Automobile Insurance SubrogationAutomobile Total Loss ThresholdsDeductible ReimbursementDiminution of ValueFirst Come, First Served: Subrogating Multiple Claims in Excess of Policy LimitsFuneral Procession Traffic LawsImputing Contributory Negligence of Driver to Vehicle OwnerKeep Right Traffic LawsLaws Regarding Using Cell Phones/Headphones/Texting While DrivingLoss Of UseMed Pay/PIP SubrogationOwner Liability For Stolen VehiclesPayment of Sales Tax After Vehicle Total LossPedestrian and Crosswalk LawsRental Car Company Physical Damage and Loss of Use ClaimsRental Car Company’s Liability Insurance Primary or ExcessSudden Medical Emergencies While DrivingSuspension of Drivers’ LicensesUse of Non-Original Equipment Manufacturer (OEM) Aftermarket Crash Parts in Repair of Damaged Vehicles
Federal , State, and Local Governmental EntitiesMunicipal/County/Local Governmental Immunity and Tort LiabilityState Sovereign Immunity And Tort Liability
General Tort Laws/StatutesAnti-Indemnity StatutesContribution ActionsContributory Negligence/Comparative FaultDog Bite LawsEconomic Loss DoctrineParental ResponsibilitySpoliationStatute of LimitationsStatute of Limitations Exceptions
Health Insurance SubrogationHealth and Disability Insurance
InvestigationAdmissibility of Expert TestimonyPre-Suit Disclosure of Liability Policy Limits in Third-Party ClaimsRecording Conversations
Product Liability SubrogationProduct Liability Law
Property Subrogation“Matching Regulations” And Laws Affecting Homeowners Property ClaimsCondominium/Co-Op Waiver of Subrogation LawsDamage to Property Without Market ValueGeneral Contractor Overhead And Profit Payments In First-Party ACV Property Damage ClaimsLandlord/Tenant Subrogation
Subrogation GenerallyAnti-Subrogation RuleCriminal RestitutionMade Whole DoctrineMedical Expenses, Insurance Write-Offs, and The Collateral Source Rule
Workers’ CompensationEmployee Leasing LawsHospital Lien LawsOCIP/CCIP Subrogation In Workers’ Compensation Construction CasesRecovery Of Increased Workers’ Compensation Premiums By EmployerWhich Workers’ Compensation “Benefits” Can Be Subrogated?Workers’ Compensation Subrogation Waiver EndorsementsWorkers’ CompensationWorkers’ Compensation Claims by Undocumented Employees
Automobile Insurance Subrogation
Automobile Total Loss Thresholds
Total Loss Threshold (75%).
Insurer may not “total” vehicle if the cost to rebuild or reconstruct the motor vehicle to pre-accident condition is less than 75% of pre-accident FMV, unless the owner provides written agreement to the contrary. It is the responsibility of insurance companies to evaluate and classify salvage. There are two (2) classifications of salvage vehicles: Classification A indicates the vehicle has extensive damage and is good for “parts only.” Classification B indicates the vehicle has considerable damage but is considered repairable. It will be the responsibility of insurance companies to evaluate and classify salvage. 230 R.I. Code R. 20-40-2.8 (Standards for Prompt, Fair, and Settlements); R.I.G.L. § 31-46-1.1 (Salvage Vehicle Statute).
Automobile: Pro-Rata. R.I. Code R. 11-5-73:7(C) (alternatively cited as R.I. A.D.C. § 02 030 073) provides: “Subrogation. An Insurer shall include first-party claimant’s deductible, if any, in subrogation demands. Upon settlement of subrogation claim, first-party claimant’s insurer shall pay its insured the full deductible or the amount collected if less than the full deductible, less the insured’s pro-rata share of subrogation expenses, if any. The subrogation expenses, as opposed to the insured’s deductible, are subject to pro rating based on percentage of fault.
Deductible must be included in any subrogation demand.
Property: Pro-Rata. R.I. Gen. Laws Ann. § 27-8-12 provides: “Whenever, through subrogation, an insurance company or its agent collects a casualty loss from a third party, that company or agent shall, from the funds collected, first pay to the insured the deductible portion of the casualty loss less the prorated share of subrogation expenses and only after this retain any funds in excess of the deductible portion of the recovery.” No specific requirement to include deductible in demand but the insured must be reimbursed pro-rata any net recovery.
No specific requirement to include deductible in demand but must reimburse insured pro-rata any net recovery.
Diminution of Value
First Party: A Rhode Island Superior Court denied an insurer’s summary judgment as to diminution in value in a case addressing policy language, finding that an ambiguity existed as to whether or not “the cost of repair or replace the property with other of like kind and quality” includes damages for the inherent diminished value of an auto resulting from the vehicle being in an accident. The Court held where a dispute existed with respect to the parties’ intent, there existed a genuine issue of material fact that must be resolved by the jury. Cazabat v. Metropolitan Property & Casualty Ins. Co., 2000 WL 1910089 (R.I. Super. Ct. 2000).
Third Party: No court decisions regarding recovery allowed for diminution in value of a damaged vehicle in a third-party claim.
First Come, First Served: Subrogating Multiple Claims in Excess of Policy Limits
It appears that a liability carrier can settle with one of several claimants for policy limits provided it is done so in good faith. Voccio v. Reliance Ins. Companies, 703 F.2d 1 (1st Cir. 1983). Where a pedestrian and his father, who had won a verdict for several hundred thousand dollars against a motorist, and who, in return for their promise not to try to collect the judgment, had been assigned motorist’s claim against insurer for bad faith in carrying out settlement negotiations with another injured pedestrian, the court held that they could not recover on the bad faith claim against insurer, in absence of any evidence suggesting that a “good faith” settlement between insurer and the other pedestrian would have precluded the large excess judgment against motorist. Id.
Funeral Procession Traffic Laws
Rhode Island law provides that funeral processions have the right-of-way, including through intersections when the lead car has lawfully entered it. Exceptions to the procession’s right-of-way through intersections are when vehicles are otherwise directed by law enforcement, or if an authorized emergency vehicle is approaching. R.I. Gen. Laws § 31-52-4. Drivers not in a funeral procession may not drive between vehicles in the procession or enter an intersection when a procession is passing through, even if the traffic signal indicates to do so. R.I. Gen. Laws § 31-52-5.
Imputing Contributory Negligence of Driver to Vehicle Owner
Imputed Contributory Negligence Law: Contributory negligence of driver is imputed to owner because § 31-33-6 deems the owner to be the “agent” of the owner, even if accident is outside of agency authority. Exception is where driver has proof of insurance. R.I.G.L. § 31-33-6; Davis Pontiac Co. v. Sirois, 105 A.2d 792 (R.I. 1954).
If driver has provided statement of financial responsibility to Rhode Island’s Registry of Motor Vehicles, the owner of the vehicle cannot be held responsible for injuries the driver causes. Oliveira v. Lombardi, 794 A.2d 453 (R.I. 2002) Merely telling the vehicle’s owner you have insurance is not enough. Ortiz v. Golini, (R.I. Super., Jul. 12, 2005) (No. PC 04-3275).
Vicarious Liability/Family Purpose Doctrine: No Family Purpose Doctrine.
Owners and lessees are vicariously liable for the negligence of drivers who operate their vehicles with their consent, and in the case of an accident the driver is deemed the “agent” of the owner, unless the driver has posted his own proof of financial responsibility prior to an accident. R.I.G.L. § 31-33-6.
Rental vehicles are governed by R.I.G.L. § 31-34-4, which places different restrictions upon rental vehicle owners.
Sponsor Liability for Minor’s Driving: R.I.G.L § 31-10-15: Any negligence by a minor while driving a motor vehicle will be imputed to the parent/adult who signed their drivers’ license application, and they will be jointly and severally liable.
Keep Right Traffic Laws
Statute: R.I.G.L. § 31-15-1, R.I.G.L. § 31-15-2 and R.I.G.L. § 31-15-4.
Summary: Drivers must drive in the right lane except when overtaking and passing another vehicle; when the right lane is closed to traffic while under construction or repair; upon a roadway with three marked traffic lanes; or upon a roadway designated for one-way traffic. Slower traffic must keep right. Drivers proceeding slower than the normal speed of traffic must drive in the right lane unless passing another vehicle or preparing to turn left.
Flow of Traffic: Drivers proceeding slower than the normal speed of traffic must drive in the right lane. Except when overtaking and passing on the right is permitted, the driver of an overtaken vehicle shall give way to the right in favor of the overtaking vehicle on audible signal.
Laws Regarding Using Cell Phones/Headphones/Texting While Driving
Cell Phone/Texting: Drivers under the age of 18 may not operate cell phones in any capacity, unless it is an emergency situation. R.I.G.L. § 31-22-11.9.
No person while operating a motor vehicle may compose, read, or send a text message. Exceptions are allowed for hands-free operation and emergency situations. R.I.G.L. § 31-22-30.
Other Prohibitions: Headsets, remote microphones, earpieces are allowed to be used while driving if it makes a cell device “hands-free.” R.I.G.L. § 31-22-30(2).
Loss Of Use
Loss of Use: Yes. A plaintiff’s loss of use of his vehicle is an element of damage for the jury to consider. Longo v. Monast, 40 A.2d 433 (R.I. 1944); see also Petroleum Heat & Power Co. v. United Elec. Rys. Co., 150 A. 259 (R.I. 1930). A plaintiff’s testimony as to what he paid per day for use of a replacement vehicle is admissible as prima facie proof of damages for loss of use of a vehicle. Longo v. Monast, supra. No case law or statutory authority on point regarding recovery of loss of use when vehicle is a total loss.
Lost Profits: Yes. Plaintiff may recover lost profits when plaintiff’s business has been interrupted. Troutbrook Farm, Inc. v. DeWitt, 611 A.2d 820 (R.I. 1992). One must be able to prove the amount of lost profits and the cost and expenses involved in generating that income with reasonable certainty. Long v. Atl. PBS, Inc., 681 A.2d 249 (R.I. 1996). Mathematical precision is not required to calculate lost profits, but such losses must be supported with some rational model on how the losses were computed. Abbey Medical/Abbey Rents, Inc. v. Mignacca, 471 A.2d 189 (R.I. 1984).
Comments: Loss of use is recoverable even when a rental vehicle is supplied for free by a third party. Scott v. S. Ry. Co., 97 S.E.2d 73 (R.I. 1957). Lost profits may be demonstrated by showing history of one’s business operations. Smith Dev. Corp. v. Bilow Enterprises, Inc., 308 A.2d 477 (R.I. 1973).
Med Pay/PIP Subrogation
Med Pay: Subrogation allowed subject to pro-rata sharing of recovery costs. Jennings v. Nationwide Ins. Co., 669 A.2d 534 (R.I. 1996).
PIP: Coverage not applicable.
Made Whole: Applies when legislatively-mandated coverage is reduced by subrogation rights such as UM, PIP and/or no-fault. Lombardi v. Merchant Mut. Ins. Co., 429 A.2d 1290 (R.I. 1981).
Statute of Limitations: The three (3) year personal injury statute of limitations runs from the date of the insured’s accident. R.I.G.L. § 9-1-14(b).
Owner Liability For Stolen Vehicles
Key In The Ignition Statutes: R.I.G.L. § 31-22-1.
Common Law Rule: Leaving the keys in the car is not a concurring proximate cause of injuries sustained by a third party. Keefe v. McArdle, 109 R.I. 90, 280 A.2d 328 (1971); Clements v. Tashjoin, 168 A.2d 472 (R.I. 1961).
Payment of Sales Tax After Vehicle Total Loss
First-Party Claims: When the policy provides for the adjustment and settlement of first-party total losses, the Insurer may (1) offer a replacement of like kind and quality including all applicable taxes, license fees, or other fees, or (2) offer a cash settlement based on the ACV of a comparable vehicle including all applicable taxes, license fees, or other fees. R.I. Code R. § 11-5-73:8.
Third-Party Claims: R.I. Code R. § 11-5-73:3 defines “claimant” as a first-party claimant, a third-party claimant, or both. “In order to fully compensate for the loss to the consumer, the insurer must include applicable sales tax in its calculation of settlement value in any total loss claim.”
Pedestrian and Crosswalk Laws
R.I.G.L. § 31-18-3: When traffic signal is not in place, vehicles must yield to pedestrian in crosswalk on vehicle’s half of road or close to it. Pedestrians must not step off curb and into path of vehicle when vehicle does not have time to stop.
R.I.G.L. § 31-18-5: Pedestrians must yield to vehicles when crossing outside crosswalk.
Summary: Pedestrian in crosswalk has right-of-way but must still look out for their own safety. Green v. Tingle, 92 R.I. 393, 169 A.2d 373 (1961).
Rental Car Company Physical Damage and Loss of Use Claims
Recover From Renter: Physical damage to rental vehicle must be covered by renter’s personal auto policy. R.I. Stat. § 27-7-6. Recovery of physical damage and loss of use are not otherwise prohibited or otherwise regulated. Terms of rental agreement control. Collision Damage Waivers regulated by statute. R.I. Stat. § 31-34-7.
Recovery From Third-Party: Lost profits allowed under certain circumstances but no cases involving loss of use recovery by a car rental company. Damages for loss of use are recoverable. Longo v. Monast, 40 A.2d 433 (R.I. 1944). Where there is evidence that plaintiff used his auto daily going to and from his employment, that about two months was required to repair automobile and that plaintiff had to hire another automobile for 43 days for his transportation, his testimony as to what he paid per day for use of the replacement auto is admissible as prima facie proof of damages for loss of use of auto. Loss of use is properly recovered even when a rental vehicle is supplied for free by a third party.
Rental Car Company’s Liability Insurance Primary or Excess
Summary: The renter’s policy is primary unless otherwise stated in the rental agreement in 10-pt. type on the face of the rental agreement. R.I. Stat. § 31-34-4(b).
Sudden Medical Emergencies While Driving
Sudden Emergency Defense. When the driver of an automobile is confronted with an unforeseeable emergency condition not caused by his own negligence. Pazienza v. Reader, 717 A.2d 644 (R.I. 1998); Malinowski v. United Parcel Serv., Inc., 727 A.2d 194 (R.I. 1999).
No cases using the sudden emergency defense for a medical emergency.
Suspension of Drivers’ Licenses
Administrative Suspension: A driver’s license will be suspended if individual fails to maintain the appropriate insurance coverage. R.I.G.L. § 31-10-38.
Judgment: The Division will immediately suspend the license of the judgment debtor. R.I.G.L. § 31-32-10. Suspension remains until the judgment is stayed or satisfied, and the debtor provides proof of financial responsibility. Suspension will be lifted in three years. R.I.G.L. § 31-32-14.
Contact Information: State of Rhode Island, Department of Revenue, Division of Motor Vehicles, Accident Division, 600 New London Avenue, Cranston, RI 02920-3024, (401) 462-4368, http://www.dmv.ri.gov/.
Use of Non-Original Equipment Manufacturer (OEM) Aftermarket Crash Parts in Repair of Damaged Vehicles
Authority: R.I.G.L. § 27-10.2-1 to 27-10.2-3; R.I.G.L. § 5-38-29.
Summary: No insurance company may require the use of aftermarket parts when negotiating repairs with any repairer unless the repairer has written consent from the owner to install aftermarket parts. An insurance company may not require aftermarket parts if your vehicle is less than 30 months old (from date of manufacture). The insured is entitled to OEM parts. However, this prohibition applies only to vehicles that are less than 48 months beyond their date of manufacture. For any auto less than forty-eight (48) months beyond the date of manufacture, the insurer and auto body repair shop must provide a written notice to the vehicle owner that: (i) he or she may require the insurer to pay for and the auto body shop to install “original equipment manufacturer parts” or “OEM parts” in the repair of a motor vehicle; or (ii) he or she may require the insurer to pay for and auto body shop to install “non-original equipment manufacturer parts” (non-OEM parts) in the repair of a motor vehicle. To comply with this provision, written notice may be provided on the appraisal written on behalf of the insurer and the estimate prepared by the auto body repair shop. Whenever aftermarket parts are used for repairs to physically damaged motor vehicles, certain standards apply.
Federal , State, and Local Governmental Entities
Municipal/County/Local Governmental Immunity and Tort Liability
Governmental Tort Liability Act: R.I.G.L. § 9-31-1 (1970). State and all political subdivisions are liable for all actions of tort in the same manner as a private individual or corporation unless exception in statute. R.I.G.L. § 9-31-1.
Notice Deadlines: Three (3) year statute of limitation for any action against State. R.I.G.L. § 9-1-25. Notice of Claim must be given within three (3) years from the date the cause of action accrues. R.I.G.L. § 9-1-25.
Claims/Actions Allowed: Can sue for operation of motor vehicle. Catone v. Medberry, 555 A.2d 328 (R.I. 1989). Former distinction between proprietary and governmental functions no longer is either controlling or of significant assistance in determining liability of municipality (except within public duty doctrine). O’Brien v. State, 555 A.2d 334 (R.I. 1989), holding modified by Verity v. Danti, 585 A.2d 65 (R.I. 1991).
Comments/Exceptions: There are few conditions on the State’s consent to suit. Marrapese v. State, 500 F. Supp. 1207 (D. R.I. 1980). The public duty doctrine grants immunity to government entities and employees engaging in uniquely governmental (discretionary) functions involving policy decisions or not ordinarily performed by private individuals. Two exceptions: (1) Special duty (i.e., proprietary acts such as driving car, or removing snow from walkway); and (2) Egregious conduct. Bierman v. Shookster, 590 A.2d 402 (R.I. 1991).
Damage Caps: Damages may not exceed $100,000. R.I.G.L. § 9-31-3. Limit not applicable if political subdivision was engaged in a proprietary function or has agreed to indemnify the federal government or any agency. R.I.G.L. § 9-31-3.
State Sovereign Immunity And Tort Liability
Tort Claims Act: Governmental Tort Liability Act. R.I.G.L. § 9-31-1 (1970).
State liable for all actions of tort in the same manner as a private individual or corporation unless exception. R.I.G.L. § 9-31-1.
Notice Deadlines: Three year statute of limitation for any action against State. R.I.G.L. § 9-1-25. Notice of Claim must be given within three years from the date the cause of action accrues. R.I.G.L. § 9-1-25.
Claims/Actions Allowed: State’s sovereign immunity as to tort actions and its 11th Amendment immunity both waived. Laird v. Chrysler, 460 A.2d 425 (R.I. 1983). Does not apply to proceedings against State before administrative agencies.
Comments/Exceptions: There are few conditions on the State’s consent to suit. Marrapese v. State, 500 F.Supp. 1207 (D. R.I. 1980).
Damage Caps: Damages may not exceed $100,000. R.I.G.L. § 9-31-2 (West). Limit not applicable if State was engaged in a proprietary function or has agreed to indemnify the federal government or any agency. R.I.G.L. § 9-31-3. State must secure $75 million insurance policy covering operation of commuter rail service. R.I.G.L. § 9-31-3.
General Tort Laws/Statutes
Prohibits Intermediate Indemnity. Applies to Construction Contracts or Agreements. R.I. Gen. Law § 6-34-1.
Not applicable to purchasing insurance for an entity’s protection, or to construction bonds.
Pure Joint and Several Liability. Joint and Several Liability – plaintiff may recover full amount of damages from any one tortfeasor. R.I.G.I. § 10-6-2.
Contribution among joint tortfeasors allowed in underlying action or separate action. R.I.G.I. § 10-6-3; Hawkins v. Gadoury, 713 A.2d 799 (R.I. 1998). One year statute of limitations after judgment or settlement. R.I.G.I § 10-6-4.
Contributory Negligence/Comparative Fault
Pure Comparative Fault: Damaged parties can recover even if 99% at fault. Plaintiff’s negligence may be considered in his right to recovery. R.I.G.L. § 9-20-4.
Dog Bite Laws
Dog owner will be held liable for all damages unless the dog was confined. If a dog owner is found liable for bite-damages a second time, the damages will be doubled. R.I. Gen. Laws § 4-13-16.
Economic Loss Doctrine
Intermediate Rule (not well defined). Rhode Island holds that if a defendant owes a duty of care to a third party that arises out of an existing contract, and the party to whom the duty is owed is injured, the injured party may bring a negligence action against the defendant even though the damages are purely economic. Rousseau v. K.N. Constr., Inc., 727 N.E.2d 190 (R.I. 1999). The ELD bars plaintiffs from “recovering purely economic losses in a negligence cause of action.” Boston Investment Property #1 State v. E.W. Burman, Inc., 658 A.2d 515 (R.I. 1995). Economic loss is defined as “costs associated with repair and-or replacement of a defective product, or loss of profits consequent thereto.” Hart Eng’g Co. v. FMC Corp., 593 F.Supp. 1471 (D. R.I. 1984). An exception exists for consumer transactions. Franklin Grove Corp. v. Drexel, 936 A.2d 1272 (R.I. 2007).
Willful Misconduct. Joint and several liability imposed on parents when child willfully or maliciously causes damages to property or injury to another person. R.I.G.L. § 9-1-3.
Minor’s Driving. Any negligence by a minor while driving a motor vehicle will be imputed to the parent/adult who signed their drivers’ license application, and they will be jointly and severally liable. R.I.G.L. § 31-10-15.
The limit of liability is 1,500.00. Child must be under 18-years-old.
Tort of Spoliation: Neither the Rhode Island legislature or the courts have yet established or recognized the existence of an independent tort for spoliation of evidence. Malinowski v. Documented Vehicle/Drivers Sys., Inc., 66 Fed. Appx. 216, 222 (R.I. 2003).
Adverse Inference: Rhode Island does recognize that an adverse inference may be given as spoliation of evidence instruction. Mead v. Papa Razzi Restaurant, 840 A.2d 1103, 1108 (R.I. 2004). The party seeking the spoliation of evidence has the burden of proof to establish that the destruction of evidence was deliberate or negligent. Malinowski v. United Parcel Serv., 792 A.2d 50, 54-55 (R.I. 2002). Furthermore, it is not necessary to show bad faith by the spoliator to draw the adverse inference, however bad faith may strengthen the spoliation inference. Kurczy v. St. Joseph’s Veterans Ass’n, Inc., 820 A.2d 929, 946 (R.I. 2003). A court will not allow a subrogated carrier to lose or destroy evidence, whether recklessly or intentionally, and then later bring a claim for subrogation, forcing a defendant to defend its case without the opportunity to have its expert examine and offer a competing opinion on the evidence. Amica Mutual Ins. Co. v. Brasscraft, 2018 WL 2433560 (D. R.I. 2018).
Statute of Limitations
Personal Property10 YearsR.I.G.L. § 9-1-13(a)
Personal Injury/Death3 YearsR.I.G.L. § 9-1-14 (b)
Breach of Contract/Written10 YearsR.I.G.L. § 9-1-13(a)
Breach of Contract/Oral10 YearsR.I.G.L. § 9-1-13(a)
Breach of Contract/Sale of Goods4 YearsR.I.G.L. § 6A – 2-725
Statute of Repose/Real Property10 YearsR.I.G.L. § 9-1-29*
Statute of Repose/ProductsN/AN/A**
Breach of Warranty/Personal Injury3 YearsR.I.G.L. § 9-1-14 (b)***
Breach of Warranty/Personal Injury/Buyer-Seller Relationship4 YearsR.I.G.L. § 6A – 2-725
Breach of Warranty/Property Damage10 YearsR.I.G.L. § 9-1-13(a)
Workers’ Comp Third Party Case3 YearsR.I.G.L. § 28-35-58
Strict Product Liability/Personal Injury3 YearsR.I.G.L. § 9-1-14 (b)
Strict Product Liability/Property Damage10 YearsR.I.G.L. § 9-1-13(a)
Statute of Limitations Exceptions
*10 Years from substantial completion of improvement to real property. R.I.G.L. §9-1-29.
**10 Year statute found unconstitutional. Kennedy v. Cumberland, 471 A.2d 195 (R.I. 1984).
***R.I.G.L. § 9-1-14 (b), unless a direct buyer-seller relationship exists. In that case, the U.C.C. 4 year SOL applies (Nappi v. John Deere & Co., 717 A.2d 650 (R.I. 1998).
Health Insurance Subrogation
Health and Disability Insurance
Statute of Limitations: 3 Years. R.I.G.L. § 9-1-14(b).
Subrogation of Medical and Disability Benefits are allowed. Hospital Service v. Corporation Pennsylvania Insurance Co., 701 R.I. 708, 227 A.2d 105, 113 (1967). Made Whole Doctrine does not apply. Ditomasso v. Ocean State Physicians Health Plan, Inc., 1988 WL 1016798 (R.I. Super 1988). Common Fund Doctrine applies. Jennings v. Nationwide Ins. Co., 669 A.2d 534, 536 (R.I. 1996) (but only to extent of benefit provided by plaintiff’s attorney).
Admissibility of Expert Testimony
Admissibility Standards: Daubert
Case/Statutory Law: RI R. Evid. Art. VII, Rule 702
Pre-Suit Disclosure of Liability Policy Limits in Third-Party Claims
Duty To Disclose: Yes. R.I.G.L. § 27-7-5.
Failure To Disclose A Basis For Bad Faith: Any insurance company doing business in this state shall reveal to an injured party making a claim against an insured the amount of the limits of liability coverage upon receiving a request in writing for that information from the injured party or his or her attorney. A reply shall be made within fourteen (14) days of receiving the request.
Comments: A third party may have a claim for breach of extracontractual duties against an insurer only where: (1) the insurer failed to adequately contemplate settlement and (2) the insured assigned its rights against the insurer to the third party. Asermely v. Allstate Ins. Co., 728 A.2d 461 (R.I. 1999). However, A settlement offer for policy limits needs to be made. Summit Ins. Co. v. Stricklett, 2019 WL 190358, (R.I. 2019).
One-Party Consent: It is not unlawful for an individual who is a party to or has consent from a party of an in-person or electronic communication to record and or disclose the content of said communication unless the person is doing so for the purpose of committing a tortious or criminal act. An individual may also disclose the content of any electronic or in-person communication that is common knowledge or public information. R.I. Gen. Laws Ann. § 11-35-21; R.I. Gen. Laws Ann. § 12-5.1-1.
Product Liability Subrogation
Product Liability Law
Statute of Limitations/Repose: 3 years for personal injury and wrongful death. R.I.G.L. § 9-1-14(b). Discovery
Liability Standards: Negligence, Strict Liability, Warranty.
Fault Allocations: Pure Comparative. R.I.G.L. § 9-20-4.
Non-Economic Caps/Limits On Actual Damages: No.
Punitive Y/N and Limits: Yes.
Heeding Presumption?: Yes.
Innocent Seller Statute: No.
Joint and Several Liability: Yes. R.I.G.L. § 10-6-2.
Available Defenses: Assumption of Risk; Misuse; Alteration; Learned Intermediary; Government Contractor Defense; Presumption; Sophisticated User.
Restatement 2nd or 3rd?: Restatement 2nd
“Matching Regulations” And Laws Affecting Homeowners Property Claims
Statute/Regulation: If replacement of items is required and the replaced items do not reasonably match in quality, color, or size, then the insurer shall replace all such items to conform with a reasonably uniform appearance. R.I. Admin. Code 11-5-73:9.
Comments: Rhode Island did not intend for this regulation to allow carriers to invoke ordinance or law restrictions and leave insured’s facing potentially extra expenses. The loss should be covered in full.
Condominium/Co-Op Waiver of Subrogation Laws
Associations shall maintain property insurance and general liability insurance on the common elements. Additionally, the insurance policy must waive its rights to subrogation against unit owners and members of their household. R.I.G.L. § 34-36.1-3.13 (1956).
Damage to Property Without Market Value
Service Value: “… by reason of the unique or peculiar character of the property taken, no market for it exists, the depreciated reproduction cost approach is proper.” Trustees of Grace and Hope Mission of Baltimore City, Inc. v. Providence Redevelopment Agency, 217 A.2d 476 (R.I. 1966).
Intrinsic Value: “… instead of adhering to the before and after market values as the rule of damages, … permit recovery of the actual value to the owner of the thing lost or damaged, excluding, of course, any fanciful or sentimental value that might be placed upon it.” De Spirito v. Briostol County Water Co., 227 A.2d 782 (R.I. 1967).
Sentimental Value : “… instead of adhering to the before and after market values as the rule of damages… permit recovery of the actual value to the owner of the thing lost or damaged, excluding, of course, any fanciful or sentimental value that might be placed upon it.” De Spirito v. Briostol County Water Co., 227 A.2d 782 (R.I. 1967).
General Contractor Overhead And Profit Payments In First-Party ACV Property Damage Claims
Payment And Depreciation Of GCOP/Sales Tax: No applicable case law, statutes, administrative rules, or other guidance with regard to the calculation and/or depreciation of GCOP.
A tenant’s liability to the landlord’s insurer for negligently causing a fire depends on the intent and reasonable expectations of the parties to the lease as ascertained from the lease as a whole. 56 Assocs. v. Frieband, 89 F.Supp.2d 189, 194 (D. R.I. 2000) (subrogation allowed where lease did not address question of fire insurance).
The ASR has not yet been embraced by Rhode Island courts. Nationwide Property & Cas. Ins. Co. v. D.F. Pepper Constr., Inc., 59 A.3d 106 (R.I. 2013). A federal court applying Rhode Island law held that if an insurer has paid a loss to one of the insureds under its policy, it cannot subrogate against another party for whose benefit the insurance was written even if the latter’s negligence caused said loss, if there had been no design or fraud on his part. New Amsterdam Cas. Co. v. Homans-Kohler, Inc., 310 F.Supp. 374 (D. R.I. 1970). In D.F. Pepper Const., Inc., Pepper is the sole owner and shareholder of D.F. Pepper Construction (“DFP”). Pepper, while driving a dump truck owned by DFP and insured by Merchants Mutual Insurance Company (“Merchant”), hit a patch of black ice and crashed into his own home that was insured by Nationwide Property and Casualty Insurance (“Nationwide”). Nationwide paid for the damages to the home and then sought to subrogate against DFP. The trial judge ruled that the ASR was not invoked as Pepper and DFP were distinct legal entities. On appeal, DFP argued that the trial court erred in finding that the ASR was not invoked because Nationwide subrogating against DFP would result in Merchant paying Nationwide and then subrogating Pepper for the damages that Merchant would have to pay to Nationwide. Meaning that if Nationwide subrogated against DFP, Nationwide would also be indirectly subrogating against their insured, Pepper. The appeals court agreed with the trial court that the ASR was not invoked in this case, and that the appropriate time to raise the ASR in court would not be until Merchant attempted to subrogate against Pepper.
Rhode Island case law allows for recovery of restitution by a “victim” against a liable criminal defendant. State v. Traudt, 679 A.2d 330 (R.I. 1996). In addition, restitution may be awarded by a judge in a family court matter, per the applicable Rhode Island statute. R.I.G.L. § 12‐19‐33. Despite the availability of restitution awards, neither case law nor statutes have made a decision on criminal restitution being available to and insurer.
Made Whole Doctrine
The Made Whole Doctrine was first applied in Rhode Island in 1981 in the context of auto insurers’ claims for a share in the proceeds of a safety responsibility bond obtained by the uninsured motorist tortfeasor. Lombardi v. Merchants Mut. Ins. Co., 429 A.2d 1290 (R.I. 1981); Ditomasso v. Ocean State Physicians Health Plan, Inc., No. 87-2487, 1988 WL 1016798 (R.I. Super. 1988) (distinguishing Lombardi and holding that insured has enforceable right to subrogation where the language of the contract regarding subrogation is clear and unambiguous). In Lombardi, the Supreme Court of Rhode Island concluded that the right of subrogation did not arise until the insured had received full compensation. Lombardi, however, was subsequently distinguished by the lower state court in Ditomasso. Therein the Court found an unambiguous subrogation provision which displaced the Made Whole Rule enforceable. According to the court in Ditomasso:
Lombardi is inapplicable to and distinguishable from the case at bar. First, Lombardi addressed the issue of subrogation rights as applicable to general liability insurers. Here, the defendant is a health insurer. Second, the Court in Lombardi held that the defendant insurance companies subrogation rights did not arise until the plaintiffs had received full satisfaction of the judgment against the uninsured. Plaintiff in the instant matter has not received a judgment from any court but rather has been paid $ 25,000 (the policy limit) from her uninsured motorist coverage. Lombardi, supra.
Although the Supreme Court in Lombardi applied the Made Whole Doctrine and rejected the auto insurers’ claims for a share in the proceeds of a safety responsibility bond obtained by the uninsured motorist tortfeasor unless the insureds’ loss (stated in their judgment against the tortfeasor), was fully paid, the application of the Made Whole Doctrine in that case appears to be limited to motor vehicle accidents and common law principles of surety. The victim in Lombardi obtained a $32,000 judgment against the wrongdoer. Two insurance companies had each paid the victim $10,000. The companies sought recovery of the funds they had advanced out of a $10,000 bond posted by the wrongdoer to secure the judgment. The Court, citing Justice Cardozo, reiterated the principle that a surety is liable only for part of the debt that does not become subrogated to collateral or to remedies available to the creditor unless he pays the whole debt or it is otherwise satisfied. Lombardi, (quoting American Surety Co. v. Westinghouse Electric Mfg. Co., 296 U.S. 133, 137, 56 S.Ct. 9, 11, 80 L.Ed. 105 (1935) (Cardozo, J.)). Thus, Lombardi concluded, the insurance company was not subrogated to the victim’s right until the “total judgment was satisfied.”
Rhode Island appears to disallow contractual limitations or subrogation provisions that curtail an insured’s recovery where the insured has not recovered the amount of his/her actual loss. DiTata v. Aetna Cas. and Sur. Co., 542 A.2d 245 (R.I. 1988).
Medical Expenses, Insurance Write-Offs, and The Collateral Source Rule
Collateral Source Rule: Common law CSR. Plaintiff’s recovery not reduced by collateral source payments made by third-party sources, such as insurance companies. Esposito v. O’Hair, 886 A.2d 1197 (R.I. 2005).
Recovery Of Medical Expenses Rule: Not yet addressed by Supreme Court. Amount billed. Bellini v. Roosevelt Manor Assisted Living, Inc., 2007 WL 3299249 (R.I. Super. 2007). Itemized medical bill, “shall be admissible as evidence of the fair and reasonable charge for the services and/or the necessity of the services or treatment” cross examination and rebuttal evidence is permitted. R.I.G.L. § 9-19-27.
Medical Malpractice: Defendant can introduce any evidence of collateral sources and jury must reduce damages by sum equal to difference between total collateral sources and total amount paid to secure them. R.I.G.L. § 9-19-34.1. (Medicaid cases not applicable). This statute declared unconstitutional in Maguire v. Licht, 2001 WL 1006060 (R.I. Super. 2001); Esposito v. O’Hair, 886 A.2d 1197 (R.I. 2005), but Rhode Island Supreme court has declined to address it.
Employee Leasing Laws
Rhode Island case law has held that an employee leasing company remains the employer of a leased employee as long as the employer remains on the general employer’s payroll, but the employee leasing company and the client company are both considered employers for purposes of the Exclusive Remedy Rule. Sorenson v. Colibri Corp., 650 A.2d 125 (R.I. 1994).
Hospital Lien Laws
Statute: R.I. Stat. §§ 9-3-4 to 9-3-14. Liens Against Causes of Action.
(1) Written notice of lien must contain the name/address of the patient, hospital, and tortfeasor (if known), along with their attorneys, along with the date of accident.
(2) It must be filed in the office of the city or town clerk in which the hospital is located before any third-party settlement.
(3) Copy of notice must be mailed, postage prepaid, to the patient, tortfeasor, tortfeasor’s insurance carrier, and any attorneys. §§ 9-3-5 to 9-3-7.
Comments: Any hospital (private, public) has lien on third-party action of patient for the “reasonable and necessary charges” of the hospital up to the date of the settlement. No lien if covered by workers’ compensation and lien does not supersede attorney’s fee lien. § 9-3-4. After notice of lien filed, tortfeasor’s carrier is liable to hospital if the lien is not repaid in a third-party settlement, for up to one year. § 9-3-6.
OCIP/CCIP Subrogation In Workers’ Compensation Construction Cases
OCIP Law: No statute or case law specifically dealing with effect of OCIP/CCIP.
Statutory Employer Law: A general contractor who enters into a contract with a subcontractor for work to be performed in Rhode Island must maintain written documentation evidencing that the subcontractor carries workers’ compensation insurance. If he does not, he will be deemed the employer. The general contractor’s status as “statutory employer” will not prevent a third-party action from being filed against it by the injured worker. Sorenson v. Colibri Corp., 650 A.2d 125 (R.I. 1994).
Comments: A general contractor can be the statutory employer of a sub-subcontractor’s employee, even though there is no direct contractual involvement between them, provided the general contractor fails to obtain written documentation from the subcontractor which hired sub-subcontractor assuring that subcontractor had workers’ compensation insurance. Brogno v. W & J Associates, Ltd., 698 A.2d 191 (R.I. 1997).
Recovery Of Increased Workers’ Compensation Premiums By Employer
Recovery For Increased Premiums? Undecided.
Statute/Case Law: None.
Rule Summary: There is no authority or precedent regarding the attempted recovery of damages for increased workers’ compensation insurance premiums by an employer from a third-party tortfeasor.
Which Workers’ Compensation “Benefits” Can Be Subrogated?
Section 28-35-58 requires the employee to “reimburse the person by whom the compensation was paid to the extent of the compensation paid…”
Section 38-35-32 provides that the Court shall order the insurance company to pay an attorney’s fee to an attorney who has successfully represented an injured worker before the Court. In Rison v. Air Filter Sys., Inc., 707 A.2d 675 (R.I. 1998), the Supreme Court interpreted “compensation” in § 28-35-58 in a broad fashion although it did not specifically address attorneys’ fees awarded in the WCA petition. The most relevant portions of the opinion are:
Rather we conclude that the unqualified term “compensation” as employed by the General Assembly in § 28-35-58 includes all types of compensation available under the WCA-except medical benefits, which are expressly exempted.
Thus, when a recovery can be obtained against a responsible third party (who usually cannot be held liable or amenable to a substantial settlement without some degree of culpability), the third party is made to bear the cost of those injuries while the employer whose liability arises solely through the WCA’s no-fault liability provisions is reimbursed or credited pro tanto for its past and continuing WCA obligations. It is critical to recognize that under the WCA the employer serves as a vanguard for the employee’s welfare, standing ready to advance benefits to the employee without delay and without determination of fault until the employee obtains a recovery from any settling third-party tortfeasor or tort-judgment debtor. If the employee does obtain a third-party recovery, the employer’s WCA obligations are then credited or reimbursed only to the extent that any recovery from the third party equals or exceeds the employer’s WCA obligations. But the employee is never required to reimburse the employer or its insurer out of his or her own pocket.
This language should provide support to the contention that a carrier’s “past and continuing WCA obligations” includes the attorneys’ fees that were included in the workers’ compensation claim settlement because the Act permitted the employee to recover those fees from the carrier. On the other side of the coin, it should be noted that given the WCA’s remedial nature, any ambiguities in the statute generally “must be construed liberally in favor of the employee.” Rison, supra. Furthermore, it could be argued that § 28-35-32 itself indicates that costs/attorneys’ fees and “compensation” are two different things:
In proceedings under this chapter, and in proceedings under chapter 37 of this title, costs shall be awarded, including counsel fees and fees for medical and other expert witnesses, including interpreters, to employees who successfully prosecute petitions for compensation; petitions for medical expenses; petitions to amend a preliminary order or memorandum of agreement; and all other employee petitions, except petitions for lump-sum commutation; and to employees who successfully defend, in whole or in part, proceedings seeking to reduce or terminate any and all workers’ compensation benefits;…
Workers’ Compensation Subrogation Waiver Endorsements
Subrogation Statute: R.I.G.L. § 28-35-58
Waiver Allowed? Nothing in the Rhode Island Workers’ Compensation Act or applicable case law prohibits the use or efficacy of a waiver of subrogation.
Effect Of Waiver Endorsement on Carrier’s Right To Assert A Lien On Claimant’s Recovery: The effect of a waiver of subrogation on the carrier’s rights, including its right to enforce its statutory lien, has not yet been decided.
Other Applicable Law: None.
Statute of Limitations: 3 Years. R.I.G.L. § 28-35-58.
Can Carrier Sue Third Party Directly: Yes, if notice given 26 weeks before the 2 year, 8 months anniversary of accident. A carrier can sue after 2 year, 8 months date.
Right to Intervene: Yes.
Recovery from UM/UIM Benefits: No.
Subrogation Against Medical Malpractice: Yes.
Subrogation Against Legal Malpractice: Undecided.
Recovery Allocation/Equitable Limitations: None.
Employer Contribution/Negligence: None, first money reimbursed.
Attorney’s Fees/Costs: Pro-Rata.
Future Credit: Yes.
Auto No-Fault: No.
Workers’ Compensation Claims by Undocumented Employees
Statute: The statute does not mention or make note of “aliens” as well as “legal” or “illegal” status. R.I. Gen. Laws § 28-29-4.
Case Law: Villa v. Eastern Wire Prods. Co., 554 A.2d 644 (R.I. 1989).
Comments/Explanation/Other: *Villa overturned a decision denying benefits to an undocumented worker who fraudulently obtained work with false papers and identification. The court reasoned a bias against how someone entered the country cannot be used against whether they receive benefits or not.