F&P on the Road

/in /by F&P on the Road

Colin Bell and Andrew Stephenson presented “FREIGHT 101: The Basics  of Cargo Claims Handing” at Trucking Bootcamps for the claims professional in eight cities throughout the country from February – May.

Bert Randall and Tamara Goorevitz attended the Spring 2018 USLAW Conference in Scottsdale, AZ from April 5-7.

Tamara Goorevitz co-presented the Robert T. Franklin Award at DRI’s Trucking Law Seminar in Chicago, IL on April 26.

Andrew Stephenson presented on the reptile theory at the P&S Safety Transportation Meeting in Birmingham, AL on May 8.

Patrick Wachter attended the ArcBest Legal Conference in Fort Smith AR on June 28.

Tamara Goorevitz will be attending the USLAW Transportation Industry Summer Legal Forum in Half Moon Bay, CA on August 8 – 9 .

James Hetzel and Ellen Stewart will be attending the USLAW Trucking Claims Bootcamp in Omaha, NE on August 16 – 17 .

Andrew Stephenson and Justin Tepe will be attending the Arkansas Trucking Seminar in Rogers, AR on September 18 – 20.

 

 

Personal Injury Protection (“PIP”) Can Be Legally Excluded

/in /by Personal Injury Protection (“PIP”) Can Be Legally Excluded

The claimant owned a personal vehicle and a taxicab. There were two separate auto policies issued by different insurance companies covering the two vehicles. There was a liability policy covering the claimant’s taxi, but this did not include any Personal Injury Protection (“PIP”) coverage. Maryland law requires every auto policy issued in the State to have a minimum of $2,500.00 PIP coverage (this can be waived by the insured as to certain specified persons). However, pursuant to Maryland insurance law, by definition, a taxi [and also a bus] is not a “vehicle” for purposes of requiring PIP (this is also the same for otherwise mandatory Uninsured Motorist (“UM”)/Under Insured Motorist (“UIM”) coverage). The policy covering claimant’s personal vehicle included PIP coverage as required by Maryland law. However, this also provided that PIP was excluded for an insured who is injured “while occupying a motor vehicle owned by you . . . and which is not insured under the liability coverage of this policy” (the “owned but not insured exclusion”).

Maryland insurance law does provide that an insurer can properly exclude PIP benefits for “any injury that occurs while the named insured . . . is occupying an uninsured motor vehicle owned by the named insured.” However, in contrast (and some potential conflict, as became apparent in this matter), another part of Maryland insurance law provides “the insurer through whom PIP benefits are generally available shall pay PIP benefits to an individual insured under the policy who is injured in a motor vehicle accident … while occupying a motor vehicle for which [PIP coverage is] not in effect” – effectively providing that PIP coverage follows the person and not necessarily the vehicle.

The claimant was injured in a motor vehicle accident while driving his taxicab. He applied for PIP benefits through the insurer of his personal auto that had PIP coverage. The claim was denied based on the exclusion. The claimant filed a complaint with the Maryland Insurance Administration (MIA), who ruled in favor of the claimant and imposed a penalty against the personal auto insurer. The MIA found the claimant was not “occupying” a “motor vehicle” because a taxi by definition is not a “motor vehicle,” and so the exclusion did not apply. The MIA further interpreted “uninsured” to mean the vehicle had to have no insurance at all for the exclusion of PIP to be valid. In turn, because the taxi in this case had some insurance, just not PIP, then the exclusion did not apply.

The insurer sought judicial review in circuit court, which reversed the MIA’s ruling. The MIA then appealed to the Court of Special Appeals, who affirmed the ruling of the circuit court, finding that the insurer properly denied the claimant’s application for PIP benefits based on the exclusion. The Court of Special Appeals found that “taxi” not coming within the definition of “motor vehicle” was simply to provide that certain otherwise mandatory coverages (such as PIP) were not required. However, this had no effect on other provisions of the insurance article referring to “motor vehicles,” which would include taxis. The Court of Special Appeals also interpreted “uninsured” in this particular section of the statute to refer specifically to having no PIP insurance – and whether or not there was any other insurance on the vehicle was irrelevant as to the exclusion being effective. The Court looked to a similar provision of Maryland insurance law allowing for an “owned but uninsured” exclusion in the context of UM/UIM coverage. It is clear that the “uninsured” reference in that statutory language specifically states that there is no UM/UIM coverage on any policy covering the occupied vehicle.

Bear in mind that the facts and circumstances of this matter are quite unusual. Not only was there confusion that a taxi is not a motor vehicle for certain insurance purposes, the fact the claimant owned both vehicles was a key issue in the ultimate determination.

Private Entity Has No Duty of Care for the Design/Construction of Public Roads

/in /by Private Entity Has No Duty of Care for the Design/Construction of Public Roads

The decedent was riding his bicycle eastbound on Maryland Route 75 at its intersection with Shepherd’s Mill Road (“the intersection”) when he was struck and killed by a tractor-trailer making a right turn from Shepherd’s Mill Road using a merge/acceleration lane. The tractor was coming from a cement plant owned and operated by Lehigh Cement Company, LLC (Lehigh). The tractor and trailer were not owned by Lehigh, and the driver was not an employee or agent of Lehigh.

The family and estate of the decedent settled with the driver of the tractor. A wrongful death and survival action was then brought against Lehigh, alleging that it was substantially involved in the negligent design and construction of the intersection. Specifically, it was claimed that the intersection negligently funneled bicycle traffic into the acceleration lane and that the intersection’s design violated the Manual on Uniform Traffic Control Devices (“MUTD”) (which includes a section on traffic control devices for bicycles); and the Transportation Equity Act for the 21st Century (“TEA-21”) (providing for cycle lanes on new road construction).

Over many years, there had been proposals and plans to redesign the intersection. The main purpose of any redesign was to deal with and accommodate increasing truck traffic to the cement plant. Pursuant to the MUTD and TEA-21, the initial plans and designs included bicycle lanes. However, final plans and designs altered the bicycle lanes to be a shoulder, which then became the merge/acceleration lane at the intersection. This was the road configuration that was actually constructed.
Lehigh’s alleged involvement was that it: 1) participated in a meeting with government entities to discuss the expansion of the cement plant; 2) prepared a proposed transportation system to provide alternate access to the plant; 3) contributed $300,000.00 to the engineering costs of developing such a system; and 4) publicly characterized the transportation system as a “public/private partnership.”

The trial court granted Lehigh’s Motion to Dismiss, finding there was no duty owed by Lehigh with respect to the design and construction of public roads. The plaintiffs appealed, arguing governmental entities may delegate their duties to private entities “pursuant to a public private partnership;” that private entities may voluntarily assume duties of public entities by conduct or by contract; and that the trial court improperly made the factual finding that there was no partnership between Lehigh and the government.

The Court of Special Appeals affirmed the circuit court’s dismissal of the complaint. The power to design, construct and maintain state and county roads is exclusively within the power of state and county governments. The Court did acknowledge that the state and county may delegate the design and construction of public roads to private entities. However, the Court determined that the plaintiffs did not assert any facts to substantiate that the design and construction of the subject intersection was delegated to Lehigh – there was no allegation in the complaint of any contract with Lehigh. Lehigh’s one statement referencing a “public/private partnership” had no legal significance and the relationship between Lehigh and the design of the intersection was “quite limited in regard to voluntarily assuming any duty.” Finally, the Court held that there was no fact finding by the trial court in regard to the existence of a partnership. The decision was legal in nature that the complaint did not properly allege either a partnership agreement or any actions of the parties holding out a partnership existed.

This case piqued the interest of Franklin & Prokopik as it was tangentially involved. F&P had mobilized its emergency response capability on the happening of the occurrence and on behalf of the tractor driver. F & P attorneys were aware, based on the terms of the settlement release from that matter, that there was the possibility of further litigation directed at the road configuration.

Recent F&P Success: Half Million Dollar Verdict Overturned for Improper Admission of Evidence from the Lack of Insurance

/in /by Recent F&P Success: Half Million Dollar Verdict Overturned for Improper Admission of Evidence from the Lack of Insurance

The plaintiff was a pedestrian when he was struck and injured by a dump truck making a right turn on its way to deliver asphalt and other materials to a construction site. At the time of the accident the truck driver’s license was suspended, the registration for the dump truck had expired and the insurance on the vehicle had lapsed for non-payment. The plaintiff sued the driver and the motor carrier company, but also sued the construction company who had hired the carrier. The plaintiff claimed the construction company (who was F&P’s client) had directly hired the driver, who was therefore an agent of the construction company, such that it was vicariously liable for the driver’s negligent actions under the legal theory of respondeat superior. The plaintiff also claimed that the construction company was directly liable for negligent hiring, because there was no liability insurance on the vehicle as required by law.

In support of the negligent hiring count, the plaintiff elicited testimony from a police officer and an insurance representative that there was no insurance on the dump truck. Maryland law generally provides that “[e]vidence that a person was or was not insured against liability is not admissible upon the issue of whether the person acted negligently or otherwise wrongfully.” However, while the trial court agreed with our arguments that evidence of insurance was inadmissible on the vicariously liability count, it concluded that evidence of lack of insurance was relevant to the negligent hiring claim.

The jury returned a verdict of $529,000.00 in favor of the plaintiff. F&P noted an appeal to the Court of Special Appeals (Maryland’s intermediate appellate court). The Court of Special Appeals reversed the jury’s verdict. The Court found that the lack of liability insurance was relevant to the driver’s fitness/competency to operate a motor vehicle (since Maryland law requires that all persons driving a motor vehicle have liability insurance), but the driver’s unfitness based on the lack of liability insurance was NOT a proximate cause of the accident or the plaintiff’s injuries. Specifically, the Court explained “it was not [the driver’s] lack of insurance coverage that caused the accident. Rather, it was [the driver’s] negligent driving that caused [the plaintiff’s] injuries and damages.”

The plaintiff noted an appeal to the Court of Appeals of Maryland (Maryland’s state supreme court). Following full briefing and recent oral argument, the Court of Appeals affirmed the decision of the Court of Special Appeals – throwing out the more than half million dollar judgment. Franklin & Prokopik again argued that the driver’s lack of liability insurance alone did not speak to his ability to safely operate a motor vehicle. The Court of Appeals agreed, holding that it was legal error to admit evidence of the driver’s lack of liability insurance coverage, because this was not the “cause and effect” of the plaintiff’s injuries and “was not probative” of the client’s control over the driver. The Court further explained that this error was prejudicial because it likely was a factor included in the jury’s deliberations and determination of liability on the count of vicarious liability. Specifically, the Court of Appeals opinion provides that the lack of liability insurance coverage “greatly increased the likelihood that the jury inferred fault . . . and considered that evidence in finding [defendant] liable under a theory of respondeat superior.”

Moran Perry v. Asphalt & Concrete Services, Inc., 447 Md. 31 (2016)

The Debate Over Drug Testing Commercial Truckers Using Hair Samples

/in /by The Debate Over Drug Testing Commercial Truckers Using Hair Samples

After the 2016 elections, 28 states and the District of Columbia have legalized the medicinal use of marijuana.  At least seven states have legalized the recreational use of marijuana.  The national trend of legalizing marijuana use, at least for medicinal purposes, is raising a number of issues in the trucking industry, which explicitly bans the use of marijuana for commercial drivers, regardless of whether a physician has prescribed its use.

The Federal Motor Carrier Safety Regulations (FMCSR) mandate that “no driver shall be on duty and possess, be under the influence of, or use, any substance set forth in Schedule I of the regulations….”  Marijuana qualifies as a Schedule I drug under the Controlled Substances Act, 21 U.S.C. § 801.  In November 2015, the Department of Transportation reiterated its zero tolerance policy when it comes to marijuana by issuing a “Medical” Marijuana Notice in which the Department stated that “Medical Review Officers will not verify a drug test as negative based upon information that a physician recommended that the employee use ‘medical marijuana.’ … It remains unacceptable for any safety-sensitive employee subject to drug testing under the Department of Transportation’s drug testing regulations to use marijuana.”

Commercial drivers are required to submit to drug and alcohol testing.  Currently, the Department of Transportation provides specific procedures for urine drug testing and breath alcohol testing.  Some large commercial carriers go above and beyond the minimal testing requirements set forth by the Department of Transportation and test prospective drivers using hair samples, which can detect the presence of marijuana up to 90 days after use.  The urine analysis presently approved by the Department of Transportation can detect marijuana approximately two to three weeks after use.  The Department of Health and Human Services has been studying hair testing since 2004 and has been tasked with adopting a hair-testing standard for federal employees, which many hope will lead to the Department of Transportation adopting a hair-testing requirement for commercial truckers.

Many people in the trucking industry are eager for the Department of Health and Human Services to pass a hair-testing standard that can be utilized for all commercial drivers because it would help to identify more marijuana users and ideally prevent accidents that can be linked to intoxication.  Critics of this method of drug testing argue that hair testing will not yield the type of results necessary in the transportation industry; that is, whether the driver was under the influence of marijuana while operating a vehicle.  Rather, the results show a broad picture revealing whether a driver was under the influence at any point in the three months preceding the test.  Hair testing also draws criticisms because results can come back positive even if the hair was simply environmentally exposed to marijuana, as opposed to the individual actually ingesting the drug.

Although it remains to be seen whether the Department of Transportation will adopt a hair-testing methodology for drug testing drivers, it seems likely that there could be a dwindling pool of eligible commercial drivers if tests get more stringent while states get more lenient regarding the use of marijuana.

FMCSA Goes “Hog-Wild” Withdrawing Proposed Rulemakings, This Time as to Increasing Financial Responsibility Levels

/in /by FMCSA Goes “Hog-Wild” Withdrawing Proposed Rulemakings, This Time as to Increasing Financial Responsibility Levels

In November 2014, the FMCSA issued an Advanced Notice of Proposed Rule Making (ANPRM) concerning financial responsibility for motor carriers, freight forwarders, and brokers. Minimum third-party liability insurance limits for common carriers, passenger carriers and hazmat carriers have been unchanged since 1985.

The ANPRM did not actually propose any new limits and primarily sought information and comments and posed a series of questions, addressing: premium rates, current minimum levels, possible increased levels, and consequences of any increase etc. FMCSA received almost 2,200 public comments in response to the ANPRM. However, despite this level of response, few provided substantive and relevant information as to “cost or benefit data and the Agency was unable to otherwise obtain sufficient data on industry practice with respect to the level of liability limits in excess of the Agency’s minimum financial responsibility requirements, the cost of such premiums and the frequency of, and the amount by which bodily injury and property damage claims exceed policy liability limits.” Perhaps not surprisingly, there was competing anecdotal and hypothetical data provided by responders. Trucking sources suggested the average financial damages in a truck accident is less than $12,000.00, where safety advocates (and those pesky plaintiffs’ attorneys again) provided examples of catastrophic losses where the current $750,000.00 minimum was nowhere close to fully compensating the victims (and suggesting a greater than ten-fold increase to $10,000,000.00 for common carriers of property was warranted).

The FMCSA found all representations to be insufficient to allow a necessary systematic cost-benefit analysis to make a final decision on increasing limits (e.g. as to (1) potential increases in insurance premiums associated with increased financial responsibility limits; (2) the impact of an increase in minimum financial responsibility requirements on insurance company capital requirements set by insurance regulators to ensure there are sufficient reserves to minimize the risk of insolvency and protect consumers; and/or (3) to calculate economic benefits from having more financial resources available to assist crash victims associated with increased minimum financial responsibility limits.) As such, the FMCSA did not have sufficient data or information to support further rulemaking and the ANPRM was accordingly withdrawn.

Given limits have not increased in 32 years, even to account for inflation, there seems little doubt that an increase is going to happen at some point in the future. When that might be is anyone’s guess, watch this space . . . .

FMCSA Withdraws Its January 2016 Notice of Proposed Rule Making (NPRM) in Regards to CSA

/in /by FMCSA Withdraws Its January 2016 Notice of Proposed Rule Making (NPRM) in Regards to CSA

 In October 2015, the Federal Motor Carrier Safety Administration (FMCSA) had responded to both a Government Accountability Office (GAO) Report and a Congressional request in  continuing to defend the (clearly flawed in our humble opinion) methodology underlying FMCSA’s Compliance, Safety, Accountability (CSA) program’s Safety Measurement System (SMS).  The GAO had released a report recommending that the FMCSA revise the SMS methodology to better account for limitations in drawing comparisons of safety performance information across carriers.  FMCSA opposed the alternative suggested methodology, warning that less than 10% of the nation’s motor carriers would meet the proposed threshold, thus skewing safety prioritization towards the largest motor carriers.  FMCSA’s response ultimately concluded that, while the data limitations of SMS are “consistent with any large scale predictive model with significant variances in events and exposures,” SMS has appropriate measures to account for the greatly varying sizes of motor carriers and uniformly assess their safety.  Citing the reduction in safety violations and crashes since SMS implementation, FMCSA concluded that SMS data was “sufficiently reliable” for it to identify groups of “high-risk carriers for intervention.”

In what was no doubt a completely unrelated decision, three months later in January 2016, FMCSA issued a Notice of Proposed Rule Making (NRPM) to revise the SMS methodology.  The most significant revisions would mean that: (1) rather than requiring a compliance review before any Safety Fitness Determination (SFD) could be made under the old rule, an unfit determination could be made based on a carrier’s on-road safety data alone (i.e. local law enforcement basic accident reports arbitrarily finding the commercial driver at fault and/or equipment issues that have little or nothing to with safety); do away with the ‘three tier’ categories of “satisfactory-unconditional-unsatisfactory” in favor of a single determination of “unfit;” and also do away with the term “safety rating.”

The FMCSA received over 150 comments and several replies from industry sources and safety advocates (and of course from organizations made up of plaintiffs’ attorneys!).  The withdrawal notice references correspondence from 62 industry groups to the Secretary of Transportation, urging that the NPRM be withdrawn.  In particular, the Fixing America’s Surface Transportation (FAST) Act, specifically provides that “[u]nless a motor carrier in the SMS has received an UNSATISFACTORY safety rating pursuant to 49 CFR Part 385, or has otherwise been ordered to discontinue operations by the FMCSA, it is authorized to operate on the nation’s roadways.”  The FAST Act also required the National Academy of Sciences (NAS) to conduct a thorough study of the CSA program, specifically the SMS that leads to SFDs and this study is still pending (last estimate being this was expected later this month).[1]

The withdrawal notice provides that the FMCSA “withdraw[s] the January 2016 NPRM and, accordingly, cancels the plans to develop a SNPRM as announced by the Agency on January 12, 2017. If FMCSA determines changes to the safety fitness determination process are still necessary and advisable in the future, a new rulemaking would be initiated that will incorporate any appropriate recommendations from the National Academies of Science and the comments received through this rulemaking.”

[1] In January 2017 FMCSA did issue a notice advising it had determined a Supplementary Notice of Proposed Rule Making (SNPRM) was the appropriate next step in order to assess the comments and the results of the FAST Act study by NAS.

[1] In January 2017 FMCSA did issue a notice advising it had determined a Supplementary Notice of Proposed Rule Making (SNPRM) was the appropriate next step in order to assess the comments and the results of the FAST Act study by NAS.