IIGA must cover lost wages in medmal case

by John O’Brien

Indiana’s Supreme Court recently decided that a policyholder from a failed insurance company may recover from the Indiana Insurance Guaranty Association for lost wages of a deceased claimant up to the point of payment.

The case involved the 1997 death of James Brown, who passed away after spending three days at the Bedford Regional Medical Center. His Estate filed malpractice and wrongful death claims against the hospital, which offered a settlement of $75,001. The two sides did not stipulate what exactly the money covered.

At the time Brown was treated, BRMC was covered by PHICO Insurance Co. Shortly before he died, a Pennsylvania court ordered PHICO into liquidation, and BRMC had to turn to the IIGA. The IIGA said the money covered Brown’s lost wages, and that it should not be responsible for paying it.

IIGA is a statutory entity responsible for some, but not all, obligations of insolvent insurers. It was created as a response to a number of failed insurers.

IIGA denied BRMC’s claim, though BRMC was granted summary judgment in a subsequent lawsuit. The Court of Appeals reversed the decision, though, saying IIGA did not have to pay lost wages.

The Supreme Court on Thursday overturned that ruling.

“The wages lost by a dead claimant are just as ‘lost’ up to the date of settlement or judgment as are the wages ‘lost’ by an injured living claimant up to the date of settlement or judgment,” BRMC argued.

“Both injured and dead claimants cannot work because of their condition which was created by the alleged negligence of IIGA’s insured. The status of ‘living’ versus ‘dead’ is not what has caused the loss of wages; it is the inability to work due to the negligent conduct of the tortfeasor.”

Justice Theodore Boehm wrote the opinion for the Court. He said problems may occur as a result of the ruling.

“(W)e concede that our reading of the statute to permit reimbursement of lost wage claims to the date of payment, but not prospectively, is itself problematic because it may encourage delay in resolving claims,” he wrote.

“The legislature may seek to address this issue, but as the statute stands today, we conclude that allowing reimbursement for lost wage claims of a decedent is the proper reading and one consistent with the IIGA’s practice of reimbursing policyholders for wage claims to the date of settlement with living claimants.”
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