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August 2017

Los Angeles Team Obtains Full Dismissal of Class Action Complaint Against Major US Insurance Carrier

Los Angeles partners Calvin Davis and Aaron Rudin obtained a full dismissal of a class action complaint alleging breach of contract and bad faith against one of the largest insurance carriers in the country. The policies in issue provided for medical payments in the event of an auto accident but contained an exclusion that benefits would not be available if workers’ compensation benefits were required. In other words, if the accident was in the course of employment the policy provided that workers’ compensation was to cover the medical payments. 

The plaintiff contended this provision should nevertheless provide benefits when the insured pursued a tortfeasor for the accident and ultimately had to reimburse the workers’ compensation carrier out of any third party recovery. An action was filed in the Superior Court of Arizona – Pima County, seeking a nationwide class action for, among other things, breach of contract and insurance bad faith. 

Gordon & Rees's attorneys contended that the policy language was clear that the only consideration to invoke the exclusion was whether in a given circumstance workers’ compensation insurance was “required” not any subsequent events.  The plaintiff claimed the later reimbursement of the proceeds rendered the exclusion latently ambiguous. Unfortunately, there was no Arizona case law directly on point and a different judge in a separate case pending in Arizona Superior Court had previously held that similar policy language was ambiguous. However, in our action the court ruled that the policy was "clear on its face": that once it was established that workers’ compensation was “required” the exclusion could be invoked and later events were irrelevant. The court also held that even taking into account the specific facts of the claim and accepting them as true, the policy was still not ambiguous. 

This is a significant victory for Gordon & Rees's client as it stops at the outset a potential nationwide class action affecting the adjustment of claims throughout the country. The Los Angeles team would like to thank the Phoenix office for its assistance in achieving this result.

Calvin E. Davis
Aaron P. Rudin