In Case of Car Injury, Punitive Damages Not Covered Under Automobile Policy

After being hit by a car, one pedestrian filed a lawsuit against the driver for negligence and gross negligence. The driver's insurance refused to pay punitive damages, so the pedestrian took them to trial.
By: | January 19, 2019 • 2 min read

Jennifer Zuniga was walking on the sidewalk when a vehicle struck her from behind, injuring her. Zuniga sued the driver, Christopher Medina, for negligence and gross negligence. The court found Medina guilty on both accounts, and Zuniga was awarded $93,250 in damages and $75,000 in punitive damages.

Medina was insured by Farmers Texas County Mutual Insurance Company and so sought coverage under the policy. Noting that Medina was a “covered person,” Farmers agreed to pay damages and gave Zuniga the $93,250 awarded to her. However, Farmers said it was not responsible for the punitive damages and did not pay them.

Farmers filed a petition against Medina and Zuniga for declaratory judgement, seeking a declaration that punitive damages were not included in the policy. They moved that the insurer had “no further duty to defend or indemnify Medina; that Zuniga is not entitled to recover or collect any additional monies from Farmers; and, that Farmers has no further duty with respect to the Final Judgment” in Zuniga’s suit against Medina.

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In the interim, Zuniga filed a petition seeking to recover punitive damages from Farmers. Under a turnover order, Zuniga was assigned all of Medina’s rights against Farmers, which led her to asserting additional claims against the insurer.

The trial court denied Farmers’ claims. In review, the court determined that “the punitive damages are covered under the automobile policy in question,” granting Zuniga’s motion. Farmers appealed, arguing that the policy’s plain language, which states that it would “pay damages for bodily injury,” did not cover punitive damages. It further said that even if the policy did cover punitive damages, public policy would bar its policy from covering such damages.

Zuniga argued punitive damages fell into the definition of “damages for bodily injury.” She noted that in similar cases, other courts concluded that the average insured would interpret the term ‘damages’ to include punitive damages.

However, the appellate court reversed the trial court’s decision, stating that Farmers was not responsible for punitive damages.

Scorecard: Farmers Texas Mutual Insurance Company does not have to pay for punitive damages in the underlying Zuniga v. Medina case.

Takeaway: In order to avoid lengthy court battles, insurers should clearly define what is and is not covered under their policies, especially if covered items could be split into subcategories. &

Autumn Heisler is the digital producer and a staff writer at Risk & Insurance®. She can be reached at [email protected]

4 Companies That Rocked It by Treating Injured Workers as Equals; Not Adversaries

The 2018 Teddy Award winners built their programs around people, not claims, and offer proof that a worker-centric approach is a smarter way to operate.
By: | October 30, 2018 • 3 min read

Across the workers’ compensation industry, the concept of a worker advocacy model has been around for a while, but has only seen notable adoption in recent years.

Even among those not adopting a formal advocacy approach, mindsets are shifting. Formerly claims-centric programs are becoming worker-centric and it’s a win all around: better outcomes; greater productivity; safer, healthier employees and a stronger bottom line.

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That’s what you’ll see in this month’s issue of Risk & Insurance® when you read the profiles of the four recipients of the 2018 Theodore Roosevelt Workers’ Compensation and Disability Management Award, sponsored by PMA Companies. These four programs put workers front and center in everything they do.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top,” said Steve Legg, director of risk management for Starbucks.

Starbucks put claims reporting in the hands of its partners, an exemplary act of trust. The coffee company also put itself in workers’ shoes to identify and remove points of friction.

That led to a call center run by Starbucks’ TPA and a dedicated telephonic case management team so that partners can speak to a live person without the frustration of ‘phone tag’ and unanswered questions.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top.” — Steve Legg, director of risk management, Starbucks

Starbucks also implemented direct deposit for lost-time pay, eliminating stressful wait times for injured partners, and allowing them to focus on healing.

For Starbucks, as for all of the 2018 Teddy Award winners, the approach is netting measurable results. With higher partner satisfaction, it has seen a 50 percent decrease in litigation.

Teddy winner Main Line Health (MLH) adopted worker advocacy in a way that goes far beyond claims.

Employees who identify and report safety hazards can take credit for their actions by sending out a formal “Employee Safety Message” to nearly 11,000 mailboxes across the organization.

“The recognition is pretty cool,” said Steve Besack, system director, claims management and workers’ compensation for the health system.

MLH also takes a non-adversarial approach to workers with repeat injuries, seeing them as a resource for identifying areas of improvement.

“When you look at ‘repeat offenders’ in an unconventional way, they’re a great asset to the program, not a liability,” said Mike Miller, manager, workers’ compensation and employee safety for MLH.

Teddy winner Monmouth County, N.J. utilizes high-tech motion capture technology to reduce the chance of placing new hires in jobs that are likely to hurt them.

Monmouth County also adopted numerous wellness initiatives that help workers manage their weight and improve their wellbeing overall.

“You should see the looks on their faces when their cholesterol is down, they’ve lost weight and their blood sugar is better. We’ve had people lose 30 and 40 pounds,” said William McGuane, the county’s manager of benefits and workers’ compensation.

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Do these sound like minor program elements? The math says otherwise: Claims severity has plunged from $5.5 million in 2009 to $1.3 million in 2017.

At the University of Pennsylvania, putting workers first means getting out from behind the desk and finding out what each one of them is tasked with, day in, day out — and looking for ways to make each of those tasks safer.

Regular observations across the sprawling campus have resulted in a phenomenal number of process and equipment changes that seem simple on their own, but in combination have created a substantially safer, healthier campus and improved employee morale.

UPenn’s workers’ comp costs, in the seven-digit figures in 2009, have been virtually cut in half.

Risk & Insurance® is proud to honor the work of these four organizations. We hope their stories inspire other organizations to be true partners with the employees they depend on. &

Michelle Kerr is associate editor of Risk & Insurance. She can be reached at [email protected]