, malicious, or otherwise oppressive. Syllabus Point 8, Parkulo,
199 W.Va. at 161, 483 S.E.2d at 507. In cases arising under W. Va. Code 29-12-5,
and in the absence of express provisions of the insurance contract to the contrary, the
immunity of the State is coterminous with the qualified immunity of a public executive
official whose acts or omissions give rise to the case. Syllabus Point 9, Id. As such, the
qualified immunity available to a state official is also available to the State. However, on
occasion, the State will be entitled to immunity when the official is not entitled to the
same immunity; in others, the official will be entitled to immunity when the State is not.
The existence of the States immunity of the State must be determined on a case-by-case
basis. Id.
The common law doctrine of qualified immunity is designed to protect public officials from
the threat of litigation resulting from difficult decisions which must be made in the course
of their employment. Clark v. Dunn, 195 W.Va. 272, 465 S.E.2d 374 (1995). In Clark,
the Supreme Court of Appeals concluded that the doctrine of qualified immunity bars a
claim of mere negligence against the Department of Natural Resources, a state
agency not within the purview of the West Virginia Government of Tort Claims and
Insurance Reform Act, and against Officer Dunn, an officer of that department acting
within the scope of his employment, with respect to the discretionary judgments,
decisions, and actions of its public officers. Id. at 380.
To overcome this immunity for claim against a State agency or its employees or officials
acting within the scope of their authority, a plaintiff must establish that the agency
employee or official knowingly violated a clearly established law, or acted
maliciously, fraudulently, or oppressively.
Parkulo v. West Virginia Board of
Probation and Parole, 199 W.Va. 161, 483 S.E.2d 507 (1996); Clark, 465 S.E.2d 394
(citing State v. Chase Securities, Inc., 188 W.Va. 356, 424 S.E.2d 591 (1991)). In other
words, the State, its agencies, officials and employees are immune for acts or
omissions arising out of the exercise of discretion in carrying out their duties, so
long as they are not violating any known law or acting with malice or bad faith.
Syl. pt. 8, Parkulo. The simple use of the words willful, deliberate, or intentional is
insufficient to overcome the Defendants entitlement to qualified immunity. See Pinder v.
Johnson, 54 F.3d 1169, 1173 (4th Cir. 1996)(stating that for a right to be clearly
established, it must be established in a particularized and relevant sense, not merely as
an overarching entitlement to due process.").
The common law doctrine of qualified immunity was scrutinized and analyzed in detail by
the West Virginia Supreme Court of Appeals in State v. Chase Securities, Inc., 188 W.Va.
356, 424 S.E.2d 591 (1992). The Court determined that: The provision of immunity
rests on the view that the threat of liability will make federal officials timid in carrying out
their official duties, and that effective government will be promoted if officials are freed
the costs of vexations and often frivolous damages suits. Id. (quoting Westfall v. Erwin,
484 U.S. 292, 295 (1988)). In Chase, the West Virginia Supreme Court of Appeals
adopted the test used by federal courts to determine the applicability of the doctrine of
qualified immunity for the acts of public officials. Specifically, the Court employed the
standard developed by the United States Supreme Court in Harlow v. Fitzgerald, holding
that government officials performing discretionary functions generally are shielded from
civil damages insofar as their conduct does not violate clearly

23

established statutory or constitutional rights of which a reasonable person would have

known. Id. at 362, 424 S.E.2d at 597 (quoting Harlow v. Fitzgerald, 457 U.S. 800, 812
(1982). The Court explained further that the term reasonable person is defined as a a
reasonable public official occupying the same position as the defendant public official.
Id. at n. 16 (citing Anderson v. Creighton, 483 U.S. 635 (1987)).
The Supreme Court of the United States established a rigid two-step sequence for
determining a defendant's entitlement to qualified immunity. A court must first decide
whether the facts alleged set forth a violation of a constitutional right and if the
plaintiff has satisfied this first step, the court must decide whether the right at
issue was 'clearly established' at the time of the defendant's alleged
misconduct. Pearson v. Callahan, 129 S. Ct. 808, 815-16, 172 L. Ed. 2d 565 (2009)
(citing Saucier v. Katz, 533 U.S. 194, 201, 121 S. Ct. 2151, 150 L. Ed. 2d 272 (2001)
(internal citations omitted)). Without modifying the elements of the qualified immunity
analysis, the Supreme Court recently held that courts no longer need to adhere to the
rigid sequence of the analysis established in Saucier, but may instead determine which
prong should be addressed first based upon the facts of the case before it. See Pearson,
supra.
Immunities under West Virginia law are more than a defense to a suit in that they
grant governmental bodies and public officials the right not to be subject to the
burden of trial at all. Hutchinson v. City of Huntington, 198 W.Va. 139, 479 S.E.2d
649 (1996) (emphasis added). Indeed [t]he very heart of the immunity defense is that
it spares the defendant from having to go forward with an inquiry into the merits of the
case. Id. (emphasis added.)(citing Swint v. Chambers County Commission, 514 U.S. 35
(parallel citations omitted) (1995)). As Justice Cleckley in Hutchinson wrote:
As assertion of qualified or absolute immunity should be heard and
resolved prior to any trial because, if the claim of immunity is proper
and valid, the very thing from which the defendant is immune a
trial will absent a pretrial ruling occur and cannot be remedied by a
later appeal. On the other hand, the trial judge must understand
that a grant of summary judgment based upon immunity does not
lead to a loss of right that cannot be corrected on appeal.
Id. at note 13.
Similarly, the United States Supreme Court used almost identical reasoning as Justice
Cleckley did in Hutchinson when it recognized the importance of a government officials
right to be summarily dismissed from litigation when qualified immunity is applicable.
Saucier v. Katz, 533 U.S. 194, 201, 121 S. Ct. 2151, 2156 (2001). The privilege of
immunity from suit is an immunity rather than a mere defense to liability, and
like absolute immunity it is effectively lost if a case is erroneously permitted to
go to trial. Id. (emphasis added). Further, Saucier holds that immunities spare
governmental defendants from the other burdens of litigation. Id. Other burdens of
litigation have been held to include discovery. See Yoak v. Marshall University Bd.
of Governors, 672 S.E.2d 191 (2008).
VI.

Deliberate Intent

A deliberate intent cause of action is one in which an injured employee sues his or her
employer as a result of a workplace accident resulting in bodily injury. This cause of
action seeks damages against an employer over and above benefits provided by workers
compensation insurance coverage. The West Virginia Legislature has authorized these
lawsuits to proceed under the deliberate intent statute, West Virginia Code 23-4-2(d)
(2). Employers who are frequently sued for deliberate intent include trucking and mining
operations, building and construction contractors, oil and gas drillers, heavy machinery
operators, and other industrial and manual labor-related fields. Any employer, however,
can be the target of a deliberate intent case.

24

There are two types of deliberate intent claims. The first type is very uncommon and is
brought forth pursuant to West Virginia Code 23-4-2(d)(2)(i). This statutory provision
permits claimants to bring suit where the employer's conduct is done with the deliberate
intention to produce the specific resulting injury or death. This type of case requires a
showing of an employers actual, specific intent to harm the employee. Merely
establishing negligence, gross negligence, willful, wanton or reckless conduct does not
meet the threshold required under part (i) of the statute. Because this section essentially
requires plaintiffs to establish malice on the part of the employer, punitive damages are
available. Due to the high threshold that must be met, there are very few cases brought
under part (i). The overwhelming number of deliberate intent cases are brought forth
under part (ii).
With respect to West Virginia Code 23-4-2(d)(2)(ii), it must be understood that the
term deliberate intent is a misnomer, as the claimant need not establish that the
employer intended to cause injury, but rather, that the employer intentionally exposed
the employee to an unsafe working condition. Punitive damages are not recoverable
under part (ii). The five element test set forth in part (ii) is as follows:
The trier of fact determines, either through specific findings of fact made by the court in
a trial without a jury, or through special interrogatories to the jury in a jury trial, that all
of the following facts are proven:
(A)

That a specific unsafe working condition existed in the

workplace which presented a high degree of risk and a strong
probability of serious injury or death;

(B)

That the employer, prior to the injury, had actual knowledge of

the existence of the specific unsafe working condition and of the
high degree of risk and the strong probability of serious injury
or death presented by the specific unsafe working condition;

(C)

That the specific unsafe working condition was a violation of a

state or federal safety statute, rule or regulation, whether cited
or not, or of a commonly accepted and well-known safety
standard within the industry or business of the employer, as
demonstrated by competent evidence of written standards or
guidelines which reflect a consensus safety standard in the
industry or business, which statute, rule, regulation or standard
was specifically applicable to the particular work and working
condition involved, as contrasted with a statute, rule, regulation
or standard generally requiring safe workplaces, equipment or
working conditions;

(D)

That notwithstanding the existence of the facts set forth in

subparagraphs (A) through (C), inclusive, of this paragraph, the
employer nevertheless intentionally thereafter exposed an
employee to the specific unsafe working condition; and

(E)

That the employee exposed suffered serious compensable injury

or compensable death as defined in section one, article four,
chapter twenty-three whether a claim for benefits under this
chapter is filed or not as a direct and proximate result of the
specific unsafe working condition.

25

Common items used to establish unsafe working conditions include:

lock out/tag out failures (repairing vehicles, repairing equipment);

improper or lack of training and safety training (operation of equipment
such as forklifts or cranes by untrained employees);

improper or lack of safety equipment (crib blocks, barriers);

improper modification of equipment (using equipment outside the scope of
its intended use, or adding devices to equipment);

improperly constructed work areas (slopes, ditches, scaffolding);

unsafe and improper loading and unloading procedures.

The second element in part (ii) is normally viewed as the most important and difficult
hurdle that the employee must clear. The statute requires the employee to demonstrate
that the employer, via a supervisor, manager, foreman, or safety officer, had actual
knowledge of the unsafe working condition. Typical examples of demonstrating the actual
knowledge requirement are as follows:

prior similar accidents;

prior complaints;
prior safety violations and/or fines;
employer having observed the workplace condition or conduct;
employer directing the employee to engage in unsafe conduct;
employer having prior knowledge of the actual unsafe condition;
failure to perform mandatory hazard assessment.

The third element requires the claimant to prove that the unsafe condition was a violation
of some regulatory code, rule, law, or commonly accepted industry standard, and not just
a general safety standard or rule. Claimants typically assert violations of OSHA, ANSI,
MSHA, or other laws and regulations that apply to working conditions. Usually, an expert
witness with a background in these areas is retained to offer an opinion as to the whether
the law or regulation was violated, and whether a subsequent injury or death was the
result. It is important emphasize that the alleged violation must be a specific, applicable
standard, and not simply a statute, rule, regulation or standard generally requiring safe
workplaces, equipment or working conditions.
The fourth element of the statute requires a claimant to demonstrate that the employer
intentionally exposed its employee to the unsafe working condition. This is typically done
by showing that the employer directed the claimant to perform the work, that the activity
was part of the claimant's typical job duties and responsibilities, and/or acquiescence on
the part of the employer.
The final element of the five-part test requires the claimant to have suffered a serious
compensable injury or death as a proximate result of the specific unsafe working
condition. A claimant is not likely to file a lawsuit without alleging some sort of
debilitating injury, such as back pain, neck pain, nerve damage, shoulder problems, or
psychological problems, which renders him or her unable to work.
A few things should be noted when defending against a deliberate intent lawsuit:

26

There is no consideration of contributory negligence on the part of

the claimant, except when the employer has proof of the employee's
intent to self-injure or commit suicide, or if there is evidence of drug/
alcohol intoxication (Roberts v. Consolidated Coal Co., 590 S.E.2d
651 (2000)).

While contributory negligence is not a defense to a deliberate intent

cause of action, an employer does not have the requisite actual
knowledge of an unsafe working condition if the unsafe working
condition existed solely as a result of the employees conduct.
Deskins v. SW Jack Drilling, 600 S.E.2d 237 (W.Va. 2004).

If an accident is a completely anomaly with no prior similar incidents,

the Supreme Court of Appeals has held that there may be no
evidence that the employer exposed its employee to an unsafe
condition in violation of any rule or regulation. Sedgmeyer v. McElroy
Coal, 640 S.E.2d 129 W.Va. (2006).

An employer cannot avoid liability under the deliberate intent statute

by claiming ignorance of an unsafe working condition as a result of
failing to do a mandatory hazard assessment. Ryan v. Clonch
Industries, 639 S.E.2d 756 (W.Va. 2006).

An employers third-party claims administrator is the employer's

agent and is entitled to its immunity under the deliberate intent
statute. Wetzel v. Employers Service Corp. of WV, 656 S.E.2d 55
(2007).

With respect to an unsafe working condition allegedly arising out of a

failure to train, not remembering and not knowing regulations and
safety procedures and precautions are two different things, and so
long as the requisite training was provided, not remembering certain
aspects as an employee does not automatically render the employer
liable. Ramey v. Contractor Enterprises, Inc., No. 34804 (2010).
Actual knowledge is a high threshold that cannot be successfully
met by speculation or conjecture; this requirement is not satisfied
merely by evidence that the employer reasonably should have known
of the specific unsafe working condition and of the strong probability
of serious injury or death presented by that condition. Instead, it
must be shown that the employer actually possessed such
knowledge. Moreover, knowledge of the specific unsafe working
condition alone is insufficient; rather, a defendant must also have
realized the high degree of risk and strong probability of serious
injury or death presented by the specific unsafe working condition.
Harbolt v. Steel of W. Va., Inc., 640 F. Supp. 2d 803, (S.D.W. Va.
2009).
In the case of an employee's death, a personal representative of the
decedent's estate may assert a deliberate intention claim against a
decedent's employer on behalf of any persons identified in West
Virginia Code 55-7-6, so long as the decedent could have
maintained the action against the employer by satisfying the
deliberate intention statutory criteria. Murphy v. E. Am. Energy
Corp., 680 S.E.2d 110 (W.Va. 2009).

27

Employers are entitled to an offset for whatever sums have been

paid to a claimant under workers' compensation benefits. This is
generally the entirety of the claimant's medical bills, his or her lost
wages (typically around 70%), and any disability payments. In cases
where the injury is severe, permanent, and debilitating, a claimant
can allege and demonstrate damages in the millions of dollars, which
workers compensation does not pay, including pain and suffering,
loss of household services, future lost wages and benefits until
retirement age, loss of the capacity to enjoy life, costs for future
medical services and life-care plans, and spousal loss of consortium.

As a practical matter, even when the hurdles to a deliberate intent

action are explained, the jury will nonetheless tend towards
employing a negligence standard in rendering its decision.

The immunity from liability extended to political subdivisions

by West Virginia Code 29-12A-5(a)(11) (1992) includes
immunity from deliberate intent causes of action brought
pursuant to West Virginia Code 23-4-2(c)(2) (1994).
Syllabus Point 4, Michael v. Marion Cty Bd. of Educ., 198 W.Va. 523,
482 S.E.2d 140 (1996).

Recent Case Law 2011 to the present

Smith v. KWV Operations, LLC, U.S. Dist Lexis 18827 (S.D.W.Va. 2011)
The United States District Court for the Southern District of West Virginia recently
concluded that 28 U.S.C. 1445(c) does not bar removal of deliberate intent actions to
federal court. After the defendant employer removed the plaintiff employee's deliberate
intent and loss of consortium action based on diversity jurisdiction, the employee sought
remand on the basis that 28 U.S.C.S. 1445(c) prohibited removal to federal court any
civil action in state court arising under workers compensation laws. The District Court
found that a West Virginia courts interpretation of West Virginia Code 23-4-2(d)(2) was
not determinative of whether a deliberate intention claim arose under workmen's
compensation laws for purposes of 28 U.S.C.S. 1445(c).
Blatt v. Steel of West Virginia, Inc., 2011 W.Va. LEXIS 289 (W.Va. 2011)
This memorandum decision was decided under the new rules of Appellate Procedure. The
plaintiff was hired as a production worker for defendant. Believing that a piece of metal
fell into a cyclodyne machine, plaintiff made an effort to retrieve it. In so doing, his leg
fell into a hole on the machine which caused him to suffer permanent injury. Plaintiff
asserts that he was never properly trained to operate this machinery and that defendant
knew the machine was dangerous. Defendant maintained that there was no reason
plaintiff should be working in or around the cyclodyne machine, defendant had no
reason to know plaintiff would be around the machine, and defendant had never received
any complaints regarding the machine. On motion for summary judgment, the Circuit
Court of Cabell County found for the defendant company on grounds that plaintiff did not
satisfy the intentional exposure element of the deliberate intent statute. On appeal, the
Supreme Court of Appeals of West Virginia affirmed the trial courts reasoning.
Unfortunately, because this was a memorandum decision under the new rules, the Court
did not discuss the merits of the arguments or the reasoning behind the affirmation of
the trial courts ruling.

28

Addair v. Litwar Processing Co., 2012 W. Va. LEXIS 12 (W.Va. 2012)

In this memorandum decision, nine petitioners appealed an order of the Circuit Court of
Wyoming County granting summary judgment to multiple employers in deliberate intent
actions premised upon chemical exposure. The circuit court granted summary judgment
on the ground of collateral estoppel because each of the plaintiff petitioners had
previously filed a related workers compensation claim that had resulted in a final order
finding that the claimant had not sustained a compensable workplace injury. The circuit
court concluded that, because of the existence of a final adjudication finding no
compensable injury with respect to each of the plaintiff petitioners, they each were
estopped from re-litigating the issue and were, therefore, unable to prove a mandatory
element of their deliberate intent claims. In lieu of addressing the issue of collateral
estoppels, the Supreme Court of Appeals noted that the trial court had imposed a
sanction upon the plaintiff petitioners that precluded them from presenting any expert
witness in connection with their cases underlying the appeal. In order to prevail, the
plaintiff petitioners must have been able to establish that they suffered serious
compensable injury or compensable death and that such serious compensable injury or
compensable death was a direct and proximate result of chemical exposure to which
they were subjected in the course of their employment. In order to establish the element
of causation, the Supreme Court of Appeals believed that expert testimony is necessary.
In upholding the trial courts ruling, the Supreme Court of Appeals held, Because the
plaintiff petitioners have been prohibited from presenting such evidence by virtue of
sanctions imposed on them by the circuit court, they are unable, as a matter of law, to
meet their burden of proof as to this element of their claim. This inability to make a
sufficient showing on an essential element of their case, for which they bear the burden
of proof, renders summary judgment proper.
Persinger v. Peabody Coal Company, 196 W. Va. 707 (1996)
The Supreme Court of Appeals of West Virginia created a new cause of action for
fraudulent misrepresentation, which takes place in the context of an employers defense
of a workers compensation claim. While Persinger is not a new cause of action, the
frequency with which plaintiffs attorneys in West Virginia have asserted the claim has
recently increased. In Persinger, an employee was injured while driving a coal truck. The
employee brought an action against the employer for knowingly filing a false statement
with the West Virginia Workers' Compensation Fund in opposition to the employee's
claim. The Supreme Court of Appeals held that a claimant could maintain the private
cause of action for fraudulent misrepresentation against an employer for knowingly and
intentionally filing a false statement. The Supreme Court of Appeals further held that the
employee could maintain the action even though he or she was ultimately awarded
workers compensation benefits. The rationale was that the employee was not attempting
to recover damages for the initial workplace injury, but instead for the harm suffered
from the fund originally denying benefits. Importantly, the Supreme Court of Appeals
held that punitive damages and attorney's fees were recoverable.
VII.

Joint and Several Liability

The law of joint and several liability in West Virginia is codified in West Virginia Code 55
-7-24 and applies to causes of action that accrued on or after July 1, 2005. Under the
law, if any defendant is found to be 30% or less at fault, then such defendants
liability to the plaintiff will be several and not joint, which means that the
defendant is only liable to the plaintiff for the damages attributable to the defendant. For
example, if a particular defendant is found to be 20% at fault and the damages are
determined to be $10,000.00, then that defendant is only liable to the plaintiff in the
amount of $2,000.00 (subject to reallocation as discussed below).

29

The exceptions to the new joint and several liability rule apply to those defendants who
are determined by a jury to have:
(1) Acted with intent to inflict injury or damage;
(2) Acted in concert with other defendants as part of a common plan or design
resulting in harm;
(3) Negligently or willfully caused the unlawful emission or disposal or spillage
of a toxic or hazardous substance; or
(4) Manufactured or sold a defective product in which strict liability is
imposed.
If a claimant is unable through good faith efforts to collect from a liable defendant, the
claimant may, not later than six months after the judgment becomes final through lapse
of time for appeal or through exhaustion of appeal (whichever occurs later), request
reallocation of any uncollected amount among the other parties to the suit. It is for the
Court (not a jury) to decide whether all or a part of a defendants proportionate share is
uncollectible and to reallocate the uncollected amount among the other parties based
upon the percentages of fault at issue, which includes the plaintiffs percentage if this
plaintiffs determined to be partially at fault. However, a court cannot reallocate to any
defendant an uncollectable amount greater than that defendants percentage of fault
multiplied by such uncollected amount.
A defendant subject to reallocation still maintains any rights and obligations of indemnity
and contribution which the defendant may maintain or owe as against any other party.
An exception to reallocation is triggered when a defendants percentage of fault
is equal to or less than the plaintiffs percentage of fault or the percentage of
fault of the defendant is less than 10%. In such a case, the defendants obligation to
the plaintiff may not be increased by way of reallocation. It should be noted, however,
that when the exception is applied to a particular defendant such that said defendants
obligation to the plaintiff is not increased, the portion of the judgment which is not
applied to the exempt defendant shall be reallocated to the other parties who are not
exempt according to their respective percentage of fault.
Under the Governmental Tort Claims Act the joint and several liability doctrine is
modified. The court in assigning the total amount awarded as damages shall
enter judgment of joint and several liability against every defendant who bears
25% or more of the negligence attributable to all defendants. W. Va. Code 2912A-7(d). The judgment is several, but not joint, among all defendants who bear less
than 25% of the negligence attributable to all defendants. Id. A defendant who is
assessed joint and several liability is liable to each plaintiff for all or any part of the total
dollar amount awarded regardless of the percentage of negligence attributable to him.
W. Va. Code 29-12A-7(e).
A right of contribution exists in favor of each defendant who has paid to a plaintiff more
than the percentage of the dollar amount awarded attributable to him relative to the
percentage of negligence attributable to him. Id. The total amount of recovery is limited
to the amount paid by the defendant to a plaintiff in excess of the percentage of total
dollar amount awarded attributable to him relative to the percentage of negligence
attributable to him. Id. No right of contribution exists against a defendant who engages
in a good faith settlement with the plaintiff prior to the jurys report of its findings to the
court or the courts findings as to total dollar amount awarded as damages. Id.
VIII. Collateral Source
The West Virginia Supreme Court of Appeals has held that money a plaintiff has
received from a collateral source is not admissible. Pack v. Van Meter, 177 W.Va.
485, 354 S.E.2d 581 (1986). The collateral source rule normally operates to preclude the
offsetting of payments from health and accident companies and other collateral sources
against the damages claimed by the injured party. Ratlief v. Yokum, 167 W.Va. 779, 280
S.E.2d 584, 589-590 (1981). The Court held that [t]he collateral source rule was

30

established to prevent the defendant from taking advantage of payments received by the
plaintiff as a result of his own contractual arrangements entirely independent of the
defendant. Id. at 590. The Court has applied the harmless error rule where evidence of
a collateral source was introduced, but the jury found against the plaintiff on liability
therefore it never addressed the issue of damages. Id.
The West Virginia Supreme Court of Appeals has not specifically addressed the issue of
write-downs or write-offs, however West Virginia law does not require that a
plaintiff actually have paid medical expenses in order to recover them. Syllabus
Point 14, Long v. Weirton, 158 W.Va. 741, 214 S.E.2d 832 (1975).
Public entities, however, are granted greater leeway in collateral sources when it comes
to temporary total disability benefits under the West Virginia Workers Compensation
system. West Virginia Code 23-4-1(a) sets forth that when an employee of the state
and its political subdivisions, including: Counties; municipalities; cities; towns; any
separate corporation or instrumentality established by one or more counties, cities or
towns as permitted by law; any corporation or instrumentality supported in most part by
counties, cities or towns; any public corporation charged by law with the performance of
a governmental function and whose jurisdiction is coextensive with one or more counties,
cities or towns; any agency or organization established by the Department of Mental
Health for the provision of community health or mental retardation services and which is
supported, in whole or in part, by state, county or municipal funds; board, agency,
commission, department or spending unit, including any agency created by rule of the
Supreme Court of Appeals, who have received personal injuries in the course of and
resulting from their covered employment, the employees are ineligible to receive
compensation while the employees are at the same time and for the same reason
drawing sick leave benefits. State employees may collect sick leave benefits until
receiving temporary total disability benefits. The employee may have sick leave benefits
restored following the receipt of temporary total disability benefits by paying the
employer the temporary total disability benefits received or an amount equal to the
temporary total disability benefits received.
IX.

Procedural Strategies
A.

Offers of Judgments

Either party may serve upon the adverse party an offer to allow judgment to be taken
against the defending party for the money or property or to the effect specified in the
offer, with costs then accrued. If the offer is accepted the parties then file with the court
a notice of acceptance with proof of service and the court shall direct entry of the
judgment by the clerk. When there is a statutory provision that specifically creates a
right to attorney fees and defines attorneys fees as being in addition to, or separate and
distinct from costs, the circuit court must determine attorneys fees separately from the
offer of judgment. When the offer of judgment does not explicitly provide that the
amount of the offer is inclusive of costs and attorney fees, the circuit court then must
determine costs and fees in addition to the amount of the offer of judgment. Therefore,
it is imperative that an offer of judgment explicitly state that is inclusive of
costs and attorney fees. If the offer is not accepted then it is considered withdrawn.
Should the case proceed to trial and the judgment obtained by the opposing party is not
more favorable the opposing party then bears the costs incurred following the making of
the offer. The fact that an offer is made but not accepted, or accepted as part payment,
does not preclude a subsequent offer.

31

There is a difference in the West Virginia and Federal Rules of Civil Procedure for offers of
judgment. In state court, an offer of judgment must be at any time more than 10 days
before the trial begins. Under the Federal rules an offer of judgment must be made at
least 14 days before the date set for trial.
B.

Third Party Practice

West Virginia Rules of Civil Procedure Rule 13(a) requires that a pleading state as a
counterclaim any claim which at the time of serving the pleading the pleader has against
the opposing party, if it arises out of the transaction or occurrence that is the subject
matter of the opposing partys claims and does not require for its adjudication the
presence of third parties of whom the court cannot acquire jurisdiction. A defendant may
bring a third-party complaint at any time after commencement of the action. W. Va. R.
Civ. Pro. Rule 14(a). Leave of the court is not required if the third-party complaint is
filed within ten (10) days after serving the original answer otherwise the party must
obtain leave of court. Id.
Under Rule 18 of the West Virginia Rules of Civil Procedure a party is permitted to assert
a claim of relief as an original claim, counterclaim, cross-claim, or third-party claim, as
the party has against an opposing party. Joinder is also permitted if (1) in the persons
absence complete relief cannot be accorded among those already parties, or (2) the
person claims an interest relating to the subject of the action and is so situated that the
disposition of the action in the persons absence may (i) as a practical matter impair or
impede the persons ability to protect that interest, or (ii) leave any of the persons
already parties subject to substantial risk of incurring double, multiple, or otherwise
inconsistent obligations by reason of the claimed interest. W. Va. R. Civ. Pro. Rule 19(a).
When joinder is not feasible the court must determine whether to allow the action to
proceed in the absence of that party or be dismissed, the absent person being considered
indispensible. Id., Rule 19(b).
A party may join an existing action as a plaintiff is they assert any right to relief jointly,
severally, or in the alternative in respect of or arising out of the same transaction,
occurrence, or series of transactions or occurrences and if any question of law or fact
common to all these persons will arise in the action. W. Va. R. Civ. Pro. Rule 20(a).
Misjoinder of parties is not a ground for dismissal of the action and parties may be added
or dropped by order of the court or on motion of any party or of its own initiative at any
stage of the action and on such terms as are just. W. Va. R. Civ. Pro. Rule 21. When a
party has a claim against the plaintiff he/she may be joined as a defendant and required
to interplead when their claims are such that the plaintiff is or may be exposed to double
or multiple liability. W. Va. R. Civ. Pro. Rule 22.
X.

Uninsured/Underinsured Motorist

West Virginia uninsured and underinsured motorist coverage is controlled by statute

found at West Virginia Code 33-6-31. These two coverages are not the same, and have
different laws applicable to each.
Uninsured coverage is mandatory in West Virginia. Every motor vehicle liability
insurance policy issued in this State must also contain uninsured motorist
coverage. There are four possible scenarios as to how a vehicle may be uninsured by
statute:
1.

The tortfeasor may not have bodily injury liability insurance and property
damage liability insurance both in the amounts specified by section two,
article four, chapter seventeen-d of this code, as amended from time to
time [currently $20,000 per person and $40,000 per occurrence for bodily
injury claims, and $10,000 in property damage claims];

32

2. There is liability insurance, but the insurance company writing the same
denies coverage thereunder;
3. There is no certificate of self-insurance issued in accordance with the
provisions of said section; or
4. If the owner or operator thereof is unknown (i.e., John Doe driver).
In uninsured motorist claims involving John Doe drivers, West Virginia law requires that
there be physical contact between the John Doe vehicle and your insureds vehicle. If
there is not physical contact, the insured can still maintain an uninsured motorist claim
by establishing a close and substantial physical nexus between an unidentified hit-andrun vehicle and the insured vehicle.
A close and substantial physical nexus exists when an insured can establish by
independent third-party evidence to the satisfaction of the trial judge and the jury, that
but for the immediate evasive action of the insured, direct physical contact would have
occurred between the unknown vehicle and the victim. Hamric v. Doe, 499 S.E.2d 699
(1997).
The but for test in Hamric is satisfied and the uninsured motorist claim can go forward
only if the injured insured presents independent third-party testimony by disinterested
individuals which clearly shows the negligence of an unidentified vehicle was a proximate
cause of the accident. Testimony by close family members, close personal friends, by
those who might share in the award or have a direct pecuniary interest in the outcome of
the case, and all others similarly situated is not testimony which is sufficient to allow the
claim to proceed.
While uninsured motorist coverage is mandatory, underinsured coverage is
optional. At the time of the initial application, the insured is presented with the option
of purchasing underinsured coverage at an additional cost. An underinsured motor
vehicle means a vehicle with respect to the ownership, operation or use of which there is
liability insurance applicable at the time of the accident, but the limits of that insurance
are either:
1.

Less than limits the insured carried for underinsured motorists' coverage;
or

2.

Has been reduced by payments to others injured in the accident to limits

less than limits the insured carried for underinsured motorists' coverage.

In effect, if the claimant has injuries which then exhaust the tortfeasors available liability
coverage, then the claimant will then turn to his or her own underinsured coverage.
Historically, it was necessary for the claimant to exhaust the liability coverage before
proceeding against the underinsured coverage. However, that changed in 2004 when the
Supreme Court decided Horace Mann Ins. Co. v. Adkins when the Court fashioned a new
theory called constructive exhaustion. This means that even if the claimant does not
exhaust the available liability limits, s/he may nonetheless assert a claim for
underinsured coverage. However, the underinsured insurance carrier will be given
credit for the amount of the liability limits.

33

For example, lets assume State Farm, as the liability carrier, for the tortfeasor,
has a policy with bodily injury limits of 25/50. The claimant settles her claim
with State Farm for $18,000. The claimant then asserts a UIM claim. The UIM
carrier gets credit for the entire $25,000 before its liability would begin such
that, if the matter went to trial and the jury returned a verdict in the amount of
$22,000, the UIM carrier would not be required to pay anything towards the
judgment (as opposed to paying $4,000 [$22,000-$18,000]).
XI.

Unfair Trade Practices

A.

Statutory Law

Chapter 33 of the West Virginia Code provides the primary framework for regulation of
the insurance industry within the State. The following selected definitions are provided for
in Chapter 33 and apply to individuals or entities conducting the business of insurance in
West Virginia:

Insurer is every person engaged in the business of making contracts of

insurance;

Person

includes

an

individual,

company,

insurer,

association,

organization, society, reciprocal, partnership, syndicate, business trust,

corporation or any other legal entity;

Domestic insurer is an insurer formed under the laws of West Virginia;

Foreign insurer is an insurer formed under the laws of the United States
or of another state of the United States;

Alien insurer is an insurer formed under the laws of a country other than
the United States; and

Mutual insurer is an incorporated insurer without permanent capital

stock and the governing body of which is elected by the policyholders.

Generally speaking, in West Virginia, the business of insurance is regulated by the Office
of the Insurance Commissioner. It has plenary power to promulgate rules and regulations
pertaining to the business of insurance, as well as the duties and obligations of insurers
in handling claims. The insurance regulations are found in Title 114 of the West Virginia
Code of State Rules. Of particular note is Series 65, which provides rules and regulations
pertaining to self-insurance pools for political subdivisions. While such arrangements are
authorized, they must contain a financial plan, have sufficient capital, and contain a
policy agreement. Importantly, the West Virginia Insurance Guaranty Association does
not provide coverage for claims made against the pooling entities in the event of default
or insolvency.
Over the past few years, the legal landscape of West Virginia insurance law has been
significantly altered. The changes are primarily due to the passage of certain legislation in
2005 relating to third-party "unfair trade practices" claims and changes in the law
regarding joint and several liability. The information contained in this section is intended
to update the reader on this legislation and the accompanying rules, as well as to report
on significant insurance-related decisions of the West Virginia Supreme Court of Appeals
from June 2005 to present.

34

During the 2005 regular session of the West Virginia Legislature, Senate Bill 418 was
enacted into law. This legislation, which became effective on July 7, 2005, prohibited
"third-party claimants" from bringing a lawsuit against any person for an "unfair claim
settlement practice." A "third-party claimant" is defined as any individual, corporation,
association, partnership, or any other legal entity asserting a claim against any
individual, corporation, association, partnership, or other legal entity insured under an
insurance contract for the claim in question. An "unfair claim settlement practice" means
a violation of the provisions of West Virginia Code 33-11-4(9).
In relation to both first and third-party claims, West Virginia Code 33-11-4(9) provides
that no person shall commit or perform with such frequency as to indicate a general
business practice, among other things, any of the following:
1.

Misrepresenting pertinent facts or insurance policy provisions relating

to coverages at issue;

2.

Failing to acknowledge and act reasonably promptly upon

communications with respect to claims arising under insurance
policies;

3.

Failing to adopt and implement reasonable standards for the prompt

investigation of claims arising under insurance policies;

4.

Refusing to pay claims without conducting a reasonable investigation

based upon all available information;

5.

Failing to affirm or deny coverage of claims within a reasonable time

after proof of loss statements have been completed;

6.

Not attempting in good faith to effectuate prompt, fair and equitable

settlements of claims in which liability has become reasonably clear;

7.

Making known to insureds or claimants a policy of appealing from

arbitration awards in favor of insureds or claimants for the purpose
of compelling them to accept settlements or compromises less than
the amount awarded in arbitration;

8.

Delaying the investigation or payment of claims by requiring an

insured, claimant, or the physician of either to submit a preliminary
claim report and then requiring the subsequent submission of formal
proof of loss forms, both of which submissions contain substantially
the same information;

9.

Failing to promptly settle claims, where liability has become

reasonably clear, under one portion of the insurance policy coverage
in order to influence settlements under other portions of the
insurance policy coverage;

10.

Failing to promptly provide a reasonable explanation of the basis in

the insurance policy in relation to the facts or applicable law for
denial of a claim or for the offer of a compromise settlement.

35

With the passage of the revised West Virginia Code 33-11-4(9), a third-party claimant's
sole recourse for an unfair claim settlement practice is to bring an administrative
complaint with the Insurance Commissioner. The time frame by which a complaint must
be submitted is within one year following the actual or implied discovery of the alleged
unfair claim settlement practice. Upon a "sufficiently complete administrative complaint,"
the Commissioner is to provide the person against whom the complaint is filed with
written notice of the alleged violation. The complaint will be closed by the Commissioner
if the recipient of the notice substantially corrects the circumstances that gave rise to the
violation or makes an offer to resolve the complaint in a manner found reasonable by the
Commissioner within sixty 60 days of receiving the notice. If the complaint is resolved,
the recipient of the notice is to report the resolution to the Commissioner within 15 days
of the disposition, but no later than 60 days from the notice's receipt.
If the third-party claim is not resolved within this 60-day period, the Commissioner shall
conduct any investigation that he or she considers necessary to determine whether the
allegations contained in the complaint are meritorious. Should merit be found by the
Commissioner, an administrative hearing may be held to determine if an unfair claim
settlement practice has been committed with such frequency as to constitute a general
business practice. The hearing is to be held in the geographical region of the state where
the complainant resides and must occur within 90 days from the filing of the complaint.
However, the hearing may be continued by mutual agreement of the parties or by the
Commissioner for good cause.
If the Commissioner finds that an unfair claim settlement practice has been committed,
the Commissioner may provide restitution from the Unfair Claims Settlement Practice
Trust Fund to a claimant who has suffered damages as a result of a general business
practice or from an "egregious act" by a person whether or not the act fell within a
general business practice. Restitution may include noneconomic damages, not to exceed
$10,000, and actual economic damages. Restitution may not be given for attorney fees
and punitive damages.
The Commissioner may also impose a monetary penalty up to $10,000 if the act in
question involves an intentional violation of West Virginia Code 33-11-4(9) and even
though it has not been established that the person engaged in a general business
practice. If the Commissioner finds that an insurer committed or performed an unfair
claim settlement practice with such frequency as to indicate a general business practice,
he or she may penalize the insurer up to $250,000. Any finding by the Commissioner
that the actions of a company constitute a general business practice may only be based
on the existence of substantially similar violations in a number of separate claims or
causes of action.
In addition to placing insurers at risk of large penalties, unlimited awards for economic
damages, license revocation and the authority of the Insurance Commissioner to
independently investigate and act on alleged unfair claims conduct, the new third-party
complaint process can result in findings of "egregious acts" or "a general business
practice" that potentially may be used at trial in first-party bad faith cases to justify the
award of punitive damages. Accordingly, compliance with the new standards and
deadlines for investigating and settling claims should be strictly adhered to and any thirdparty administrative complaints should be aggressively defended if they cannot otherwise
be resolved within the first 60 days of the complaint being filed.

36

As of January 26, 2007, there were 467 third party administrative complaints filed with
the Insurance Commissioner since the effective date of Senate Bill 418 (July 8, 2005). Of
the 467 complaints, 169 were resolved in the 60-day "cure" period, 14 were declared to
be outside the jurisdiction of the Insurance Commissioner, 29 lacked sufficient
information for the matter to continue, and 227 were referred to the Legal Division of the
Offices of the Insurance Commissioner for a merit determination. Of the complaints
referred to the Insurance Commission's Legal Division, the overwhelming majority have
either been found to lack merit or were resolved prior to the occurrence of an
administrative hearing.
B.

Regulatory Law: 114 CSR 14-1, et seq.

In April of 2006, two sets of final administrative rules governing provisions of Senate Bill
418 were adopted and approved by the Legislature and incorporated in the West Virginia
Code of State Rules. The adoption of these rules caused many substantive and procedural
changes in the way insurance companies must adjust or otherwise handle insurance
claims. Highlights include:

Defines certain practices that constitute unfair methods of competition or

unfair or deceptive acts or practices and establish certain minimum
standards and methods of settling both first-party and third-party claims.

Does not prohibit using additional methods above the stated minimums if
they do not violate this rule or any other West Virginia statute or rule.

Applies to all insurance policies and insurance contracts except Workers'

Compensation.

Is not exclusive. Other acts, not specified in the rule, also may constitute
unfair claim settlement practices.

Does not create or recognize, either exclusively or impliedly, any new or

different cause of action not otherwise recognized by law.

Does not change former definitions of "Claimant," "First-Party Claimant," "Person,"

"Insurer," "Investigation," "Notification of Claim," "Third-Party Claimant," "Settlement of
Claims," "Insurance Policy," "Insurance Contract," or "Claim."

Deletes in the "Claimant" definition any reference to a "designated legal

representative, designated member of claimant's immediate family, or any
other person named by the insured" who may legally act on his/ her
behalf and who so acts without any compensation.

Adds "Commissioner" to mean West Virginia's Insurance Commissioner.

Adds "Licensee" to mean any person holding a license or certificate of
authority from the Commissioner, or any other entity for whom the
Commissioner's consent is required before transacting business in the
State of West Virginia or with residents of West Virginia.

37

File and Record Documentation

1.

Requires all communications and transactions from or by the insurer

to be dated and maintained in the claim file;

2.

Requires the date and substance of all oral communications to be

recorded in the claim file; and

3.

Requires a record or copy of all forms sent to claimants to be in the

claim file.

Representation of Policy Provisions & Benefits

An insurer is barred from requiring a first-party claimant to provide notification or proof
of a claim within a specified time, unless it is required by the policy or set by statute or
rule.
Standards for Acknowledging Pertinent Communications
Each producer or other licensee, in addition to each insurer, must furnish the
Commissioner with a complete written response to any inquiry within 15 working days of
the date appearing on the inquiry (the sole exception is responding to the notice of a
third-party administrative complaint, per new rules at 114 CSR 76-1, et seq.).
A "complete written response" must address all issues raised by the claimant or the
Commissioner and must include copies of any documentation requested.
This rule is not intended to permit delay in responding to Office of the Commissioner in
conjunction with a scheduled examination of the insurer's premises.
Standards for Prompt Investigation & Fair and Equitable Settlement
Every insurer is required to promptly conduct and diligently pursue a thorough, fair, and
objective investigation and may not unreasonable delay resolution by persisting in
seeking information that is not reasonably required for or material to the resolution of a
claim dispute. For medical professional liability claims, the Medical Professional Liability
Act (MPLA), West Virginia Code 55-7B-1, et seq., applies.
An insurer is required to establish investigatory procedures that:
1.

Require an investigation of any claim to commence within 15 working

days of receipt of notice of claim;

2.

Require the insurer to notify each first-party claimant (or authorized

representative) of all items, statements and forms the insurer
reasonably believes to be required of such claimant within 15
working days of receiving notice of the claim;

3.

Deems a claim to have been filed with an insurer unless an agent of

the insurer who receives it does not promptly notify the claimant that
the agent is not authorized to receive notices of claims; and

4.

Within 10 working days of completing its investigation, an insurer is

required to deny the claim in writing or make a written offer, subject
to policy limits. For medical professional liability claims, the MPLA
applies.

38

Offers of Settlement & Prohibition of Unreasonably Low Settlements

An insurer is prohibited from attempting to settle a claim by making a settlement offer
that is "unreasonably low." To determine whether an offer is "unreasonably low," the
Commissioner shall consider any evidence offered regarding the following factors:
1.

The extent to which the insurer considered evidence submitted by

the claimant to support the value of the claim;

2.

The extent to which the insurer considered legal authority or

evidence made known to it or reasonably available;

3.

The extent to which the insurer considered the advice of its claims
adjuster as to the amount of damages;

4.

The extent to which the insurer considered the opinions of

independent experts;

5.

The procedures used by the insurer in determining the amount of

damage;

6.

The extent to which the insurer considered the probable liability of

the insured and the likely jury verdict or other final determination of
the matter; and

7.

Any other credible evidence presented to the Commissioner that

demonstrates that the final amount offered in settlement of the claim
by the insurer is or is not below the amount that a reasonable person
would have offered in settlement of the claim after taking into
consideration the relevant facts and circumstances at the time the
offer was made.

Denial of Claims
1.

An insurer cannot deny a claim on the grounds of a specific policy

provision, condition or exclusion unless reference to such provision,
condition or exclusion is included in the denial; and

2.

A denial must be given to a claimant in writing or, if by means other

than a writing, a notation must be recorded in the insurer's claim file.

Notice of Necessary Delay in Investigating Claim

If an insurer needs more than thirty 30 calendar days from the date of receipt of a proof
of loss from a first-party claimant or a notice of claim from a third-party claimant to
determine whether the claim should be accepted or denied, the insurer is required to:
Provide written notification to claimant within 15 working days after the 30day period expires; and
Provide written notification to the claimant every 45 calendar days thereafter
1. as long as an investigation remains incomplete, stating why the
additional time is needed.
If a claim is being investigated as a suspected fraudulent claim, the insurer is not
required to disclose any information that could be reasonably expected to alert a
claimant to that fact; however, there must be "a reasonable basis supported by specific

39

information" available for review by the Insurance Commissioner that a claimant has
fraudulently caused or contributed to the loss before the insurer is relieved of the
requirements of this rule.
Time Limits
Every insurer must pay any amount finally agreed upon in settlement of all or part of a
claim not later than 15 working days from the receipt of such agreement by the insurer
or from the date of the performance by the claimant of any condition set by such
agreement, whichever is later.
The rule has been amended to require written notice be given to a first-party claimant in
not less than 30 days and to third-party claimants in not less than 60 days before the
expiration date of a time limit (statute of limitations or policy or contract time limit) that
may affect the rights of a claimant who is neither an attorney nor represented by an
attorney. Otherwise, any negotiation for the settlement of a claim with such a claimant is
barred.
Other Investigation & Settlement Standards

A provision prohibits insurers from offering incentives or compensation to its

employees, agents or contractors based on savings to the insurer as a result of
improperly denying the payment of claims.

An insurer is barred from deducting premiums owed on one policy from a claim
payment made under another policy unless the insured consents.

An insurer may not ask or require a claimant to submit to a polygraph

examination or other truth detection device in connection with the settlement
of a claim unless:

1.

Authorized under the applicable insurance contract;

2.

Authorized under state law; and

3.

The claimant gives written consent prior to use of the device.

Any notice rejecting any element of the claim must contain the identity and the
claims processing address of the insurer and the claim number. The notice also
must state that the claimant has the option of contacting the Commissioner
and include the Commissioner's mailing address, telephone number and
website address.

No claimant can be required to travel unreasonably either to inspect a

replacement motor vehicle or to obtain a repair estimate. Reference to "a
specific repair shop" is deleted.

An insurer may furnish to the claimant names of one or more conveniently

located motor vehicle repair shops that will perform repairs. However, an
insurer may not require a claimant to use a particular repair shop or location to
obtain the repair.

Added to the fifth criteria required of motor vehicle valuation sources other
than a valuation manual is that deductions made for the condition of the
insured vehicle "must be reasonably based on a physical attribute that has the
effect of decreasing the vehicle's value."

40

Training and Certification

Within 90 days of April 24, 2006 (effective date of rule), every insurer must adopt and
communicate to all of its claims agents written standards regarding the prompt
investigation and processing of claims.
Highlights of 114 CSR 76-1, et seq. (Administrative Complaint Process for ThirdParty Claimants)
Definitions Applicable to the Rule

"Claimant" means the third-party claimant as defined in 114 CSR 14-2.8.

"Complaint" means the administrative complaint filed by a third-party claimant
pursuant to West Virginia Code 33-11-4a(b).

"Egregious Act" means conduct that is either: (1) fraudulent, or (2) malicious
and reckless, whether or not the act constituted a pattern corresponding to an
unfair claim settlement practice committed with such frequency as to constitute
a general business practice. An act, or failure to act, that is due to negligence,
lack of judgment, incompetence, or bureaucratic confusion, is not an egregious
act.

"Respondent" means a person against whom a complaint is filed with the

Commissioner pursuant to West Virginia Code 33-11-4a(b).

"Sixty day period" means the 60 days following the respondent's receipt of a
Complaint.

Representation of Claimants and Respondents

Claimants who are natural persons (i.e., not created by law) may appear at
and represent themselves in any matter before the Insurance Commissioner.

Partners may represent their partnership with the Insurance Commissioner's

permission.

Corporations only can be represented by an attorney duly licensed or

authorized to practice law in the State of West Virginia, although a
corporation's employee may testify at a hearing without the presence of
counsel.

No party can be represented in any matter before the Commissioner by a

spokesperson, lay representative or any other natural person not admitted or
authorized to practice law in the State of West Virginia.

Any out of state attorney appearing before the Commissioner must have
obtained a pro hac vice admission to the West Virginia State Bar and
documentation of that permission must be supplied to the Insurance
Commissioner before any such attorney files any papers or makes an
appearance.

Filing of an Administrative Complaint

A written Complaint must be received by the Insurance Commissioner no later than
one year after the actual or implied discovery of the alleged unfair claim settlement
practice.

41

A Complaint is deemed filed on the date on which a written document describing acts that
could reasonably be construed as an unfair claim settlement practice is received by the
Insurance Commissioner, regardless of whether the document is on the following
described form.
A Complaint is to be on a form provided by the Insurance Commissioner (attached
hereto) and must state with specificity the following:
1.

The statutory provision, if known, which the person allegedly

violated;

2.

The facts and circumstances giving rise to the violation;

3.

The name of any individual or other entity involved in the violation;

4.

The specific policy language that is relevant to the violation, if

known; and

5.

Any other information the Commissioner may require.

If a Complaint does not provide sufficient information:

The Commissioner must contact the claimant within 15 days of its receipt
advising of the Complaint's insufficiency.

The claimant may amend the original Complaint within an additional 15 days
from the date of the Commissioner's contact to clarify the Complaint, add and/
or delete parties, and make any other necessary changes.

No further action on the Complaint is to be taken if the claimant does not

provide, in the 15 days allowed, the information needed for a sufficiently
complete complaint.

If a sufficiently complete Complaint is received:

The Commissioner must provide to any respondent (by mail or electronic

means) a copy of the Complaint within 5 working days of receiving a
satisfactory Complaint.

A respondent must, within 45 days of receiving a Complaint, inform the

in writing of the status of the negotiations with the claimant unless:

Commissioner

1.

Complaint has been resolved and the Commissioner is so advised; or

2.

The respondent has advised the Commissioner that it does not intend
to take any further action to resolve the Complaint.

If a Complaint is unresolved and remains open after the 60-day period, the Commissioner
is to conduct an investigation to determine the merits of the allegations. If merit is found:

The Complaint must be forwarded to the Office of Consumer Advocacy ["OCA"]

who may advocate for the claimant's interest at any hearing or during judicial
review of any administrative order.

The Commissioner may order further investigation or a hearing.

42

Resolution Without a Hearing

The Commissioner is to close a Complaint and take no further action (except as provided
in West Virginia Code 33-11-4(a)(I) and Rule 5.4) if it is determined that the
respondent:
1.

Substantially corrected the circumstances that gave arise to the

Complaint within the 60-day period;

2.

Offered to resolve the Complaint in a reasonable manner within 60day period; or

3.

Gave sufficient information to satisfy the Commissioner that the

Complaint lacks merit.

The Commissioner can close a Complaint any time after the 60-day period expires,
including during or after a hearing. A claimant has the right to demand a hearing in
writing pursuant to West Virginia Code 33-2-3 on the issue of whether the
Commissioner properly decided to close a Complaint. If error is found, the Complaint is re
-opened and proceeds as if no closure occurred. Other deadlines applying to a Complaint
are tolled until a determination is made after an improper closure hearing.
Despite any closure of a Complaint by the Commissioner under this rule, the
Commissioner has the authority to consider evidence related to the factual allegations of
the Complaint in determining (in the context of a proceeding other than the one involving
the closed claim itself) whether the alleged unfair settlement practice was, when
considered in conjunction with other similar violations, part of the general business
practice.
Determining the Need for a Hearing
After the 60-day period has expired without a resolution of the Complaint or the
respondent declares that no further action will be taken to resolve the Complaint within
the 60-day period, the Commissioner may conduct an investigation deemed necessary to
determine whether the allegations contained within the Complaint are meritorious.
If there is a finding that an unfair claim settlement practice has been committed, the
Commissioner also may conduct an investigation to determine whether the violation was
committed with such frequency as to constitute a general business practice.
For any Complaint not closed or that has been ordered to be reopened, and the
Commissioner makes a preliminary finding that the Complaint has merit, a complete copy
of the Complaint and the respondent's response, if any, must be forwarded to the "Office
of Consumer Advocacy."
Complaint Hearings

Shall be held within 90 days from the date a Complaint is filed unless it is
continued by agreement of all parties or by the Commissioner for "good cause."
"Good cause" includes, but is not limited to, the Commissioner's determination
that additional investigation is necessary.

Shall be assigned a time and place by the Commissioner by notice to the

parties at least 10 days in advance of the hearing.

Shall be conducted in the geographic region of the state where the complainant
resides, as determined by the Commissioner.

May be conducted by telephonic conference call, if all parties concur.

43

Shall be conducted pursuant to 114 CSR 13, except for conflicts with this rule.
Shall determine pre-hearing matters pursuant to 114 CSR 13.4.
Shall record testimony and evidence stenographically or by mechanical means.
Shall have findings made by the Commissioner of whether or not the
respondent committed an unfair claim settlement practice. If an unfair claim
settlement practice is found, the Commissioner is required to determine:

1.

Whether the violation was intentional;

2.

Whether the violation was the result of an egregious act; and

3.

Whether the violation was committed with such frequency as to

constitute a general business; and

4.

Whether a hearing is necessary brought pursuant

administrative proceeding initiated by the Commissioner.

to

an

May be continued or adjourned from day to day or to a later date to hear

evidence related to the required determinations that the Commissioner must
make.

Commissioner's Authority
Nothing in the rule limits the authority of the Commissioner to conduct an investigation
of, or to take action against, a respondent whom the Commissioner has reason to believe
has:
1.

Intentionally committed an unfair claim settlement practice;

2.

Committed an unfair settlement practice with such frequency as to

constitute a general business practice; or

3.

Consistently uses the 60-day period to resolve or settle a third-party

claim.

Penalties, Restitution & Judicial Review

If the Commissioner determines at the hearing that a respondent has committed an
unfair claim settlement practice, the Commissioner must:

Enter an Order directing the respondent to cease and desist the practice
The Commissioner may also assess penalties as prescribed by West Virginia
Code 33-11-6 (a) through (e), including:
1.

A fine up to $1,000 for each UTPA violation to an aggregate of

$10,000 if the violation was not intentional and not conducted with
such frequency so as to constitute a general business practice.

2.

A fine up to $5,000 for each UTPA violation to an aggregate of

$100,000 in a six-month period if the insurer knew or should have
known it was a UTPA violation.

3.

A fine up to $10,000 for each UTPA violation without an aggregate

limit if the Commissioner finds the act was intentional, but not
conducted with such frequency so as to constitute a general business
practice.

44

4.
A fine up to $250,000 if the Commissioner finds that a violation
occurred with such frequency as to constitute a general business practice. Such a finding
of a general business practice must involve substantially similar violations in a number of
separate actions.
5.
Revoke or suspend the license of any persons who knew or
reasonably should have known, they were in violation of the UTPA.
6.
Order restitution to be awarded to the claimant to be paid form the
Unfair Claim Settlement Practice Trust Fund established by West Virginia Code 33-11-4
(b).

If the Commissioner determines that the claimant has suffered damages a a

result of a general business practice of the respondent or an egregious act that
was made by the respondent, regardless of whether the act occurred as a
general business practice, the Commissioner may award the claimant actual
economic damages and up to $10,000 for non-economic damages. There can
be no award for attorney fees or punitive damages.

Judicial review is available for any person aggrieved by any act of the Commissioner,
which includes the entry of an Order, or by a failure of the Commissioner to act, pursuant
to West Virginia Code 33-2-14 and 33-11-6(g).

An appeal must be filed:

1.

Within 30 days after the Commissioners order (or order denying a

rehearing) has been mailed or delivered to the persons entitled to
receive it.

2.

By written petition to the Kanawha County Circuit Court with a copy

to the Commissioner who, in turn, must transmit the record of the
proceedings to the clerk of that court.

The petitioner must give written notice to the Commissioner of the time and place the
judge has set for a hearing at least 15 days prior to the hearing.
The judge, without a jury, is to hear and determine the matter upon the record of the
proceedings before the Commissioner and enter an order revising or reversing the order
of the Commissioner for further proceedings.
If good cause is shown, the Judge may permit additional evidence to be introduced.
Pending such appeal, the order of the Commissioner shall be in full force and effect
unless stayed until final determination by the Commissioner of the court or judge before
whom the appeal is pending.
The State Supreme Court of Appeals may review the circuit court's judgment on appeal in
the same manner as other civil cases to which the State is a party.
XII.

Insurance Related Case Law

Below is a brief summary of significant insurance-related decisions of the Supreme Court

of Appeals of West Virginia over the past several years.

45

Satterfield v. Erie Insurance Property and Casualty, 618 S.E.2d 483 (June 30,
2005)
The Court determined that where an insured who holds more than one automobile
insurance policy with the same insurer acquires an additional vehicle, the named
inclusion of the additional vehicle on one insurance policy does not operate to remove
coverage extended by the "newly acquired auto clause" in a separate policy, barring
language that (1) expressly terminates coverage in such circumstances, or (2) requires
the insured to make an election as to the specific policy under which coverage is sought.
Glen Falls Ins. Co. v. Smith, 617 S.E.2d 760 (July 1, 2005)
Based on a prior decision, the Court held that when a homeowners' or automobile policy
does not otherwise define the phrase "resident of your household," that phrase means a
person who dwells, though not necessarily under a common roof, with other individuals
who are named insureds in a manner and for a sufficient Based on a prior decision, the
Court held that when a homeowners' or automobile policy does not otherwise define the
phrase "resident of your household," that phrase means a person who dwells, though not
necessarily under a common roof, with other individuals who are named insureds in a
manner and for a sufficient length of time so that they could be considered to be a family
living together. The factors to be considered in determining whether that standard has
been met include, but are not limited to, the intent of the parties, the formality of the
relationship between the person in question and the other members of the named
insureds' household, the permanence or transient nature of that person's residence
therein, the absence or existence of another place of lodging for that person, and the age
and self-sufficiency of that person.
Ferrell v. Nationwide Mutual Ins. Co., 617 S.E.2d 790 (July 8, 2005)
In this case, the Court was asked to answer the following certified question: "May an
insurance company seek reimbursement of medical expense payments made to an
insured, where (a) the insurance policy allows the insurance company to seek
"reimbursement" of those medical expense payments from the insured out of any
recovery obtained by the insured from a third party; (b) the proceeds of the recovery
from the third party duplicate the insurance company's medical expense payments to the
insured; and (c) the insurance company is the liability insurer of the third party"?
Before answering this certified question, the Court summarized West Virginia's position
regarding subrogation clauses in insurance policies. The Court stated that, generally
speaking, this state's public policy permits insurers to pursue subrogation of medical
payments from their own insureds. The Court went on to say that insurers can, in fact,
pursue subrogation against an insured who receives benefits under the policy if the
insured successfully recovers from a tortfeasor, although the insurer must reimburse the
insured its share of the attorney fees and costs of obtaining the recovery from the
tortfeasor.
A different result occurs, however, when an insurer seeks subrogation of medical expense
payments from a plaintiff-insured when both the plaintiff-insured and the tortfeasor are
insured by the same insurance company. In this instance, the Court noted a previous
decision where it held that no right of subrogation can arise in favor of an insurer against
its own insured since by definition subrogation arises only with respect to rights of the
insured against third persons to whom the insurer owes no duty.

46

The Court then noted that a different outcome might be reached if an insurer were to
have policy language that clearly created a contractual right to "reimbursement" of
medical payments it had advanced to its insured to the extent such medical payments
were compensated by a settlement with or judgment against a tortfeasor who it also
insured.
Hicks v. Jones, 617 S.E.2d 457 (July 8, 2005)
In this case, the Court addressed the meaning of the phrase "fair and equitable
settlement," as stated in the Unfair Trade Practices Act at West Virginia Code 33-11-4
(9)(f). It was held that a fair and equitable settlement was one that is made by the
insurer impartially, honestly, and free from prejudice, self-interest or other improper
influence. Moreover, the Court went on to state that such a settlement implies a
disposition of a claim for an element of damages that has a basis in evidence and in
reason, and achieves a fitting and right balance of considerations that is free from
favoritism, and is fair and equal to all concerned.
Newark Ins. Co. v. Brown, 624 S.E.2d 783 (Nov. 18, 2005)
The Court found that West Virginia Code 33-6-31(b), which requires an automobile
liability policy to provide an option of uninsured and underinsured motorist coverage,
does not require an offer of such coverage when an insured purchases umbrella liability
policy. However, West Virginia Code 33-6-31f(a), which was enacted after West Virginia
Code 33-6-31(b) in 2001, does require an offer of such coverage by an insurer issuing
an excess or umbrella policy covering automobile liability. Because West Virginia Code
33-6-31f(a) is more specific in nature, it prevails over the more general provision of West
Virginia Code 33-6-31(b). Thus, as of July 2001, which was the effective date of West
Virginia Code 33-6-31f(a), insurers who issue (or issued) excess or umbrella policies
covering automobile liability must provide the insured the option of purchasing uninsured
and underinsured motorist coverage.
Aluise v. Nationwide Mutual Fire Ins., 625 S.E.2d 260 (Dec. 1, 2005)
The Court held that, absent policy language to the contrary, a homeowners policy
defining occurrence as bodily injury or property damage resulting from an accident
does not provide coverage for an insured homeowner who is sued by a home buyer for
economic losses as a result of the insured negligently or intentionally failing to disclose
defects in the home.
Dairyland Ins. Co. v. West Virginia National Auto Ins. Co., 624 S.E.2d 599 (Dec.
2, 2005)
It was determined by the Court that if an insurance company chooses to issue a new
policy of automobile liability insurance and the insured fails to pay the initial premium or
otherwise provide consideration for the new policy, the insurer may cancel the policy but
must provide the insured with at least 10 days notice of the cancellation as required by
West Virginia Code 33-6A-1(e). Where there has been an invalid cancellation of an
automobile liability policy, the policy remains in effect until the end of its term or until a
valid cancellation notice is provided to the insured, whichever occurs first.

47

Gibson v. Northfield Ins. Co., 631 S.E.2d 598 (Dec. 2, 2005)

An insurance company may incorporate into a governmental entitys motor vehicle
insurance policy limiting terms and conditions that violate the statutory requirement that
a policy contain coverage that protects the named insured against liability for death,
bodily injury, loss or damage that results from negligence in the operation or use of a
vehicle. However, the limiting terms and conditions in such a policy are statutorily
required to be determined by the political subdivision in its discretion as set forth by W.
Va. Code 29-12-16(a). In other words, the limiting terms and conditions must be the
result of some choice, judgment, volition, wish or inclination as a result of investigations
or reasoning by the governmental entity. Enforcement of the limiting terms and
conditions will not occur merely because they are different from those found in the typical
insurance policy.

Jenkins v. State Farm Automobile Ins. Co., 632 S.E.2d 346 (May 18, 2006)
The Court found that underinsured motorist ("UIM") coverage under a policy issued to the
insured's spouse did not apply while the insured was driving his mother's vehicle. Even
though the spouse's policy allowed for UIM benefits up to the highest limit of liability of
any applicable policy, it unambiguously made UIM coverage inapplicable for injury to the
insured while occupying or otherwise using a vehicle owned by a relative if the vehicle
was insured for UIM coverage under a policy issued by the same insurer.
Gauze v. Reed, 633 S.E.2d 326 (July 5, 2006)
The underlying dispute arose from a single-car accident that occurred on September 4,
2001. The complaint filed by the plaintiff alleged that the defendant negligently operated
her vehicle in which he was riding as a passenger.
The vehicle involved in the accident was owned by the Human Resource Development
Foundation (HRDF), a non-profit agency and an administrator of a state-funded program
that provided lower income applicants with transportation for job purposes. The vehicle
was leased to the defendant under a lease-to-own arrangement. In the lease agreement,
HRDF acknowledged sole ownership of the vehicle and agreed to provide insurance
coverage on the vehicle.
The insurance company that provided coverage was declared insolvent shortly after the
accident, and liquidation was ordered by the Circuit Court of Cook County, Illinois. As a
result of the insolvency order, the appellee West Virginia Insurance Guaranty Association
(Guaranty Association) stepped into the insolvent insurers place and assumed the
defense of the defendant.
As a non-profit agency, HRDF also qualified for insurance coverage provided through the
State of West Virginia by the Board of Risk and Insurance Management, as authorized by
West Virginia Code 29-12-5. The Board of Risk and Insurance Management purchased
automobile liability insurance from National Union Fire Insurance Company (NUFIC) for
vehicles owned by HRDF, including the vehicle leased to Ms. Reed.
The statute which creates the Guaranty Association requires that a plaintiff exhaust all
potential solvent sources of insurance coverage before recovering from it. This provision
is commonly referred to as the non-duplication provision of the Insurance Guaranty
Association Act.

48

Following the insolvency of the liability insurer, NUFIC contended that its policy did not
provide liability insurance coverage for the plaintiff's claim, as its policy was an excess
insurance policy rather than a primary liability insurance policy. NUFIC pointed to other
insurance language contained in the certificate of liability insurance indicating that if
HRDF has other primary insurance from another source, then there was no coverage
provided by NUFIC's policy except to the extent that the amount of loss exceeds the
limit of liability of the other primary insurance policy. NUFIC therefore argued that
because HRDF had purchased other primary insurance, and the Guaranty Association had
assumed responsibility for the insolvent insurers policy once the company was declared
insolvent, then the Guaranty Association was responsible for providing the primary
liability insurance coverage for the defendants negligence. In short, NUFIC argued that it
provided only excess insurance coverage to HRDF, and that its responsibility under the
policy would only be triggered when the Guaranty Association had exhausted its
obligation to provide primary coverage.
The Guaranty Association argued that the NUFIC policy explicitly defines the coverage
provided as primary for any covered auto owned by the insured. The policy stated,
under the title other insurance:
For any covered auto you own, this Coverage Form provides primary insurance. For any
covered auto you don't own, the insurance provided by this Coverage Form is excess
over any other collectible insurance.
The policy defined HRDF as an additional insured. The Guaranty Association therefore
asserted that because HRDF owned the auto involved in the accident, the coverage under
the NUFIC policy was primary liability coverage by the policy's own terms and conditions.
The Guaranty Association also noted that the language of the NUFIC policy was
ambiguous, and should be construed against NUFIC.
In an order dated February 15, 2005, the circuit court rejected NUFIC's argument that
its policy was nothing more than an excess liability insurance policy that was intended to
provide coverage only after primary insurer had fulfilled its obligations. The circuit court
concluded that the terms of the NUFIC policy, . . . identify it as a primary insurer. . .
Thus, the plain language of the
policy is such that it provides primary insurance
to automobiles owned
and operated by the insureds, [HRDF and the defendant].
In finding for the Guaranty Association, the Supreme Court held:
When an insurance company (a) issues a primary liability insurance policy;
and (b) has contracted for and received a premium for a risk as though it were a primary
insurer; but (c) the insurance company has become a secondary insurer by operation of
an other insurance clause in the policy and the existence of another primary insurance
carrier, then if that other insurance carrier is declared insolvent, the insurance company
is responsible for coverage of the loss as though it were the sole primary liability insurer.
State ex rel. Erie Insurance Property & Casualty Co. v. Mazzone, et al., 648
S.E.2d 31 (June 7, 2007)
In this case, the Supreme Court denied a writ of prohibition sought by insurer in a thirdparty bad faith action to prevent enforcement of an order requiring disclosure of relevant
reserves information to the plaintiff below. In short, the issue was whether case reserves
information is privileged from disclosure. In the following enumerated syllabus points,
the Court held as follows:

49

(4) When individual case reserves information is set by an attorney or by a non-lawyer

representative with the primary intent of preparing for litigation, then the individual case
reserves information is subject to protection from discovery as opinion work product
pursuant to Rule 26(b)(3) of the West Virginia Rules of Civil Procedure.
(5) For the purposes of Rule 26(b)(3) of the West Virginia Rules of Civil Procedure,
aggregate reserves documents compiled for specific litigation either by a lawyer or by a
non-lawyer representative are opinion work product and merit greater protection from
discovery. However, aggregate reserves documents not developed primarily in
anticipation of specific litigation but produced for general business purposes are not
protected by the work product rule.
(6) Reserves documents determined to be opinion work product are generally protected
from disclosure under the provisions of Rule 26(b)(3) of the West Virginia Rules of Civil
Procedure unless the party seeking discovery demonstrates compelling need for the
materials, which shall include proof that the opinion materials qualify for a recognized
exclusion from application of the work product doctrine.
With regard to the disclosures at issue, the Court held that there was no basis in the
limited record to conclude that the reserves were set for reasons other than the ordinary
course of business, and that Erie did not prove that the principal reason for setting the
reserves was anticipation of litigation.
Strum, et al. v. Swanson, 653 S.E.2d 667 (Oct. 26, 2007)
In this case, an insured, as personal representative of automobile accident victim's
estate, brought action against personal automobile insurer to recover underinsured
motorist (UIM) benefits for wrongful death of victim even though victim was not an
insured.
In adopting the majority view of other jurisdictions, the Court held that the West Virginia
wrongful death statute does not support a cause of action seeking benefits through a
claimant's personal UIM insurance policy, where that claimant is acting in his or her legal
capacity as a personal representative of an estate and the decedent was not insured
under the UIM policy at issue.
Keefer v. Farrell, 655 S.E.2d 94 (Nov. 8, 2007)
The operator of a farm tractor was injured by an uninsured motorists while attempting to
load the farm tractor on a tractor trailer for transport. Operator brought an action against
tractor trailer owner and its insurer seeking to recovery against uninsured motorists
benefits provided in the policy of insurance covering the tractor trailer. The issue before
the Court was whether the act of loading, or attempting to load, the farm tractor
constituted use of the tractor trailer for the purpose of coverage. The Court held:
Tractor operator, injured in collision with uninsured motorist on roadway while
attempting to load tractor onto trailer, was occupying the insured truck to
which the trailer was attached, thus supporting award of uninsured motorist
(UM) benefits to tractor operator under truck owner's business auto policy;
although tractor was yet thirty feet away from truck and trailer when accident
occurred, operator was in the process of getting on the truck, as the sole
reason operator was driving the tractor, as well as the sole reason for the truck
being in the driveway, attached to a trailer, with the trailer's ramps down, was
to load the tractor onto the truck.

50

Nationwide Mutual Insurance Company v. Kaufman, 658 S.E.2d 728 (Jan. 25,
2008)
This case involves a motor vehicle accident and a companion claim for a non-bad faith
case of action against Nationwide. During written discovery, the Plaintiff requested
documents and claim file materials. Counsel for Nationwide lodged a blanket objection to
these materials and asserted the attorney-client and/or work/product privilege.
Furthermore, counsel for Nationwide filed a motion in Circuit Court to stay the discovery
in this matter because of the pending non-bad faith third party action.
The court held, [t]hat the general procedure involved with the discovery of allegedly
privileged documents is as follows: (1) the party seeking the documents must do so in
accordance with the reasonable particularity requirement of Rule 34(b) of the West
Virginia Rules of Civil Procedure; (2) if the responding party asserts a privilege to any of
the specific documents requested, the responding party shall file a privilege log that
identifies the document for which a privilege is claimed by name, date, custodian, source
and the basis for the claim of privilege; (3) the privilege log should be provided to the
requesting party and the trial court; and (4) if the party seeking documents for which a
privilege is claimed files a motion to compel, or the responding party files a motion for a
protective order, the trial court must hold an in camera proceeding and make an
independent determination of the status of each communication the responding party
seeks to shield from discovery.
With respect to Nationwides motion for a protective order and to stay discovery, the
Court held that the following factors will be considered before staying the proceedings in
a pending non-bad faith third party action, (1) the number of parties in the case; (2) the
complexity of the case; (3) whether undue prejudice would result to the plaintiff if
discovery is stayed; (4) whether a single jury will ultimately hear both cases; (5) whether
partial discovery is feasible on the claim against the insurer, and (6) the burden placed
on the trial court by imposing a stay on discovery. The party seeking to stay discovery
has the burden of proof on the issue.
SER Nationwide Mutual Insurance Co. v. Judge M. Karl, 664 S.E.2d 667 (Feb. 14,
2008).
After Plaintiff settled for policy limit with liability carrier, Nationwide, as UIM carrier,
appeared and defended in name of tortfeasor. Counsel appearing in the name of the
tortfeasor and representing Nationwide was employed by Nationwide as in-house counsel
and worked for Nationwide Trial Division that operated as Law Offices of W. Stephen
Flesher.
While in-house counsel operated as Law Offices of W. Stephen Flesher, the office
answered the phones Nationwide Trial Division and Nationwide Trial Division appeared on
all letterhead, business cards and other documents.
Just prior to trial, the defendant objected to a question contained in the Plaintiffs
proposed voir dire that would have caused the Court to ask the jury panel if they were
familiar with Nationwide Trial Division. The defendant objected because it would likely
have the effect of putting the jury on notice that insurance was available to pay any
judgment rendered.

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When the Court refused to strike the proposed questions, the defense moved the Court to
continue the trial so that the matter could be taken up to the West Virginia Supreme
Court of Appeals. The plaintiff, not wanting to delay the trial attempted to withdraw the
question. However, the Court refused to allow the question to be withdrawn and
continued the trial.
The West Virginia Supreme Court of Appeals held that, during voir dire, when in-house
counsel is utilized by the defense, it is proper to inquire of the jury panel if they are
familiar with anyone associated with the defense firm. If the defense happens to be
provided by a captive firm operated by an insurance company and holding itself out to
the public as a division of the insurance company, then it is proper to use the name of
the insurance company. The Court held that this would not violate the rules of evidence
because it was not being done to suggest that insurance was available but rather for the
purpose of determining if any potential jury was biased in favor or against defense
counsel.
While the issue of the use of captive firms was not directly addressed by the Court, in a
footnote Justice Benjamin made it clear that he had serious questions about the ability of
in-house counsel to remain loyal to their client when they were directly employed by the
insurer.
Horkulic v. Galloway, 665 S.E.2d 284 (Feb. 19, 2008)
This matter was initially presented as a legal malpractice action filed by Jeffrey Horkulic,
Rebecca Horkulic, and Jeffrey Horkulic as natural parent and legal guardian of Stephanie
Horkulic and Benjamin Horkulic (Appellees) against their former attorney, Mr. William
O. Galloway and Galloway Law Offices. The Appellees amended their complaint to assert
a third-party bad faith claim against TIG, Cambridge Professional Liability Services, and
Acordia of West Virginia. After the bad faith claim was stayed and bifurcated, the Circuit
Court of Hancock County granted Appellees motion to compel enforcement of settlement
agreement, and awarded former clients attorney fees incurred in connection with the
motion. Insurer appealed and petitioned for a writ of prohibition.
After consolidating the appeal and the writ petition, the Supreme Court of Appeals held
that: (1) findings in court order granting motion to compel enforcement of judgment,
which included attorney/insured's confession of judgment in excess of policy limits, would
not be binding on insurer in subsequent third-party bad faith action against insurer; (2) a
consent or confessed judgment against an insured party was not binding on that party's
insurer in subsequent litigation when the insurer was not a party to the proceeding; (3)
attorney/insured's waiver of attorney-client privilege in settlement agreement did not
affect insurer's rights to assert any attorney-client privilege belonging to insurer; and (4)
insurer could not be ordered to pay former clients' attorney fees without a full evidentiary
hearing and the opportunity to participate fully.
Fauble v. Nationwide Mutual Fire Insurance Company, 664 S.E.2d 706 (June 16,
2008)
The Faubles owned a home that was covered by a policy of homeowners insurance
issued by Nationwide. A third-party caused damage to the Faubles home while
performing construction blasting on nearby property. The Faubles made a claim to
Nationwide and the claim was paid in the amount of $49,843.43. The Faubles then made
a claim against the third-party and reached a pre-suit settlement of $80,000.00.

52

After learning of the settlement agreement, Nationwide demand that it be repaid dollar
for dollar out of the settlement proceeds in the amount of $49,843.43. The Faubles,
relying upon a prior opinion of the West Virginia Supreme Court of Appeals asserted that
Nationwide must take a one-third reduction to pay its pro-rata share of attorneys fees
from the total settlement of $80,000.00. When Nationwide refused to accept the
reduction, the Faubles were forced to file suit against the third-party to preserve their
claim. Nationwide intervened in the suit and a declaratory judgment action was
commenced regarding the amount of the total settlement to be subrogated back to
Nationwide.
The circuit court ultimately found as a matter of law that Nationwides subrogation
interest must be reduced to reflect its pro-rata share of attorneys fees. Nationwides
petition for appeal was denied.
After Nationwides petition for appeal was denied, the Faubles then filed a motion with
the circuit court seeking to recover attorneys fees from Nationwide related to bringing
the action after a settlement agreement had been reached but could not be concluded
because of Nationwides refusal to take a reduce payment.
The circuit court denied the Faubles motion. On appeal, the West Virginia Supreme Court
of Appeals found that it was well settled law that the insurer must take a reduced
payment equal to its pro-rata share of attorneys fees. By Nationwides refusal to accept
this reduction, the Faubles were forced to commence litigation, during which they
substantially prevailed. The Court further found that because the Faubles entitlement to
reduce Nationwidess subrogation amount was a necessary element of the subrogation
clause contract, the prinicpals of Hayseeds applied and the Faubles were entitled to
recover attorneys fees from Nationwide.
Savarese v. Allstate Insurance Company, 672 S.E.2d 255 (Sept. 26, 2008)
Plaintiff, an Allstate insured was an Ohio resident who was injured in an automobile
accident occurring Ohio with another Ohio resident. The plaintiff retained a West Virginia
attorney (David Jividen of Wheeling, West Virginia), who filed the personal injury action
in Ohio.
At the time of the accident, the plaintiff had an insurance policy with the defendant
Allstate which included $25,000.00 in medical payments coverage. Both parties to the
policy contracted for the policy in Ohio and it was expressly subject to Ohio law. The
plaintiff, through his West Virginia attorney set about trying to collect on his medical
payments coverage. The claims were handled by codefendant adjusters located in Ohio
and Alabama. During the course of the handling of the medical payments claim, requests
for information and notification of benefits and coverage were directed to the plaintiffs
West Virginia attorney pursuant to the attorneys notice of representation.
Three years after the subject accident, the plaintiff filed suit in Ohio County, West Virginia
against Allstate, an Illinois corporation with a principal place of business in Illinois, and
against the individual adjusters for first party bad faith and breach of contract. After a
removal to federal court and a remand to Ohio County, Allstate moved to dismiss on the
basis of a lack of venue and subject matter jurisdiction.
The plaintiff responded asserting that Allstates communications with his lawyer in West
Virginia served as a basis for both venue and subject matter jurisdiction. The Circuit
Court of Ohio County agreed and dismissed the case. The plaintiff appealed to the West
Virginia Supreme Court of Appeals.

53

The Supreme Court of Appeals found that the West Virginia venue statute, West Virginia
Code 56-1-1 clearly controlled:
Effective for actions filed after the effective date of this section, a nonresident
of the state may not bring an action in a court of this state unless all or a
substantial part of the acts or omissions giving rise to the claim asserted
occurred in this state.
The Supreme Court of Appeals found that Allstate and the individual defendants were
required to direct communications to plaintiffs attorney in West Virginia solely due to his
decision to retain a West Virginia attorney. But for this decision, the Court reasoned the
such an obligation would not exist. Recognizing that the attorney is an agent of the
client, the Court further reasoned where the agents acts are not at issue, the mere
presence of the agent in a jurisdiction should not be the sole foundation to support
venue in that jurisdiction.
The Court also noted:
Indeed, a fundamental tenet of agency law is that the principal is liable for the
acts of the agent. Where the acts of the agent are not at issue in determining liability, the
location of the agent is not relevant to a venue determination. As the defendant pointed
out, any contractual obligation to the plaintiff belonged to the plaintiff in Ohio, not to his
attorney in West Virginia.
American Modern Home Ins. Co. v. Corra, 671 S.E.2d 802 (Dec. 15, 2008)
American Modern brought a declaratory judgment action seeking to have the Court
declare that a homeowner knowing allowing underage adults to drink in his home did not
constitute an occurrence under the policy that would trigger coverage. Mr. Corra had
been sued after one of the minors was killed and several injured as a result of automobile
collision. The Court held that:
Absent policy language to the contrary, a homeowners insurance policy
defining occurrence as an accident, including continuous or repeated
exposure to substantially the same general harmful conditions, which results,
during the policy period, in . . . . bodily injury or property damage does not
provide coverage where the injury or damage is allegedly caused by the
homeowners conduct in knowingly permitting an underage adult to consume
alcoholic beverages on the homeowners property.
State of West Virginia ex rel. Nationwide Mutual Insurance Co. v. The Honorable
John Lewis Marks, Jr., 676 S.E.2d 156 (Mar. 27, 2009)
This case came before the Supreme Court of Appeals of West Virginia on petition for writ
of prohibition filed by Nationwide to prohibit the circuit court from ordering the production
of confidential settlement agreements. The insured, Mr. George, was injured in collision
and brought a first-party bad faith claims against Nationwide pursuant to West Virginia
Code 33-6-31(b), alleging a failure to make a reasonable offer of underinsured motorist
(UIM) coverage.

54

In discovery requests, the Georges asked whether Nationwide had paid any money,
settled or resolved any first party un-fair insurance claims practices; bad faith settlement
conduct, or unfair trade practices violations asserted by insured or third party. The
interrogatories then requested the details of the settlement, verdicts, judgments, and
resolutions, and to produce a copy of the same in writing, including any confidential
settlement or resolution for each dispute.
Nationwide objected on basis that the
requests were overly broad, oppressive, and burdensome, as well as that the documents
are confidential. Nationwide responded, but with a disclaimer stating that the list
provided is an incomplete, partial list of cases created for litigation purposes only.
Thereafter, the Georges filed their Motion to Compel Discovery, and the circuit court
granted the Motion ordering Nationwide to completely respond and produce documents.
However, the court also issued a protective order concerning the confidential settlement
agreements.
In response, Nationwide sought a writ of prohibition from the Supreme Court of Appeals
arguing that the production of the documents is improper due to their confidential nature.
Because Nationwide only plead one narrow issue, the Court would not address the
argument that the request for production of settlement agreements entered into by
insurer was overly burdensome, the insurer failed to brief the issue of the discovery
requests being overly burdensome. In a footnote, the Court emphasized that it was
troubled by Nationwide's failure to accurately reflect the lower court's rulings in its
petition for writ of prohibition. The Court found that Nationwide failed to accurately reflect
the mandate of the circuit court's order: it didnt order all privileged documents to be
produced. In its analysis, the Court analogized the case to SER Nationwide Mut. Ins. Co.
v. Kaufman, 222 W.Va. 37, 658 S.E.2d 728 (2008) and reiterated the standard for
issuing a writ of prohibition and reviewed the general procedure involved with the
discovery of allegedly privileged documents. The Court found that the rule to show cause
was improvidently granted, and denied Nationwides petition for writ of prohibition.
Boniey v. Kuchinski, 677 S.E.2d 922, (May 14, 2009)
Plaintiff was injured while riding as a passenger on an ATV. At the time of the subject
injury, the ATV was being operated off-road. The Plaintiff initially made a claim against
the liability policy held by defendant. When liability carrier denied the claim because the
ATV was not covered, the Plaintiff made a claim for uninsured benefits against two State
Farm policies under which she was insured.
The Court held that:
As noted above, uninsured motorist coverage is intended to provide the
equivalent of motor vehicle liability coverage under our financial responsibility
law. In other words, unisured motorist coverage is intended to place a
motorists who is injured by the negligence of an uninsured motorist in the
position he or she would have been in if the negligent motorist had complied
with the financial responsibility law and procured the required amount of
liability insurance.
Because no liability coverage is required for off-road vehicles, such as ATVs, no
uninsured coverage is mandated to provide the equivalent of such coverage. As such, the
Plaintiffs attempt to collect against her uninsured coverage failed.

55

Blankenship v. City of Charleston, 2009 WL 1740184 (June 18, 2009)

This case involves a declaratory judgment action within a personal injury action pursuant
the West Virginia Supreme Court of Appeals ruling in Christian v. Sizemore, 185 W.Va.
409, 407 S.E.2d 715 (1991). Plaintiff Blankenship slipped on spilled beer adjacent to a
concession stand at the Charleston Civic Center while attending a concert and was
injured. He sued the City of Charleston and through discovery learned that the
concession stand was operated by Lakewood Swim Club, a private pool club. Charleston
sued Lakewood in a third party action and Lakewood presented its claim to Evanston
Insurance Company, its commercial general liability insurer. Determining that the claim
was outside the policys provisions, Evanston declined to defend or indemnify Lakewood,
and Lakewood filed a fourth party complaint against Evanston seeking a declaration that
coverage was available for a defense and indemnification.
At the circuit court, Evanston argued that there was no coverage for the plaintiffs claims
and therefore no duty to defend based on the clear and unambiguous policy language.
The circuit agreed and granted Evanston summary judgment on the declaratory
judgment action. Lakewood appealed to the West Virginia Supreme Court of Appeals.
In affirming the circuit court, the Supreme Court of Appeals examined the language in an
endorsement which confined coverage for those claims arising out of the ownership of the
premises and/or the operation of the project shown on the endorsements schedule. In
this case, both the premises and project was the private pool. The Court applied the rule
that where policy provisions are clear and ambiguous, they are not subject to judicial
construction, but that the language should be given its plain, ordinary meaning. Syl. Pt.1
Christopher v. U.S. Life Ins. Co., 145 W.Va. 707, 116 S.E.2d 864 (1960); Syl.Pt. 1 Solvia
v. Shand, Morahan & Co., Inc., 176 W.Va. 430, 345 S.E.2d 33 (1986), overruled on other
grounds by Nationwide Mut. Ins. Co. V. McMahon & Sons, Inc., 177 W.Va. 734, 356
S.E.2d 488 (1987). Because the policy endorsement clearly contemplated that the policy
would cover claims only arising from the ownership or use of the pool, fund raising
events such as operating a beer concession at the Civic Center were clearly outside the
policys coverage provisions. Accordingly, the Court reasoned, Evanston owed Lakewood
neither a defense nor indemnity.
State ex rel. State Farm Mut. Auto. Ins. Co. v. Bedell, 2010 W. Va. Lexis 79 (June
16, 2010)
This case involved a Protective Order entered by the circuit court which required the
insurer to return or destroy the plaintiffs medical records upon the conclusion of the civil
action. State Farm objected to the Protective Order, arguing that legislative rules
promulgated by the West Virginia Insurance Commissioner prohibited this conduct and
that if it were to adhere to the courts Protective Order, then the insurer would be in
violation of the legislative rules. The Supreme Court held that a regulation proposed by
an agency and approved by Legislature is a legislative rule and as such has the force and
effect of law. A valid legislative rule is entitled to substantial deference and can be
ignored only if the agency has exceeded its constitutional or statutory authority or is
arbitrary or capricious. Thus, a court may not issue a protective order directing an
insurance company to return or destroy a claimants medical records prior to the time
period set forth by the Insurance Commissioner in 114-15-4.2(b) and 114-15-4.4(a)
of the Code of State Rules.

56

These rules require an insurer to maintain records for the current calendar year plus five
calendar years, from the closing date of the period of review for the most recent
examination by the commissioner, or a period otherwise specified by statute as the
examination cycle for the insurer.
In addition, the Court addressed the plaintiffs challenge that State Farm electronically
stored the plaintiffs medical records and that it should be prohibited from doing such,
believing that State Farm would disseminate such private information to third parties
such as the National Insurance Crime Bureau (NICB), thereby violating her rights to
privacy and confidentiality. The Court found that the Protective Order was issued without
any basis, as there were no facts to support plaintiffs allegations. The Court did,
however, leave open the possibility that the dissemination of such private information
may be prohibited.
Michael, et al. v. Appalachian Heating, LLC and State Auto Ins. Co., 2010 W. Va.
Lexis 69 (June 11, 2010)
The plaintiffs, Doris Michael, Kitrena Michael and Todd Battle, are African Americans who
resided together in a public housing apartment that caught fire, allegedly due to the
negligence of Appalachian Heating, causing a total loss of the plaintiffs personal
property. State Auto insured Appalachian Heating. Following the fire, State Auto settled
the plaintiffs claims but paid only $2,500 in general damages to Doris Michael and Todd
Battle and nothing to Kitrena Michael.
The plaintiffs filed suit, alleging that State Auto had violated the West Virginia Human
Rights Act in settling their claims due to their race and because they resided in public
housing. The Court held that the West Virginia Human Rights Act, West Virginia Code 5
-11-9(7)(A), prohibits unlawful discrimination by a tortfeasors insurer in the settlement
of a property damage claim when the discrimination is based upon race, religion, color,
national origin, ancestry, sex, age, blindness, disability or familial status. In doing so,
the Court rejected State Autos argument that the Unfair Trade Practices Act precludes a
third-party action against the insurer such that the plaintiffs sole remedy is to file an
administrative complaint with the Insurance Commissioner.
Putnam Bancshares, Inc. v. Progressive Classic Ins. Co., 692 S.E.2d 658 (2010)
This case involves a denial of coverage by the insurer after the insured failed to renew
the insurance coverage. The issue before the court was whether the insurer was required
to provide notice to the insured and the loss payee of cancellation of the policy.
In August 2006, Terry Daniel purchased a vehicle from T.C.s Used Cars and was
financed by Putnam County Bank. The loan was contingent upon Daniel obtaining and
maintaining an insurance policy sufficient to cover any physical damage to the vehicle
and that the policy list Putnam County Bank as a loss payee. On August 23, 2006,
Progressive issued an insurance policy to Daniel with Putnam County Bank as a loss
payee. The policy was effective for a 6-month period through February 23, 2007.
On January 29, 2007, Progressive offered to renew Daniels policy by mailing him a
renewal invoice which also included a Declarations Page and Proof of Insurance cards for
the renewal period. The declarations page noted that it was effective only if Daniel paid
the renewal premium. The renewal invoice also expressly noted that the renewal
premium was due by February 23, 2007.

57

On February 9, 2007, Progressive mailed a renewal reminder to Daniel, advising him that
his policy would expire on February 23 if payment was not received. Daniel did not pay
the renewal premium by the due date.
On February 27, Daniel was involved in an accident, resulting in the vehicle being
declared a total loss. On February 28, Daniel paid the minimum of the premium amount
required to renew his policy with Progressive. However, the receipt expressly informed
Daniel that the policy would renew with a lapse in coverage, and the renewal effective
date would be one day after payment is made. Subsequently, Putnam County Bank
made a claim with Progressive regarding the total loss, which Progressive denied, noting
that the claim had expired four days prior to the loss.
The Court held that where an insurance company has extended an offer to renew an
automobile liability or physical damage insurance policy, and the insured does not accept
the offer and does not pay the premium due for renewal, thus allowing the underlying
policy to expire, there is no duty imposed upon the insurance company to provide a
notice to the insured that the policy has expired. Further, the law does not impose a
duty upon the insurance company to provide notice to a loss payee that the insured did
not renew the policy or that the insurance policy expired. Finally, the Court confirmed
that even if the insured makes payment after the policy has expired, thus reinstating the
same, there is nonetheless a lapse in coverage between the date of the expiration of the
policy and the reinstatement date, and a reinstated policy begins a new coverage period.
State Farm Mut. Auto Ins. Co. v. Rutherford, 229 W.Va. 73, 726 S.E.2d 41
(2011).
Ms. Rutherford was injured in a car accident and filed suit against Olive McClanahan and
the Kanawha County Commission and provided notice of suit to her underinsured
motorist carrier State Farm. Following these actions, Ms. Rutherford entered into
settlement agreements with Ms. McClanahan for $100,000.00 and the Kanawha County
Commission for $30,000.00. Ms. Rutherford then proceeded against State Farm who
elected to defend the action in the name of Ms. McClanahan and challenged liability and
damages at trial. The jury returned a verdict in favor of Ms. Rutherford for $175,000.00
with $170,000.00 in special damages. State Farm received a pro tanto offset of
$130,000.00 and a dispute arose regarding prejudgment interest. The circuit court order
prejudgment interest as follows:
This Court finds that as a matter of law the figure used to calculate
the Plaintiff's prejudgment interest for the period of July 13, 2002
through March 9, 2004 is $ 170,000. This Court further finds that for
the period of March 10, 2004, the date upon which plaintiff received
$ 100,000 from Defendant Olive McClanahan's liability carrier, to
March 16, 2008, the figure used to determine the plaintiff's
prejudgment interest is $ 70,000. This Court further finds that for
the period from March 17, 2008, the date upon which the Plaintiff
received $ 30,000 from the Defendant, Kanawha [6] County
Commission, through September 29, 2008, the date of the jury
verdict, the figure used to determine plaintiff's prejudgment interest
is $ 40,000. Therefore, the Plaintiff, Sheila Rutherford, is entitled to
prejudgment interest in the amount of $ 58,517.81.

58

On appeal the West Virginia Supreme Court of Appeals considered whether the circuit
court properly awarded prejudgment interest. The Court ruled the circuit court erred in
awarding prejudgment and should have calculated prejudgment interest only on the
special damages portion of $45,000.00 judgment against State Farm and not the special
damages portion of the entire verdict. The Court further noted that Ms. Rutherford
willingly entered into the $130,000.00 settlements and that prejudgment interest was
included in the settlements or was waived by Ms. Rutherford by agreeing to the
settlements.
The Court next considered whether prejudgment interest was properly calculated from
the date of accident rather than the date the cause of action accrued against State Farm
as the underinsurance carrier. The Court held the circuit court correctly calculated
prejudgment interest against State Farm from the date of the car accident. State Farm
also disputed the calculation of prejudgment interest by 10% rather than the language
contained in the 2006 version of West Virginia Code 56-6-31. The Court held the 1981
version of the statute applied and interest was properly calculated at 10%.
Casaccio v. Curtiss, 228 W.Va. 156, 718 S.E.2d 506 (2011).
Following a vehicle accident the executor of the decedents estates filed a wrongful death
action against John Tanner and Hartley Trucking Company, which was bankrupt but
insurance coverage for the accident was available through a policy issued to Hartley
Trucking by Converium. On March 2, 2006, the circuit court ordered the parties to
complete mediation in the case by November 17, 2006. During the first mediation, Ms.
Jo Knapp appeared as the designated representative for Converium. Prior to the
mediation, Converium was purchased National Indemnity through a Stock Purchase
Agreement.
This Agreement contained a clause limiting Converiums settlement
authority to amounts less than $500,000.00. No representative of National Indemnity
appeared at the mediation. Despite the limits of the agreement, Ms. Knapp made an
unqualified offer of $700,000.00 to settle the case, which was rejected. Ms. Knapp then
recommended and agreed to seek approval for a settlement of $900,000.00 which the
executor accepted. Ms. Knapp then revealed the settlement could not be finalized
without the approval of National Indemnity who subsequently refused to agree to the
settlement offer.
The circuit court ordered an additional mediation on November 27, 2006, and instructed
the mediator to inform the parties that certain individuals were to attend, including a
representative of National Indemnity.
Mr. Casaccio was designated as National
Indemnitys representative but did not appear, claiming he missed his connecting flight.
Mr. Casaccio participated by telephone during the mediation. Another mediation was
scheduled for November 28, 2006, which Mr. Casaccio attended. The parties settled the
case for $850,000.00 during this mediation. The circuit court then held a summary
proceeding and ratified the settlement and proposed distribution of settlement proceeds.
During the same hearing the circuit court sua sponte informed the parties that it was
setting for hearing the issue of whether the conduct of Mr. Casaccio or National
Indemnity warranted sanctions under West Virginia Trial Court Rule 25.10 or the inherent
powers of the circuit court. The circuit court entered an order granting the plaintiff
$50,000.00 as the difference between the first settlement and the subsequent
settlement; $25,000.00 as compensation for injuries caused by Mr. Masaccios and
National Indemnitys conduct; $150,000.00 to punish Mr. Casaccio and National
Indemnity; and attorney fees expended by the plaintiff from the first mediation through
the date of the final order imposing sanctions.

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Mr. Casaccio and National Indemnity appealed asserting the circuit court erred in
imposing sanctions under West Virginia Trial Court Rule 25.10 to a representative of an
insurance company who fails to attend mediation and whether there was sanctionable
conduct in this case. Under Trial Court Rule 25.10, the circuit court may order the
following individuals:
if furnished reasonable notice, are required to appear at the
mediation session: (1) each party or the party's representative
having full decision-making discretion to examine and resolve issues;
(2) each party's counsel of record; and (3) a representative of the
insurance carrier for any insured party, which representative has full
decision-making discretion to examine and resolve issues and make
decisions. Any party or representative may be excused by the court
or by agreement of the parties and the mediator. If a party or its
representative, counsel, or insurance carrier fails to appear at the
mediation session without good cause or appears without decisionmaking discretion, the court sua sponte or upon motion may impose
sanctions, including an award of reasonable mediator and attorney
fees and other costs, against the responsible party.
The Supreme Court of Appeals held that the insurance carrier for an insured party is
considered a party to court-ordered mediation, and, thus, may be sanctioned by a trial
court for its unauthorized failure to participate in mediation through the presence of a
representative who has full decision-making discretion to examine and resolve issues and
make decisions in connection with the mediation. The Court also determined that there
was no sanctionable conduct by Mr. Casaccio or National Indemnity in failing to attend
the November 27, 2006, mediation.
Loudin v. Natl Liab. & Fire Ins. Co., 228 W.Va. 34, 716 S.E.2d 696 (2011).
Thomas Loudin was performing maintenance on its 1993 International truck with the
assistance of his brother, William Loudin. At some point, William Loudin backed the truck
over Thomas Loudin causing severe and permanent injuries. The truck was insured
under a policy issued by National Liability & Fire Insurance Company under which Thomas
Loudin filed a claim for Auto Medical Payments provision. National paid Thomas Loudin
the liability limit of $5,000.00 under the auto Medical Payments provision of the policy.
Thomas Loudin also filed a Liability Coverage provision based upon the negligence of
William Loudin as a permissive operator of Thomas Loudons truck. National investigated
and refused to pay Thomas Loudins liability claim.
The Loudins filed a negligence action against William Loudin and included claims against
National, Jack Sergent, D.L. Thompson, and Consolidated Claim Services, Inc. The
complaint specifically asserted claims against National for common law bad faith, breach
of the insurance contract, breach of the implied duty of good faith and fair dealing,
violations of the Unfair Trade Practices Act, and the tort of outrage. National eventually
settled the claim against William Loudin for $150,000.00. The Loudins then filed an
Amended Complaint removing William Loudin as a defendant. National filed a motion for
summary judgment asserting it was entitled to summary judgment because the Loudins
were third-party claimants and were barred as a matter of law from bringing their claims.
The circuit court granted summary judgment in favor of National finding that the Loudins
claims were precluded because they were third-party claimants and there was no
material issue of fact on the tort of outrage.

60

The Supreme Court of Appeals considered the Loudins appeal regarding the third-party
claim and tort of outrage. It held that West Virginia defines a third-party claimant as an
individualasserting a claim against any individualinsured under an insurance policy or
insurance contract of an insurer. W. Va. Code R. 114-14-2.8. The Loudins claim was
unusual in that Thomas Loudin was the named insured under the policy, thus, the issue
involved questions of first and third-party claims. The Court held that when a named
policyholder files a claim with his/her insurer, alleging that a nonnamed insured under
the same policy caused him/her injury, the policyholder is a first-party claimant in any
subsequent bad faith action against the insurer arising from the handling of the
policyholders claim. The Court also held the circuit court erred in granting summary
judgment for the tort of outrage which involves questions of fact for the jury.
State ex rel. State Farm Mut. Auto. Ins. Co. v. Bedell, 228 W.Va. 252, 719 S.E.2d
722 (2011).
In this case, the Plaintiff disputed the use to which State Farm could make of her medical
records in the defense of the lawsuit filed by the Plaintiff. The Plaintiff and her husband
were involved in a vehicle accident which resulted in the death of Plaintiffs husband
along with the other driver. Plaintiff was also injured in the accident. During discovery
State Farm requested Plaintiff and her husbands medical records. Plaintiff sought a
protective order with the court to ensure the confidentiality of the requested medical
records. The circuit court granted the protective order and State Farm sought a writ of
prohibition asserting the protective order was too restrictive and interfered with its ability
to maintain claims files as required by West Virginia insurance law. The Supreme Court
of Appeals granted the writ and remanded the case to the circuit court for further
proceedings. Prior to the start of trial following this decision the Plaintiff submitted a
Temporary Protective Order Granting Plaintiff Protection for Her Confidential Medical
Records and Medical Information. This Order was signed by the circuit court which
restricted State Farms ability to use the medical records, imposed time limits on
retention, and prohibited from disclosing to third parties without the third party signing a
confidentiality agreement. State Farm filed another writ of prohibition to prevent the
circuit court from enforcing the second protective order.
The Supreme Court of Appeals noted that the first protective order did not include any
good cause establishing the need for a protective order and precluding State Farm from
electronically storing her medical records. Plaintiff established good cause for issuing the
second protective order and the Supreme Court of Appeals affirmed the protective order.
State Farm Mut. Auto. Ins. Co. v. Schatken, 737 S.E.2d 229 (2012).
Mr. and Mrs. Schatken were injured in a vehicle accident. Under the tortfeaser's
Nationwide policy there was a $25,000.00 liability coverage which Nationwide paid out to
Plaintiffs for injuries to Mrs. Schatken. Mr. and Mrs. Schatken were insured under a State
Farm policy which included $5,000.00 in medical payments coverage and $25,000.00 in
underinsured motorists coverage. State Farm consented to the $25,000.00 Nationwide
settlement and waived subrogation. The $5,000.00 in medical payments coverage was
exhausted in partial payment of Mrs. Schatkens medical bills. State Farm then informed
Mr. and Mrs. Schatken that under the non-duplication provision of the policy State Farm
reduced their settlement offer by the $25,000.00 settlement and $5,000.00 medical
payments coverage already received.
The circuit court granted partial summary
judgment on the non-duplication provision, denied the motion to strike the Schatkens
declaratory judgment count, and established a new briefing schedule on the
reimbursement issue.

61

The circuit court eventually ruled that the non-duplication provision violated the plain
language of West Virginia Code 33-6-31(b) which prohibits the reduction of sums
payable under underinsured motorist coverage by payments made under the insureds
policy. The Supreme Court of Appeals held a non-duplication of benefits provision in an
underinsured motorist policy which permits an insurer to reduce an insureds damages by
amounts received under medical payments coverage does not violate the no sums
payable language of West Virginia Code 33-6-31(b), insofar as it does not serve to
reduce the underinsured motorist coverage availability under the insureds policy.
State ex rel. State Farm Mut. Auto. Ins. Co. v. Marks, 741 S.E.2d 75 (2012).
In this appeal, the Supreme Court of Appeals considered whether medical protective
orders are valid and enforceable to limit the dissemination and retention of medical
records obtained through discovery. The Supreme Court of Appeals previously upheld
such protective orders. State Farm and Nationwide asserted that such protective orders
precluded them from fulfilling their mandatory reporting obligations imposed by the
federal government, the State, and sister states. The Supreme Court of Appeals affirmed
the protective orders because each included language allowing for the insurance
companies to comply with their statutory and regulatory obligations. The Supreme Court
of Appeals also found the provision to return or destroy was not burdensome. There
was also an argument that the protective orders violated the insurance companies right
to free speech under the First Amendment of the United States Constitution which the
Supreme Court of Appeals also rejected.

State ex rel. Mass. Mut. Life Ins. Co. v. Sanders, 228 W.Va. 749, 724 S.E.2d 353
(2012); State ex rel. Mass. Mut. Life Ins. Co. v. Sanders, 737 S.E.2d 61 (2012).
In both appeals the Supreme Court of Appeals considered a writ of prohibition filed by
Massachusetts Mutual Life Insurance Company to prohibit the circuit court from enforcing
two Orders requiring the Chief Executive Officer and Chairman of Massachusetts Mutual
to submit to depositions. As a basis for the writ, Massachusetts Mutual asserted the CEO
did not have personal or unique knowledge about the case and the order was an abuse of
the circuit courts discretion.
The Supreme Court of Appeals considered the determination of whether to allow the
deposition of the CEO involves an examination of the apex deposition rule, which
provides that before a plaintiff may take the deposition of a high-ranking or apex
governmental official or corporate officer, the plaintiff must demonstrate that the person
possesses superior or unique information relevant to the issues being litigated and that
the information cannot be obtained by a less intrusive method. The Supreme Court of
Appeals granted the writ for prohibition and held the circuit court could not order the
deposition of the CEO.
After the Supreme Court of Appeals entered its order the circuit court entered another
order compelling the deposition of the CEO for which Massachusetts Mutual filed another
writ of prohibition. The Supreme Court of Appeals held the plaintiffs failed to engage in
less intrusive discovery methods for the information requested and the circuit court did
not properly consider the apex rule in granting the plaintiffs motion to depose the CEO.
The circuit court was directed to enter a protective order prohibiting the deposition of the
CEO.

62

New Hampshire Ins. Co. v. RRK, Inc., 736 S.E.2d 52 (2012).

Plaintiffs purchased a floating barge and two strings of docks, and obtained a policy of
insurance from the insurance company. Prior to agreeing to purchase the insurance
policy, the Plaintiffs reviewed the insurance policy and paid the required premium. The
Plaintiffs did not receive the same policy. Insurance Systems eventually realized that the
barge was not listed as covered property under the insurance policy and requested the
insurance company to add the barge and its contents to the policy. The new policy also
failed to include the barge and contents as covered property under the policy but once
again the Plaintiffs did not read the policy. The barge eventually sank and Plaintiffs filed
a claim with the insurance company for the barge and its contents. The insurance
company denied the claim asserting the barge and its contents were not listed in the
policy as covered property. Eventually the insurance company engaged in additional
investigation and found the barge and contents were covered property but denied
coverage under the wear-and-tear exclusion of the policy.
The Plaintiff filed suit against the insurance company asserting breach of contract and
bad faith and seeking declaratory judgment on coverage. Plaintiff filed a motion for
summary judgment asserting the cause of the barge sinking was irrelevant and the
insurance company should be strictly liable for the loss without regard to policy
exclusions.
The circuit court granted the motion for summary judgment and the
insurance company appealed while the underlying action was stayed by the circuit court.
The Supreme Court of Appeals held that the doctrine of reasonable expectations applied
in this case. In a summary judgment motion under this doctrine the court must find that
the insured had an objectively reasonable expectation of coverage under the insurance
contract. The circuit court did not rule on the issue of whether the wear-and-tear
exclusion was placed in such a way to allow the Plaintiff to reasonably expect the
existence of the exclusion.
The Supreme Court of Appeals held the reasonable
expectations doctrine is a question of fact and reversed and remanded the circuit court
order on this issue. Plaintiffs also appealed on the issue of whether the renewal policy
was mailed and received by the Plaintiff and upheld the circuit court order on this issue.
Am. States Ins. Co. v. Surbaugh, 2013 W. Va. LEXIS 49 (2013).
This case arose following the accidental shooting and subsequent death of Gerald
Kirchner. Robbie Bragg was in the process of showing a customer how to load a handgun
for sale in the store when the shooting occurred. Mr. Kirchners mother, Ms. Surbaugh
filed a wrongful death action against Mr. Kirchners employer, Grimmett Enterprises and
Mr. Bragg. Mr. Bragg and Grimmett Enterprises entered into a settlement agreement for
$1.5 million with Ms. Surbaugh in return for Mr. Bragg and Grimmett Enterprises
assigning all claims they might have against their respective insurers for refusing to
provide a defense and coverage. Ms. Surbaugh then filed an amended complaint
asserting a declaratory judgment action against Grimmett Enterprises insurer, American
States. Ms. Surbaugh and American States each filed cross motions for summary
judgment. Ms. Surbaugh asserted the employee exclusion was ambiguous, was not
conspicuous, and had not been brought to the attention of Mr. Grimmett and American
States argued in opposition to this position. The circuit court held that the exclusionary
language of the policy was not ambiguous and ruled the issue of whether the exclusion
was disclosed to Mr. Grimmett was a question to be resolved by the jury. The case was
submitted to a jury which determined that the exclusionary language was not disclosed to
Mr. Grimmett and the circuit court entered an order finding the employee exclusion
unenforceable. American States appealed.

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The Supreme Court of Appeals considered whether the circuit court properly whether the
jury should consider whether the exclusion was communicated to Mr. Grimmett and
whether the circuit court erred in denying American States motion for summary
judgment. The circuit court had held that a jury was required to determine whether the
exclusionary language at issue in the case was brought to the attention of Mr. Grimmett.
The Supreme Court of Appeals held there was no necessity to submit the issue to the
jury.[A]s a general rule, the issue of whether an insurer has brought a policy exclusion
to the attention of the insured is to be resolved by the trial court. The circuit court
previously held the policy exclusion was not ambiguous, made conspicuous in the policy,
and communicated to Mr. Grimmett. In West Virginia the insured has a duty to read the
insurance policy and Mr. Grimmett failed to do so. Under this analysis the circuit court
erred by not granting summary judgment in favor of American States.
XIII.

Coverage Principals
1.

An insurers duty to defend is greater than its duty to indemnify.

If part of the claims against an insured fall within the coverage of the
applicable liability insurance policy and part do not, the insurer must
defend all claims, although it might eventually be required to pay only
some. Included in the consideration of whether an insurer has a duty to
defend is whether the allegations in the complaint are reasonably
susceptible of an interpretation that the claim may be covered by the
terms of the insurance policy; there is no requirement that the facts
alleged in the complaint specifically and unequivocally make out a claim
within the coverage under the insurance policy.

Prior to 2013, the West Virginia Supreme Court of Appeals consistently held that poor
workmanship is not a covered occurrence under the provisions of a commercial general
liability policy (CGL). Erie Ins. Property and Cas. Co. v. Pioneer Home Improvements,
Inc., 206 W.Va. 506, 526 S.E.2d 28 (1999)(A claim for faulty workmanship is not covered
by a CGL policy.). This holding was clarified in Syllabus Point 2, Corder v. William W.
Smith Excavating Co., 210 W.Va. 110, 556 S.E.2d 77 (2001), which held:
Commercial general liability policies are not
designed to cover poor workmanship.
Poor
workmanship,
standing
alone,
does
not
constitute an occurrence under the standard
policy definition of this term as an accident
including continuous or repeated exposure to
substantially
the
same
general
harmful
conditions.
This was further elaborated on in Webster County Solid Waste Authority v. Brackenrich
and Assoc., Inc., 217 W.Va. 304, 617 S.E.2d 851 (2005) which found that a CGL does
not provide coverage for a product or work performance that fails to meet contractual
requirements, the policy is specifically designed to insure the risk of tort liability for
physical injury to persons or property sustained by third parties as a result of the product
or work performed or damages sustained by others from the completed product or
finished work.

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In Cherrington v. Erie Ins. Property & Casualty, 2013 W.Va. LEXIS 724, 2013 WL
3156003 (June 18, 2013, W.Va.), the Supreme Court of Appeals reconsidered these prior
holdings in light of recent developments in state courts around the country supporting
occurrences for bodily injury and property damage resulting from poor workmanship.
In order for a claim to be covered by a CGl policy, it must evidence bodily injury or
property damage that has been caused by an occurrence. Id., p. *33. An occurrence
is an accident, including continuous or repeated exposure to substantially the same
general harmful conditions. Id. The circumstances giving rise to the claimed damages
or injuries must not have been deliberate, intentional, expected, desired, or foreseen by
the insured. Id., p. *34. In Syllabus Point 6 of Cherrington, the Supreme Court of
Appeals held:
Defective workmanship causing bodily injury or
property damage is an occurrence under a
policy of general liability insurance.
To the
extent our prior pronouncements in Syllabus
Point 3 of Webster County Solid Waste Authority
v. Brackenrich and Assoc., Inc., 217 W.Va. 304,
617 S.E.2d 851 (2005); Syllabus Point 2 of
Corder v. William W. Smith Excavating Co., 210
W. Va. 110, 556 S.E.2d 77 (2001); Syllabus
Point 2 of Erie Ins. Property and Casualty Co. v.
Pioneer Home Improvement, Inc., 206 W.Va.
506, 526 S.E.2d 28 (1999); and Syllabus Point 2
of McGann v. Hobbs Lumber Co., 150 W. Va.
364, 145 S.E.2d 476 (1965), and their progeny
are inconsistent with this opinion, they are
expressly overruled.
2.

Where provisions of an insurance policy contract are clear and

unambiguous, they are not subject to judicial construction or
interpretation, and full effect will be given to the plain meaning
intended.
Ambiguities in an insurance policy are construed
against the insurer.
If language in an insurance policy is
ambiguous, then the doctrine of reasonable expectations
applies, which holds that objectively reasonable expectations of
applicants and intended beneficiaries regarding the terms of insurance
contracts will be honored even though painstaking study of policy
provisions would have negated those expectations.

3.

Exclusionary language contained in an insurance policy is strictly

construed against an insurer in order that the purpose of providing
indemnity not be defeated. When an insurance company seeks to avoid
liability through the operation of an exclusion, the insurance company has
the burden of proving the exclusion applies to the facts in the case. When
an insurance policy exclusion applies, a liability insurer must look beyond
the bare allegations contained in the third party's pleadings and conduct a
reasonable inquiry into the facts in order to ascertain whether the claims
asserted may come within the scope of the coverage.

65

XIV.

4.

An insurer can only deny coverage under an intentional acts

exclusion if the policyholder (1) committed an intentional act; and
(2) expected or intended the specific resulting damage. When an
intentional acts exclusion uses language to the effect that insurance
coverage is voided when the loss was "expected or intended by the
insured," courts must employ a subjective rather than objective
standard for determining the policyholder's intent.

5.

An underinsured motorist carrier occupies the position of an excess

or additional insurer in regard to the tortfeasor's liability carrier,
which is deemed to have primary coverage. Consequently, the
tortfeasor's liability carrier, having primary coverage, should
ordinarily control litigation on behalf of tortfeasor insured. However,
the primary insurance carrier has a duty to act in good faith with
respect to the excess or additional insurance carrier when defending
claim on behalf of a primary insurance carrier's insured. If an excess
carrier can demonstrate that the primary insurance carrier is
defending claim in bad faith manner, the underinsured motorist
carrier may petition the court to allow it to assume primary control of
defense.

Handling Indemnity Issues

There are two basic types of indemnity express and implied. Express indemnity arises
when one party is contractually obligated to indemnify another. Implied indemnity arises
when one party, for equitable reasons, is required to indemnify another.
Today, more than ever, parties in litigation look to each other for reimbursement of
defense costs and payment of judgments/settlements. In order for a party to secure its
right to indemnity, it is imperative to be informed and organized, and to stay diligent and
aggressive. Conversely, when defending against a demand for indemnity, a party must
be prepared to invest time and energy to cover all bases and defend against all theories.
Again, being informed and organized is imperative.
Speaking in general terms, indemnity language is construed to either have a fault or nofault requirement. Under a fault scenario, the indemnitors obligations are triggered by a
finding of fault on the part of the indemnitor. Under a no-fault scenario, the indemnitors
obligations are triggered irrespective of whether the indemnitor is at fault. As illustrated
below, the scope of the indemnitors obligations and the precise language that triggers
them can take on a variety of looks.
A.

Implied Indemnity

Parties will often assert cross-claims against each other, asserting therein a right to
implied indemnity. The primary consideration that must be made in analyzing a claim for
implied indemnity is whether the party asserting the right is without fault. Under West
Virginia law, a party who bears fault may not seek a right of implied indemnity from
another:
The requisite elements of an implied indemnity claim in West Virginia are a showing
that: (1) an injury was sustained by a third party; (2) for which a putative indemnitee
has become subject to liability because of a positive duty created by statute or common
law, but whose independent actions did not contribute to the injury; and (3) for which a
putative indemnitor should bear fault for causing because of the relationship the
indemnitor and indemnitee share. Syl. Pt. 4, Harvest Capital v. W. Va. Dep't of Energy,
211 W. Va. 34, 560 S.E.2d 509 (2002).

66

In short, implied indemnity is a difficult claim to prosecute, and before succumbing to a

demand for implied indemnity, a brief investigation should be conducted regarding the
scope of liability, if any, attributable to the party making the demand.
B.

Rules for Interpreting Contractual Indemnity Language

When handling a claim of express indemnity, it is important to determine whether the

intent of the parties is clearly expressed in the language of the subject contract. If it is
not, be prepared to go to battle.
In West Virginia, general contract principles apply to claims for express indemnity.
few of the more important principles to recognize are as follows:

Under West Virginia law, contracts for indemnity against ones own negligence
do not contravene public policy and are valid.
Chemical Corp., 378 S.E.2d 282 (W.Va. 1989).

Syl. pt. 3, Riggle v. Allied

Under West Virginia law, the rules governing the requisites and
validity of contracts generally apply to contracts of indemnity and in
construing a contract of indemnity and determining the rights and
liabilities of the parties thereunder, the primary purpose is to
ascertain and give effect to the intention of the parties. Dawson v.
Norfolk & Western Ry. Co., 475 S.E.2d 10, 17 (W.Va. 1996).

A valid written instrument which expresses the intent of the parties

in plain and unambiguous language is not subject to
judicial
construction or interpretation but will be applied and enforced
according to such intent. Syl. Pt. 1, Cotiga Development Co. v.
United Fuel Gas Co., 128 S.E.2d 626 (W.Va. 1962).

The term ambiguity is defined as language reasonably susceptible

of two different meanings or language of such doubtful meaning that
reasonable minds might be uncertain or disagree as to its meaning.
Syl. Pt. 4, Estate of Tawney v. Columbia Natural Res., LLC, 633
S.E.2d 22 (W.Va. 2006).

The mere fact that parties do not agree to the construction of a

contract does not render it ambiguous. The question as to whether a
contract is ambiguous is a question of law to be determined by the
court. Syl. Pt. 1, Berkeley County Pub. Serv. Dist. v. Vitro Corp. of
America, 162 S.E.2d 189 (W.Va. 1968).

Uncertainties in an intricate and involved contract should be resolved

against the party who prepared it. Jochum v. Waste Mgmt. of W.
Va., Inc., 680 S.E.2d 59, 64 (W.Va. 2009) (quoting Syl. Pt. 1,
Charlton v. Chevrolet Motor Co., 174 S.E. 570 (W.Va. 1934)).

C.

Fault-Based Contractual Indemnity

Contractual

indemnity

language

can

take

on

variety

of

appearances. In each and every case, the indemnity language must

be closely scrutinized and all possible arguments for and against
indemnity should be mapped out. Some common variations of
contractual indemnity language follow, with explanations of possible
interpretations.

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Example 1 - Party A shall defend, indemnify, and hold harmless

Party B, its officers, officials, employees, and volunteers from and
against all claims, damages, losses, and expenses, including attorney
fees arising out of the negligent acts or omissions of Party A,
any sub-contractor, anyone directly or indirectly employed by any of
them, or anyone for whose acts any of them may be liable.

The above language presents two separate issues. First, it could be

logically argued that Party A must be found to have been negligent
before its defense and indemnity obligations are triggered. Second,
the language would appear to limit the scope of Party As indemnity
obligation to the percentage of liability attributable directly to its acts
or omissions, and not liability attributable to Party B or any other
party.
Example 2 - Party A shall defend, indemnify, and hold harmless
Party B, its officers, officials, employees, and volunteers from and
against all claims, damages, losses, and expenses, including attorney
fees arising out of the performance of the work described herein,
caused in whole or in part by any negligent act or omission of
Party A, any sub-contractor, anyone directly or indirectly employed
by any of them, or anyone for whose acts any of them may be liable.
This language would appear to require Party A to provide 100%
defense and indemnity to Party B, irrespective of whether any other
party, including Party B, is liable. In this scenario, however, Party A
must, at the very least, be partially at fault. Again, based upon the
language of the indemnity clause, it could be argued that a finding of
negligence on the part of Party A is a prerequisite to owing indemnity
to Party B.
Obviously, if an investigation is conducted and reveals that a finding of liability is all but
certain, then hedging your bets on the theory that negligence must first be established
may not be advisable.
Incidentally, we have seen multiple instances of language being added to similar
indemnity clauses which eliminates Party As indemnity obligation entirely when Party B is
at fault. Such language generally states something to the effect of except where caused
by the active negligence, sole negligence, or willful misconduct of the Party B.
D.

No-Fault Contractual Indemnity

No-fault indemnity language attempts to broaden the scope of the indemnitors defense
and indemnity obligation by eliminating the requirement of fault being found on the part
of the indemnitor. Thus, the indemnity obligation exists by simply virtue of the fact that
the indemnitor participated in an activity related to the subject of the contract:
Party A shall indemnify, defend, and hold harmless Party B, its officers,
officials, employees, and volunteers from and against any and all liability,
claims, damage, cost, expenses, awards, fines, judgments, and attorney fees

68

(including, without limitation, costs, attorney fees, expert witness fees, and
other expenses of litigation) of every nature arising out of or in connection
with Party As performance of work hereunder, or its failure to comply
with any of its obligations contained in the agreement.
Arguably, this language does not require Party A to have even acted
negligently before its indemnification obligation arises.
E.

Liability vs. Indemnity

We often see parties seek summary judgment on the issue of liability by asserting that
another party owes them indemnity. In other words, they argue that they cannot be
found liable by a jury because another party has contractually agreed to indemnify them.
This is not a viable argument. Whether a party can be held liable and whether it is owed
indemnity are two different issues. Strategically, it may be in the interest of the party
against whom indemnity is sought to accept a tender in order to be able to control the
defense of the purported indemnitee, but this must be analyzed on a case-by-case basis.
Of course, if there is a dispute as to whether indemnity is owed, a tender is likely to be
rejected, notwithstanding concerns over being able to control the defense.
F.

Enforcing the Right of Indemnity

In the event, it is desirable to enforce a right of indemnity against another party, it is

important to immediately begin the fact-gathering process. Ideally, a party would have
the following information in hand prior to issuing tender/demand letters:

Copies of all complaints, responsive pleadings, and dispositive

motions;

Copies of all contracts that are at issue in the litigation;

Copies of all contracts of insurance issued to the parties which
provide or potentially provide insurance coverage;

A written summary from defense counsel as to the role of any

parties who may arguably owe indemnity; and

Business registration and service of process information for

entities who may owe indemnity.

After obtaining and analyzing the above information, it is time to begin the process of
trying to secure precious indemnity dollars. The very first thing that should be done is to
prepare a formal letter demanding indemnity. This letter should contain an explanation
as to why indemnity is owed, and should state that it should be construed as a formal
tender of defense. If the party against whom indemnity is sought is being represented
by counsel, the letter should be sent to counsel. The letter should be sent by defense
counsel, and not the Claims Professional, as the insured is technically the entity who is
owed indemnity. Request that the tender be provided to the partys insurer and that a
response to the tender be provided within 10 days of receipt. Ask the party to provide
the name of its insurer, along with the applicable policy identification number. Advise the
indemnitor that a claim for indemnity will be prosecuted in civil court if no response is
provided, or if the tender is denied. If a trial date has been set, state so in the letter.
Send the letter via certified mail, return receipt requested. Send follow-up letters every
15-30 days, until such time as it is necessary to file suit. Keep potential indemnitors
informed of major case developments, including the mediation date.

69

If a potential indemnitor refuses to accept a tender, a written explanation should be

requested. It is crucial to understand the basis for the refusal and explore whether it is
valid. Contact the partys insurer to discuss the tender, and request a letter advising
whether coverage exists. Ultimately, throwing away good money to go after bad is never
a good thing. The key is to stay informed and to make informed decisions.
If a tender is not accepted, it may be necessary to litigate the issue. If the party against
whom you are seeking indemnity is a party to the action, prepare and file an appropriate
cross-claim. If they are not already a party, you may need to file a third-party action.
Dont forget to ascertain and calendar the date upon which the statute of limitations
expires!
G.

What to Do if a Tender Has Been Submitted to You or Your Insured

First and foremost, a tender of defense can be submitted in multiple ways. Generally,
this is done through written correspondence, or by virtue of asserting a claim for
indemnity via pleading. No case law exists in West Virginia which indicates whether a
tender can be effected verbally, but we suspect that the Supreme Court of Appeals would
find a verbal tender valid. Accordingly, in the event you are put on notice of a claim for
defense or indemnity from an insured or purported indemnitee, it would be wise to treat
the notice as a valid tender.
Once a party has tendered its defense, it is important to analyze the scope and extent of
obligations assumed by the insured to defend and indemnify. Review contract documents
carefully to determine ambiguities and whether the indemnity clause contains a faultbased indemnity requirement.
Consult with defense counsel to ascertain whether
indemnification is required and to map out a strategy for responding to the tender and, if
necessary, litigating the issue.
Review the applicable insurance policy to determine whether the obligations assumed by
the insured are covered by the policy. Remember, just because an insured has entered
into an agreement to indemnify another party does not necessarily mean that the
obligation is covered by an applicable insurance policy. In most instances, the policy will
contain an insured contract provision, but the policy should be analyzed for potential
applicable exclusions and whether the indemnity agreement constitutes an insured
contract. In addition, as discussed below, ascertain whether the agreement contains an
additional insured provision and study the policy to determine under what
circumstances an indemnitee is conferred additional insured status.
H.

Insured Additional Insured and Certificates of Insurance

It is crucial to immediately ascertain whether a purported indemnitee is an additional

insured under a policy of insurance issued to the insured. If so, then the indemnitee
may have a first-party bad faith claim against the insurer if coverage is wrongfully
denied. When the issue of whether a party is entitled to additional insured status
surfaces, it will be crucial to comply with the laws of West Virginia governing unfair trade
practices. As a rule of thumb, any and all correspondence should be responded to within
15 days. A proper investigation should be conducted regarding whether coverage exists.
In most instances, coverage counsel should be retained to issue an opinion and provide
guidance on how to proceed.

70

As for certificates of insurance, they can evidence multiple things. In some instances, a
certificate of insurance simply evidences that the insured has a valid policy of insurance
in effect. In other instances, a certificate of insurance may be issued to evidence that
coverage exists for an indemnitee of the insured. In many situations, the retail or
wholesale insurance broker issues the certificate of insurance. In the event that a valid
certificate of insurance is required as a prerequisite to being conferred additional insured
status, and in the event the broker fails to issue a proper certificate, the insured may be
subject to a breach of contract claim and, in turn, may have a claim against the broker.
If this occurs, it will be important to monitor the status of that matter to ensure that the
insurer is protected and insulated from liability.
XV.

Medicare Secondary Payer Act (MSP) / Medicare/Medicaid and SCHIP

Extension Act (MMSEA)

In order to recover monies paid out by the government for medical expenses incurred by
individuals as a result of the negligence of a third-party, Congress enacted MMSEA and
MSP. If a Medicare subrogation claim is not satisfied out of the settlement proceeds,
insurers, attorneys and claimants alike may be forced to satisfy the claim. Accordingly,
insurers and attorneys alike need to make certain that the claimant/plaintiff is not a
Medicare recipient and that none of the medical bills incurred by the claimant/plaintiff
have been paid by Medicare.
Importantly, the right to subrogation is absolute, and the insurer has the obligation to
determine if there is a Medicare lien. Unlike liens from other insurance carriers, Medicare
does not have to provide you with notice of the law; rather, you have the obligation to
investigate to see if Medicare has, in fact, paid any of the medical bills and, thus, to
determine if Medicare has a lien.
In nearly every case, the claims adjuster should:
1.

Gather, as soon as possible, all information possible regarding

whether or not a claimant/plaintiff receives or is entitled to receive
Medicare benefits relative to his or her claim-related injury or
condition. Oftentimes, you may be able to look through the medical
records and bills to determine if they have been paid by Medicare or
Medicaid. Regardless, you should also have the claimant/plaintiff
provide you with a Consent to Release form which you will then need
to provide to Medicare. This will:
(a) let Medicare know about the claim and the insurers
involvement; and
(b) get you in touch with Medicare relative to benefits paid
and nature and extent of any Medicare right of subrogation

2.

If your investigation reveals a Medicare lien, then you should make it

known to the claimant/plaintiff or his or her lawyer regarding the lien
and that you are required to protect this lien. Most lawyers will
understand that you are not only protecting yourself but also all of
the parties involved (i.e., claimant, attorneys and insurer). This
should be addressed prior to settlement if at all possible.

3.

After settlement is perfected, but before payment has been made,

you must confirm the amount of the Medicare lien.

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4.

Different lawyers are asking that the lien be satisfied in different

manners: Preferably, a check should be cut directly to Medicare to
satisfy the lien, with the remainder of the settlement to be paid to
the claimant/plaintiff.
A few attorneys would prefer the entire
settlement amount be paid to the claimant/plaintiff/Medicare so that
the check can be then sent to Medicare for payment, and Medicare
would then reimburse. Go over the attorneys preference prior to
drafting the settlement check.

5.

Some lawyers will promise to pay the Medicare lien out of the
settlement proceeds and ask that the entire settlement be sent to
him/her. This is a dangerous venture and should be viewed with
caution. Only if you are certain that the lawyer will pay the lien
should you agree to such an agreement, as the civil penalties for not
paying a Medicare lien are significant.

Target claimants for Medicare, Medicaid and SCHIP include:

XVI.

Someone who has applied for Social Security Disability Benefits

Someone who has been denied Social Security Disability Benefits and
has put you on notice of intent to re-file or appeal

Someone 65 years of age or older

Someone who is 62 years and 6 mos. old (an anticipation of

qualifying for Medicare in the next 30 mos.)

Someone with end stage renal disease but does not yet qualify for
Medicare

Someone who has been denied Social Security Disability Benefits and
has re-filed for such benefits or appealed the decision denying them

Someone who has been receiving Social Security Disability Benefits

for 24 months or longer

Employment Law for Public Entities

A.

Malice in Employment Termination

While West Virginia is an at-will doctrine state, an employer may not terminate an
employee for any reason that contravenes a substantial public policy. Generally, an
employee has a duty to mitigate their damages by accepting a similar employment.
However, if a jury finds that the wrongful discharge was malicious mitigation is
not to be considered by a jury when awarding damages and a jury may award
front pay, back pay, incidental damages (i.e., humiliation, embarrassment, emotional
and mental distress, loss of personal dignity, etc.).
The West Virginia Supreme Court has defined malice in this context to mean that the
discharging agency or official willfully and deliberately violated the employee's rights
under circumstances where the agency or individual knew or with reasonable diligence
should have known of the employee's rights . . . . Mason County Bd. of Educ. v. State
Superintendent of Sch., 295 S.E.2d 719 (W. Va. 1982); see also, Peters v. Rivers Edge
Mining, Inc., 680 S.E.2d 791, 815 (W. Va. 2009).

72

For example, a Plaintiff is 40 years old and was making $40,000 per year when
she was terminated. If a jury finds that the termination was malicious, she is
entitled to back and front pay (up to the age of 67) regardless of the fact that
she found a new job 3 months after she was terminated and began making
$50,000 per year.
If there are not specific immunities against punitive
damages, a jury may also award punitive damages.
Punitive damages are normally available in these cases; however, such damages
are not available against public entities.
The rule that an employer has an absolute right to discharge an at will employee must be
tempered by the principle that where the employers motivation for the discharge is to
contravene some substantial public policy principal, then the employer may be liable to
the employee for damages occasioned by this discharge. Syllabus Point 1, Harless v.
First Natl Bank, 162 W.Va. 116, 246 S.E.2d 270 (1978). A determination of the
existence of public policy in West Virginia is a question of law, rather than a question of
fact for the jury. Swears v. RM Roach and Sons, Inc., 225 W.Va. 699, 696 S.E.2d 1
(2010); Cordle v. General Hugh Mercer Corp., 174 W.Va. 321, 325 S.E.2d 111 (1994). It
is only when a given policy is so obviously for or against the public health, safety, morals
or welfare that there is a virtual unanimity of opinion in regard to it, that a Court may
constitute itself the voice of the community so declaring. Swears, 174 W.Va. at 705, 696
S.E.2d at 7. The sources determinative of public policy are, among others, our federal
and state constitutions, our public statutes, our judicial decisions, the applicable
principles of the common law, the acknowledged prevailing concepts of the federal and
state governments relating to and affecting the safety, health, morals and general
welfare of the people for whom governmentwith usis factually established. Cordle v.
General Hugh Mercer Corp., 174 W.Va. at 325, 325 S.E.2d at 114 (quoting Allen v.
Commercial Casualty & Ins. Co., 131 N.J.L. 475, 478, 37 A.2d 37, 39 (1944)).
Substantial public policy exists in circumstances where an employee is terminated
following the filing of a grievance with the West Virginia Public Employees Grievance
Board; (Armstrong v. W. Va. Division of Culture & History, 229 W.Va. 538, 729 S.E.2d
860 (2012)); sexual discrimination or sexual harassment in employment (Williamson v.
Greene, 200 W.Va. 421, 490 S.E.2d 23 (1997)); refusal to take a polygraph test (Cordle,
174 W.Va. at 321, 325 S.E.2d at 111); employee making a claim for overtime wages not
paid (McClung v. Marion County Commn, 178 W.Va. 444, 360 S.E.2d 221 (1987)); self
defense (Feliciano v. 7-Eleven, Inc., 210 W.Va. 740, 559 S.E.2d 713 (2001);
Substantial public policy is not violated when an employer terminates an employee for
the reporting of potential criminal misconduct in the absence of an identified
constitutional, legislative enactment, legislatively approved regulations, or judicial opinion
(Swears, 225 W.Va. at 699, 696 S.E.2d at 1); when there is another mechanism
available to enforce the public policy at issue (Hill v. Stowers, 224 W.Va. 51, 680 S.E.2d
66 (2009)); general admonitions as to the requirement of good care for patients by social
workers do not constitute substantial and clear public policy (Birthisel v. Tri-Cities Health
Services Corp., 188 W.Va. 371, 424 S.E.2d 606 (1992);
B.

Whistleblower

The West Virginia Whistleblower statute is found in West Virginia Code 6C-1-1, et seq.
Under the provisions of this statute an employer may not discharge, threaten or
otherwise discriminate or retaliate against an employee by changing the
employees compensation, terms, conditions, locations or privileges of
employment because the employee, acting on his own volition, or a person
acting on behalf or under the direction of the employee, makes a good faith
report or is about to report, verbally or in writing, to the employer or
appropriate authority an instance of wrongdoing or waste.

73

W. Va. Code 6C-1-3(a). The employer may not discharge, threaten or otherwise
discriminate or retaliate against an employee by changing the employees compensation,
terms, conditions, location or privileges of employment because the employee is
requested or subpoenaed by an appropriate authority to participate in an investigation,
hearing or inquiry held by an appropriate authority or in a court action. W. Va. Code
6C-1-1-3(b).
For a report to be made in good faith the report must be made without malice or
consideration of personal benefit and which the person making the report has reasonable
cause to believe is true. W. Va. Code 6-C-2(d). A report of waste consists of conduct
or omissions which result in substantial abuse, misuse, destruction or loss of funds or
resources belonging to or derived from federal, state, or political subdivision sources. W.
Va. Code 6C-1-2(f). Wrongdoing is a violation which is not of a merely technical or
minimal nature of a federal or state statute or regulation, of a political subdivision
ordinance or regulation or of a code of conduct or ethics designed to protect the interest
of the public or the employer. W. Va. Code 6C-1-2(h).
An individual qualifies as a whistleblower when the individual witnesses or has evidence
of wrongdoing or waste while employee with a public body and who makes a good faith
report of, or testifies to, the wrongdoing or waste, verbally or in writing, to one of the
employees superiors, to an agent of the employer or to an appropriate authority. W. Va.
Code 6C-1-2(g). All reports must be made to an appropriate authority which includes
a federal, state, county, or municipal government body, agency or organization having
jurisdiction over criminal law enforcement, regulatory violations, professional conduct or
ethics, or waste; or a member, officer, agent, representative or supervisory employee of
the body, agency or organization. W. Va. Code 6C-1-2(a). This also includes, but is
not limited to, the office of the attorney general, the office of the state auditor, the
commission on special investigations, the Legislature and committees of the Legislature
having the power and duty to investigate criminal law enforcement, regulatory violations,
professional conduct or ethics, or waste. Id.
It is the employees burden to establish by a preponderance of the evidence that
he/she had reported or was about to report in good faith, verbally or in writing,
an instance of wrongdoing or waste to the employer or an appropriate
authority. W. Va. Code 6C-1-4(b). The defense of a Whistleblower action occurs
when the employer proves by a preponderance of the evidence that the action
complained of occurred for separate and legitimate reasons, which are not
merely pretexts. W. Va. Code 6C-1-4(c). The court may order reinstatement of the
employee, the payment of back wages, full reinstatement of fringe benefits and seniority
rights, actual damages or any combination of remedies, including all or a portion of the
costs of litigation, including attorneys fees and witness fees. W. Va. Code 6C-1-5.
A person, either employer or under color of an employers authority, violates the article is
liable for a civil fine of not more than five hundred dollars, and, except for public office
holders, if the court specifically finds that the person, while in the employment of the
state or a political subdivision, committed a violation with the intent to discourage
disclosure of the information, may order the persons suspension from public service for
not more than six months. W. Va. Code 6C-1-6.
Any cause of action asserting a Whistleblower claim under West Virginia Code
6C-1-1, et seq., must be brought within 180 days of the underlying claim. W. Va.
Code 6C-1-4(a). A Whistleblower claim also subsumes any potential common law
claims plead in the cause of action within the 180 statute of limitations. Broschart v. W.
Va. Dept of Health & Human Res., 2013 W.Va. LEXIS, 2013 WL 2301777 (May 24, 2013,
W. Va.).
C.

42 U.S.C. 1983

Under this provision:

Every person who, under color or any statute,
ordinance, regulation, custom, or usage, of any state or

74

territory or the District of Columbia, subjects, or

causes to be subjected, any citizen of the United
States or other person within the jurisdiction
thereof to the deprivation of any rights,
privileges, or immunities secured by the
Constitution and law, shall be liable to the party
injured in an action at suit, suit in equity, or
other proper proceeding for redress.
The number of cases that have been brought under section 1983 has dramatically
increased since 1961 when the Supreme Court decided Monroe v. Pape, 365 U.S. 167
(1961). In Monroe, the Supreme Court held that a police officer was acting under color
of state law even though his actions violated state law. This was the first case in which
the Supreme Court allowed liability to attach where a government official acted outside
the scope of the authority granted to him by state law. Since Monroe was decided, an
extensive body of law has developed to govern section 1983 claims.
Only persons under the statute are subject to liability. Will v. Michigan Dept. of
State Police, 491 U.S. 58 (1989). A state is not a person subject to suit under
section 1983 (Id.), but a state officer can be sued in his official capacity for
prospective or injunctive relief despite the fact that an suit against a
government official in his official capacity represents nothing more than a suit
against the government entity itself. Ex Parte Young, 209 U.S. 123 (1908); Hafer v.
Melo, 502 U.S. 25, 31 (1991); Kentucky v. Graham, 473 U.S> 159, 165 (1985). Despite
this logical inconsistency, the current state of the law is that a state may not be sued for
damages, but may be sued for declaratory or injunctive relief. Monell v. Dept. of
Social Services of New York, 436 U.S. 658, 701 (1978); Bivens v. Six Unknown Named
Agents of the Federal Bureau of Narcotics, 403 U.S. 388 (1971). Id., Hafer v. Melo, 502
U.S. 25 (1991); City of Oklahoma City v. Tuttle, 471 U.S. 808 (1985); Graham, 473 U.S.
at 165. Municipalities and local governments are persons subject to suit for
damages and prospective relief, but the United States government is not. Individual
employees of federal, state, and local government may be sued in their
individual capacities for damages, declaratory or injunctive relief.
The traditional definition of acting under the color of state law requires that the defendant
have exercised power possessed by virtue of state law and made possible only because
the wrongdoer is clothed with the authority of state law, and such actions may result in
liability even if the defendant abuses the position given to him by the state. West v.
Atkins, 487 U.S. 42, 49 (1988), Monroe, 365 U.S. at 172. A private actor may also act
under color of state law under certain circumstances. Wyatt v. Cole, 504 U.S. 42 (1988).
For all practical purposes, the color of state law requirement is identical to the state
action prerequisite to constitutional liability. Lugar v. Edmondson Oil Co., 457 U.S. 922,
929 (1982).
Section 1983 does not impose a state of mind requirement independent of the underlying
basis for liability, but there must be a causal connection between the defendants action
and the harm that results. Pratt v. Taylor, 451 U.S. 527 (1981), overruled in part,
Daniels v. Williams, 474 U.S. 327 (1986); Mt. Healthy City School Bd. of Educ. V. Doyle,
429 U.S. 274, 285-87 (1977). In order to hold a local government liable under section
1983, the Supreme Court has interpreted this causation element to require that the harm
be the result of action on the part of the government entity that implemented or
executed a policy statement, ordinance, regulation, or decision officially adopted and
promulgated by that bodys officers, or the result of the entitys custom. Monell v. Dept.
of Social Services of the City of New York, 436 U.S. 658, 690-91 (1978). Further, the
entitys policy or custom must have been the moving force behind the alleged
deprivation. Id., 436 U.S. at 694. This custom or policy requirement is a dramatic
departure from the rule of respondeat superior that prevails in many common law
actions. Id., 436 U.S. at 691-95.

75

Section 1983 is not itself a source of substantive rights, it merely provides a

method for the vindication of rights elsewhere conferred in the United States
Constitution and Laws. Chapman v. Houston Welfare Rights Org., 441 U.S. 600, 617
(1979). Therefore, a plaintiff may prevail only if he can demonstrate that he was
deprived of rights secured by the United States Constitution or federal statutes.
There is no requirement that the plaintiff sue in federal court because state courts have
concurrent jurisdiction, and the usual rule is exhaustion of administrative and judicial
state remedies is not a prerequisite to a section 1983 action. Howlett v. Rose, 496 U.S.
356 (1990); Monroe, 365 U.S. at 183. The Supreme Court has noted that the basic
purpose of a section 1983 damages award is to compensate the victims of
official misconduct, and therefore held that there is no limit on actual damages
if they can be proven. Carey v. Piphus, 435 U.S. 247 (1978). But where they are not
proved, only nominal damages of $1.00 may be awarded. Punitive damages may also be
awarded, but not against a municipality. Farrar v. Hobby, 506 U.S. 103, 112 (1992).
States and state agencies are entitled to Eleventh Amendment immunity in federal court,
but local governments have no immunity from damages flowing from their constitutional
violations, and may not assert the good faith of its agents as a defense to liability.
Edelman v. Jordan, 415 U.S. 651 (1974); Owen v. City of Independence, MO, 445 U.S.
621 (1980). Further, state law sovereign immunity and state law limitations on damages
do not protect local governments from liability under section 1983, and state laws
requiring pre-suit notification prior to initiating an action against the state or its
subdivisions do not apply. Howlett, 496 U.S. at 356; Felder v. Casey, 487 U.S. 131
(1988).
Individual capacity defendants are protected by qualified immunity. Harlow v. Fitzgerald,
457 U.S. 800 (1982). This is a powerful tool that shields individual officials who
are performing discretionary activities unless their conduct violates clearly
established statutory or constitutional rights of which a reasonable person
would have known. Id., 457 U.S. at 817. A government official is entitled to
qualified immunity unless his act is so obviously wrong, in the light of
preexisting law, that only a plainly incompetent officer or won who was
knowingly violating the law would have done such a thing.
The qualified
immunity inquiry is purely objectivethe subjective intentions of the actor is irrelevant.
Crawford-El v. Britton, 523 U.S. 574 (1998). Qualified immunity is not only immunity
from liability, but it is immunity from suit as well, and shields individual capacity
defendants even where a constitutional violation may have occurred. Siegert v. Gilley,
500 U.S. 226, 232 (1991). Supervisory inaction can expose municipalities to 1983
liability if plaintiff can show:
(1) that the supervisor had actual or
constructive knowledge that his subordinate was
engaged in conduct that posed a pervasive and
unreasonable risk of constitutional injury to
citizens like the plaintiff; (2) that the
supervisors response to that knowledge was so
inadequate as to show deliberate indifference to
or tacit authorization of the alleged offensive
practices; and (3) that there was an actual
affirmative
causal
link
between
the
supervisors
inaction
and
the
particular
constitutional injury suffered by the plaintiff.
Shaw v. Stroud, 13 F.3d 791, 799 (4th Cir.
1994); See also Johnson v. Baltimore City Police
Dept, 2013 U.S. Dist. LEXIS 13780 (4th Cir.,
January 29, 2013).

76

Generally, 42 U.S.C. 1983 causes of action revolve around police practices and
prison conditions. Cases may be brought for other circumstances as well. In Crosby v.
City of Gastonia, 635 F.3d 634, 638 (4th Cir. ), the United States Fourth Circuit Appeals
Court considered an action filed by retirees asserting that their employer, the City of
Gastonia, interfered with their vesting rights in retirement benefits. Municipalities may
also be sued under 42 U.S.C. 1983 for ordinances Greater Baltimore Ctr. For Pregnancy
Concerns, Inc. v. Mayor & City Counsel Baltimore, 2013 U.S. App. LEXIS 13607 (4th Cir.,
July 3, 2013); the passage of resolutions, Centro Tepeyac v. Montgomery Cty., 2013
U.S. App. LEXIS 13606 (4th Cir., July 3, 2013); for asserted violations of a plaintiffs First
Amendment freedom of speech rights, Cooksey v. Futrell, 2013 U.S. App. LEXIS 13232
(4th Cir., June 27, 2013).
D.

Americans With Disabilities Act

Title II of the Americans With Disabilities Act (ADA) prohibits public entities
from discriminating against disabled individuals. 42 U.S.C. 12132. A public
entity is considered to be any state or local government, any department, agency, special
purpose district, or other instrumentality of the State or States or local government. 42
U.S.C. 12131(1). The provisions of the ADA do not apply in employment cases. Elwell
v. Okla. ex rel. Bd. of Regents of Univ. of Okla., 693 F.3d 1303 (10th Cir. 2012).
Many ADA cases are also considered under the West Virginia Human Rights Act,
West Virginia Code 5-11-9, which requires employers to make reasonable
accommodations for disabled employees.
Reasonable accommodation means
reasonable modifications or adjustments to be determined on a case-by-case basis which
are designed as attempts to enable an individual with a disability to be hired or to remain
in the position for which he or she was hired. The Human Rights Act does not necessarily
require an employer to offer the precise accommodation an employee requests, at least
so long as the employer offers some other accommodation that permits the employee to
fully perform the jobs essential functions. Syllabus Point 1, Skaggs v. Elk Run Coal Co.,
198 W.Va. 51 ( ).
In order to state a claim for breach of the duty of reasonable accommodation a plaintiff
must allege the following: (1) Plaintiff is a qualified person with a disability; (2) the
employer was aware of the plaintiffs disability; (3) the plaintiff required an
accommodation in order to perform the essential functions of a job; (4) a reasonable
accommodation existed that met the plaintiffs needs; (5) the employer knew or should
have known of the plaintiffs need and of the accommodation; and (6) the employer
failed to provide the accommodation. Syllabus Point 2, Id. An employer may defend
against a claim of reasonable accommodation by disputing any of the essential elements
of the employees claim or by proving that making the accommodation imposes an undue
hardship on the employer.
Syllabus Point 3, Id.
Once an employee requests a
reasonable accommodation, the employer must assess the extent of an employees
disability and how it can be accommodated. Syllabus Point 4, Id. When the employee
cannot be accommodated in the current position, restructuring or other job opportunities
within the company may be considered by the employee. Id.
XVII.

Alternative Dispute Resolution

A.

Arbitration

People often assume that it is a foregone conclusion that binding arbitration is preferable
to litigating a case in court. Lawyers tend to lean towards arbitrating claims based upon
the assumption that procedural rules are more lax and that the overall process will be
less contentious. This is not a proper assumption to make, and lax atmosphere rarely
bodes well for a defendant. Before agreeing to arbitrate a case, or before deciding to
enforce an arbitration clause, take into consideration the following items:

77

Venue. The tendencies of the judge and potential jury must be analyzed
and weighed. A report should be generated by defense counsel that
discusses the positives and negatives of the venue, along with whether it
is preferable to proceed there or in an arbitration forum. In short, if
dismissal is a realistic possibility in the civil venue, then arbitration may
not be preferable.

Rules. Read the rules of the arbitration forum in which the matter may
proceed. If there are concerns with the rules governing the arbitration,
discuss them with counsel. If arbitration is the preferred method for
resolution, but if there are concerns regarding the governing rules,
negotiate the ground rules for the arbitration early. Make a call as to
whether it is desirable to have the matter governed by the rules of civil
procedure, rules of evidence, and/or trial court rules. Have the arbitrator
establish a time frame order for submission of filings.

Arbitrator.

This is perhaps the most crucial component of having a

successful arbitration. Select an arbitrator who is well-versed in the law

of the jurisdiction, preferably a former judge or a tenured lawyer. It is
crucial to have a structure to an arbitration proceeding and understanding
of legal issues and the legal process. A non-lawyer may allow the
proceeding to run amuck.
In addition to the considerations set forth above, the following strategies should be
employed:

During the pendency of the arbitration proceeding, make a note of any

and all grounds for overturning an adverse award, or seeking nonenforcement of the award. Make an objection on the record to any
inconsistencies or inappropriate activities by the parties or the arbitrator.
Upon conclusion of the proceeding, the attorneys should state on the
record whether the proceeding was administered in a fair and just
manner.
Federal statutes (and many state statutes) that govern
enforcement of arbitration provisions provide very limited circumstances
under which an award will be overturned or unenforced.

Remember that an arbitration proceeding is pending before a single

arbitrator or a panel of three arbitrators, not a lay jury. What may tend
to influence a jury, will not likely influence a sophisticated tribunal.

Some arbitration rules, such as those employed by the American Arbitration Association,
require parties to specifically request the use of a court reporter. If not requested, the
proceedings are not transcribed. Under no circumstance should you participate in an
arbitration proceeding without requesting the services of a court reporter.
This
transcript may be needed in the event that post-arbitration filings are needed or
required.

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B.

Mediation

Hands down, mediation is the most common form of case resolution in West Virginia.
Most judges require mediation to be conducted during the pendency of a case. In some
instances, the judge will conduct a settlement conference prior to trial if a case fails to
settle during mandatory mediation. During these conferences, the judge will essentially
act as a mediator. As discussed below, prior to mediating a case, a few things should be
considered.
In most instances, the judge presiding over the case will permit the parties to select the
mediator. When this is this case, the following items should be considered:

Dont agree with the opposing counsel on just any mediator. Only agree
upon a mediator with whom you and your selected counsel are
comfortable.

Remember that the mediator is being paid to perform a job. Therefore,

you should select a mediator who is active and involved in the process. If
the mediator sees his/her role as simply relaying offers and demands,
then he/she is nothing more than a line of communication and is not a
worthy candidate.

Select a mediator who will study the mediation statements and do

additional research on the issues presented, if necessary, in order to be
informed and persuasive.

A good mediator is an experienced lawyer who has handled a variety of

cases and issues, both simple and complex.

If the case has been contentious, an aggressive mediator may be

necessary in order to keep the parties on task.

Select a mediator who is not afraid to work a case and who will not view
mediation as a 9 AM to 5 PM prospect.

A good mediator does not quit the case simply because the mediation
session has ended. A mediator should be willing to continue assisting with
negations after an unsuccessful mediation session.

The mediator should be someone who will candidly communicate to the

court the outcome of the mediation.

Dont view your participation in mediation as a mandatory court

requirement. Assuming settlement authority is set for an amount that is
sufficient to settle the case, go into mediation prepared and with the
intent to settle the case.

Decide in advance what information you do not want to be divulged to the

opposition, as well as items that you are willing to disclose.

It goes without saying that you can never be too prepared. At the very least, you should
have the following information at your disposal:

Pre-mediation

Evaluation

Report.

If

any

information

provided

is

ambiguous, confusing or incomplete, request that the report be amended

to clarify the issues.

79

Obtain and review copies of liability and damages reports from all of the
parties experts.

For multi-plaintiff litigation, request counsel to prepare a breakdown of

estimated damages for each claimant.

Map out a flexible strategy for the mediation in advance. It is important

to have a game plan, but equally important to be able to amend it as the
mediation proceeds.

Whenever possible, find out in advance how the mediation process will
work. Each mediator is different and your strategy should be catered to
how the mediator handles mediations.

If dispositive motions have not been filed, you need to have a detailed
outline with argument as to which claims could be disposed of on their
merits, with appropriate references to undisputed facts and law.

Review the West Virginia Trial Court Rules that govern mediation in order
to determine if any additional steps need to be taken prior to mediation.

XVIII.

Privacy and Social Media in the Workplace

Under the United States Constitution, public employees are granted

greater privacy rights than private employees. A public employees
speech may be protected if it (a) pertains to a matter of public concern
and (2) the employee is speaking as a citizen rather than an employee.
Garcetti v. Caballos, 547 U.S. 410 (2006). If these facts are met, a
reviewing court will conduct a balancing test to deterimine whether the
public employees interest in maintaining an effective, non-disruptive
workplace outweighs the public employees right to speak freely. Id. If
these facts are not met, free speech protections do not apply. Id.

Along with the First Amendment protections public employees also receive
considerable protections under the Fourth Amendment of the United
States Constitution. Searches conducted pursuant to the Fourth
Amendment must be considered under a totality of the circumstances to
determine if the search is reasonable. United States v. Krisel, 508 F.3d
941, 947 (9th Cir. 2007). The expectation of privacy in their offices,
desks, and file cabinets may be reduced virtue of actual office practices
and procedures or by legitimate regulation. OConnor v. Ortega, 480 U.S.
709, 715 (1987). Public employer intrustions on the constitutionally
protected
privacy
interests
of
governmental
employees
for
noninvestigatory, work-related purposes, should be judged by the
standard of reasonableness under all the circumstances. Id. The United
States Supreme Court recently considered the extent a public employee
has an expectation of privacy in private messages on employer owned
devices and declined to answer the question, saying [r]apid changes in
the dynamics of communication and information transmission are evident

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not just in the technology itself but in what society accepts as proper behavior. At
present, it is uncertain how workplace norms, and the laws treatment of them, will
evolve. City of Ontario, Cal. v. Quon, 130 S.Ct. 2619 (2010). Thus, for the
purposes of its holding in Quon, the Court assumed the employee had a reasonable
expectation of privacy in his text messages, that the City of Ontarios review of the
transcript constituted a Fourth Amendment search, and that the principles applicable
to a government employers search of an employees physical office apply as well in
the electronic sphere. Id.

The Electronic Privacy Communications Act (EPCA) (18 U.S.C. 2701 et seq.)
prohibits unauthorized access to stored data found on a computers hard drive or
email servers. There is an exception for under the provider definition for employer
-provided accounts, equipment, etc. Generally, an employer may monitor an
employees use company provided email systems, internet usage, and the like.

Many states are now passing legislation to provide additional protections for
employees social media usernames and passwords. West Virginia does not have
similar legislation protecting employees. Even in states without these additional
protections and employer may not take disciplinary action based upon an
employees status in a protected calss or a medical condition, or a religious belief, if
the employee blogs or posts about alleged harassment or discrimination at work,
and/or
the employee whisteblows about alleged company wrongdoing. In
numerous civil cases around the country many judges are allowing defendants to
have access to plaintiffs social media, at least those portions of a plaintiffs profile
that are public and no steps are taken to protect the privacy of the information.

Section 7 of the National Labor Relations Act grants employees (with or without a
union) the right to engage in concerted activities for the purpose of...mutual aid or
protection. This right is enforceable under Section 8(a) of the NLRA, which prohibits
employers from interfering, restraining or coercing employees who exercise their
rights under Section 7, or from discriminating against employees because of their
protected activity. The NLRB has long held that employee communications
amounting to concentrated activity for mutual aid and protection, having to do with
wages, hours or terms and conditions of employment, is protected under the NLRA
and cannot be restricted by the employer. The NLRB views blanket emplopyer
prohibitions on employees discussing work are illegal since such actions infringeo on
a workers right to discuss work conditions freely and without fear or retribution,
regardless of where the conversations occur. An employee acting alone, however,
may in certain circumstances be disciplined by the employer without violating the
National Labor Relations Act. The NLRB issued a Memorandum OM 12-59 (May
30,2012), summarizing a series of memoranda from the Division of Advice involving
social media policies. Under this Memorandum a rule will be found to unlawfully chill
-protected activity if: (a) employees reasonably would construe the rule to prohibit
such activity; (b) the rule was issued in response to union activity; or (c) the rule
has been applied to restrict protected activity.

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XIX.

The West Virginia Judiciary

The organizational structure of the West Virginia judiciary is defined by provisions in the
state's constitution and supplementary statutory provisions. The Judicial Reorganization
Amendment to the states Constitution, adopted in 1974 and effective in 1976,
established a unitary or hierarchical judicial system within the state. The system was
patterned after the system adopted in New Jersey in 1947. The amendment completely
replaced the disorganized judicial system provided for in Article VIII, the Judicial Power
article of the West Virginia Constitution. In comparison to many other states, the
Amendment provided for a very simple assignment of judicial tasks.
A.

The Supreme Court of Appeals of West Virginia

The Supreme Court of Appeals of West Virginia is the court of last resort for disputes
arising under the laws of West Virginia and is the state's only appellate court. No
intermediate courts of appeal have been created, although they are legislatively
permitted. All petitioners must petition the justices to docket or list the case for
consideration.
There are five justices, each of whom is elected for staggering twelve year terms using a
partisan ballot. Almost all of the justices elected to the Court during the past 20 years
have been Democrats, and most of them were politically active in partisan politics prior to
their election. They are highly engaged with the media and any controversial activities
are highly documented. The current court consists of Chief Justice Margaret L. Workman,
Justice Robin Jean Davis, Justice Brent D. Benjamin, Justice Menis Ketchum, and Justice
Thomas E. McHugh. All Justices are registered democrats, although Justices Benjamin
and McHugh previous private practices were primarily defense-oriented.
Justices
Ketchum and Workman were both prominent plaintiffs attorneys. Justice Davis is
married to Scott Segal, one of the preeminent plaintiffs attorneys in the State of West
Virginia.
B.

Circuit Courts

The circuit courts are West Virginia's only general jurisdiction trial courts of record. Circuit
courts have jurisdiction over all civil cases exceeding $300 in value; all civil cases in
equity; proceedings in habeas corpus, mandamus, quo warranto, prohibition, and
certiorari; and all felonies and misdemeanors. The circuit courts act as an appellant court
with respect to appeals from magistrate court, municipal court, and administrative
agencies, except workers' compensation appeals. The circuit courts also hear appeals
from family court decisions, unless both parties to the case agree to appeal directly to the
Supreme Court of Appeals. The circuit courts receive recommended orders from judicial
officers who hear mental hygiene and juvenile matters. The Supreme Court of Appeals
receives appeals of circuit court decisions.

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As for the makeup of the circuits, West Virginia's 55 counties are divided into 31 circuits
with 66 circuit judges. The circuits vary in size. For example, the 13th Circuit has seven
judges, and eleven circuits have one judge. Although there are 31 circuits, each of the
55 counties has a courthouse where the circuit court judge presides. Circuit court judges
are elected to eight-year terms in partisan elections. The only caveat is that judges must
have practiced law for at least five years. When a vacancy occurs, the governor appoints
the replacement. Any appointee wanting to remain in office must run in the next
election. The current salary of a circuit judge is $116,000 per year.
C.

Other Courts

In addition to circuit courts and the Supreme Court of Appeals, two other courts exist in
West Virginia. The Constitution grants magistrates county-wide limited jurisdiction over
criminal matters and civil claims with values of $3,000 or less. Magistrates cannot preside
over matters involving equity, eminent domain, real estate titles and liens, false
imprisonment, malicious prosecution, or slander and libel. The criminal jurisdiction of the
magistrate courts is fairly broad, particularly with preliminary criminal issues. West
Virginia is one of only two states, the other being Texas, that afford the right to a jury
trial in the lowest court of the judicial system.
The other court, the Court of Claims, is more or less a legislative agency, and is not part
of the judicial branch of the States government. It is composed of three judges
appointed by the President of the Senate and the Speaker of the House with the advice
and consent of the State Senate. The Court of Claims hears alleging personal injury and
property damage against state officers and employees, and also claims for unjust arrest
and imprisonment. The Court of Claims equitably decides claims against the State which
are otherwise barred by the doctrine of sovereign immunity. The majority of claims paid
through the Court of Claims are vendor claims for nonpayment of goods and services
provided to the State, claims by State inmates, and road hazard claims for damage to
private vehicles from potholes in state.

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85

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West Virginia Circuit Court Judges

1st Circuit

11th Circuit

21st Circuit

Martin J. Gaughan

Joseph C. Pomponio, Jr.

Philip B. Jordan, Jr.

James P. Mazzone

James J. "Jim" Rowe

Lynn A. Nelson

Arthur M. Recht

12th Circuit

22nd Circuit

Ronald E. Wilson

Paul M. Blake, Jr.

Donald H. Cookman

2nd Circuit

John W. Hatcher, Jr.

Charles E. Parsons

Mark A. Karl

13th Circuit

23rd Circuit

David W. Hummel

Jennifer F. Bailey

Michael D. Lorensen

3rd Circuit

Louis "Duke" Bloom

David H. Sanders

Tim Sweeney

Tod J. Kaufman

Christopher C. Wilkes

4th Circuit

Charles E. King, Jr.

Gray Silver, III

J.D. Beane

James C. Stucky

John C. Yoder

Jeffrey B. Reed

Carry L. Webster

24th Circuit

Robert A. Waters

Paul Zakaib, Jr.

Darrell Pratt

5th Circuit

14th Circuit

James H. Young, Jr.

Thom as C. Evans, III

Jack Alsop

25th Circuit

David W. Nibert

Richard P. Facemire

William S. Thompson

6th Circuit

15th Circuit

Jay M. Hoke

Paul T. Farrell

Thomas A. Bedell

26th Circuit

Alfred E. Ferguson

John Lewis Marks, Jr.

Thomas H. Keadle

David M. Pancake

Jim Matish

27th Circuit

F. Jane Hustead

16th Circuit

Warren R. McGraw

7th Circuit

Michael J. Aloi

28th Circuit

Eric H. O'Briant

David R. Janes

Gary L. Johnson

Roger L. Perry

17th Circuit

29th Circuit

8th Circuit

Russell M. Clawges, Jr.

Phillip M. Stowers

Rudolph J. Murensky, II

Susan B. Tucker

Booker T. Stephens

Phillip Guajot

O. C. "Hobby" Spaulding

9th Circuit

18th Circuit

Omar J. Aboulhosn

Lawrence S. Miller, Jr.

William J. Sadler

19th Circuit

Derek C. Swope

Alan D. Moats

10th Circuit

20th Circuit

Robert A. Burnside, Jr.

Jamie G. Wilfong

30th Circuit
Michael Thornsbury
31st Circuit
Robert A. Irons

John A. Hutchison
H.L. "Kirk" Kirkpatrick, II
*Democrat
*Republication

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dynamic representaon.
Bailey & Wyant is a fullservice law firm dedicated to providing aggressive,
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expecta ons and deliver dynamic representa on.
If you would like to speak to an a orney about a claim, or poten al claim,
please give us a call at 304.345.4222.
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