Singer Lenny Kravitz is being sued for the third time over an overflowing toilet in his Manhattan penthouse that caused insurers to pay out nearly $700,000 in damage claims from other tenants.
Category Archives: Subrogation
I admit it, out of the universe of insurance and risk topics, subrogation may be the one with the least interest and glory attached to it. However, just like that boring relative you have to see every Thanksgiving, it’s part of the family and we should make every effort to deal with it pleasantly. With that said, I found the decision interesting in Opichka v. Racine County , 2006 WL 861099 (Wisc.App. April 5, 2006). Maybe you will, too. Maybe you won’t. This blog provides no warranties.
Three sheriff’s deputies asked for time off work because of motor vehicle accidents in which they had been involved. The County gave them paid time off, then asserted a subrogation lien against the deputies’ tort recoveries. The appellate court held the subrogation liens were improper. The County was entitled to subrogation for amounts it paid out because of the harm caused by the people responsible for the accidents. The court, however, said the deputies had earned their time off, and consequently, the County had not paid out anything on account of the injuries. It had, instead, paid out according to an accrued benefit the employees could have used due to a variety of causes or reasons.
Sixteen residents of a Nashville nursing home died in a September 2003 fire. A number of lawsuits have been settled, leaving two remaining, and the nursing home’s insurer has filed suit against a mattress maker, claiming it supplied defective mattresses that produced thick black smoke, killing 15 residents and inhibiting firefighters. As the story in the Tennessean points out, the insurer’s claims in the coverage lawsuit are inconsistent with the nursing home’s defenses in the lawsuits against it. This is why the verdict in a tort lawsuit against an insured is not binding on a later coverage lawsuit, to prevent the insurer from placing its interests first and interfering in an insured’s defense.
Bonus points for anyone who can say the name of this case three times really fast. In Grosshandels-Und Lagerei-Berufsgenossenschaft v. World Trade Center Properties, LLC, 2006 WL 52716 (2d Cir. January 11, 2006), the court denied an attempt by a German “social insurer” to seek subrogation for money it had paid out to its insureds, who were killed in the September 11, 2001 terrorist attacks.
The Second Circuit held that the Victim Compensation Fund (VCF) created by the federal government was not liable for the insurer’s subrogated claim. The VCF was created to erase the potential tort liability of a wide range of possible tortfeasors, and the acceptance of money from the fund extinguished all claims, including supposed subrogation rights. The VCF paid the victims’ families after deducting from their claim the amount of insurance proceeds paid by the German insurer. An interesting sidenote to this case is that the “social insurance” mentioned is a state-sponsored insurance fund in Germany that provides German citizens not only with life insurance but apparently disability insurance as well.