Bill Orberson and Jack Phillips recently drafted and filed an Amicus Curiae brief on behalf of the Kentucky Defense Counsel in an appeal to the Supreme Court of Kentucky regarding an attempt to expand third-party bad faith law in Kentucky. Arising from a medical malpractice case, the Plaintiffs/Appellants brought third-party bad faith claims under Kentucky’s Unfair Claims Settlement Practices Act (UCSPA) against the medical Defendants’ wholly-owned captive self-insurer, First Initiatives Insurance, Ltd., and First Initiatives’s parent company, Catholic Health Initiatives, Inc.
The trial court granted summary judgment to First Initiatives and Catholic Health because it found First Initiatives to be a pure captive subsidiary of Catholic Health and thus the self-insurer is exempt from bad faith liability under the UCSPA. The Court of Appeals affirmed, and the Supreme Court granted discretionary review. In a “friend of the court” brief, the KDC argued that the Court of Appeals decision should be affirmed and that captive self-insurers should not subsumed within the UCSPA. The KDC stressed the Supreme Court’s recent reluctance to expand bad faith liability, analyzed what it means to engage in the business of insurance in Kentucky, and presented practical economic and policy implications supported by academic studies.
Oral arguments will likely be held in this case, and a decision is not expected for several months.