Thursday, March 15, 2007

Property and Casualty Insurance Guaranty Corporation v. Yanni (Ct of Appeals)

Filed March 15, 2007. Opinion by Judge Lynne Battaglia, joined by Judge Glenn T. Harrell, Jr. as to the immunity issue only. Dissenting opinion by Judge Alan Wilner (retired, specially assigned).

From the opinion's headnote:
The Property and Casualty Insurance Guaranty Corporation (“PCIGC”) sought review of the Circuit Court for Montgomery County’s entry of summary judgment for Peter L. Yanni in which the Circuit Court upheld the Workers’ Compensation Commission’s award of late-payment penalties and attorneys’ fees to Yanni for PCIGC’s tardy payment of Yanni’s workers’ compensation award. The Court of Appeals reversed summary judgment for Yanni and held that the penalties should not have been assessed against the PCIGC because it was not an “insurer” for purposes of Section 9-728 of the Labor and Employment Article, and because the late-payment penalties were not part of Yanni’s “covered claims,” as the term is defined in Section 9-301(d) of the Insurance Article. The Court also concluded that, even if the PCIGC were an “insurer,” and the penalties were part of the “covered claim,” it was immune from the assessment of late-payment penalties under the provisions of Section 9-314(a) of the Insurance Article and Section 5-412 of the Courts and Judicial Proceedings Article.

The court's official headnote adequately captures the substance of the majority opinion, but in dissent, Judge Wilner (joined by Cheif Judge Robert Bell) responded that the majority resorts to an overly constrained interpretation to come up with a conclusion at odds with the stated purposes for establishing PCIGC, "to provide a mechanism for the prompt payment of covered claims". Explicit language in the statute drops PCIGC into the shoes of the defaulting insurer, and thus PCIGC is an insurer for the perposes of the statuory scheme. Moreover, since the failure to timely pay the amounts due to Yanni was due to PCIGC's failure to timely pay amounts due under the policy, the penalties most certainly should be deemed as "arise out of" the policy. Finally, the dissent found the reasoning to afford immunity to PCIGC, derived for other cases, inapposite here, where PCIGC was being held accountable for its own failure to comply with the statute's requirement, and to suggest a different channel to seek redress as suggested in the majority opinion, "makes utterly no sense", and for all those reasons, would have affirmed the judgment of the court below.

The opinion is available in PDF format.

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