Caught in a liability loophole

Alicia Marie Wichman was headed home about 7:30 a.m. Nov. 4 after working an extra shift at Bergan Mercy Medical Center when she stopped at the traffic light at 72nd and Pacific Streets.

Bam!

The sound and the crash were the first signs that Wichman, 25, would be entangled in a loophole in Nebraska's liability insurance law.

A black pickup struck her red 1999 Taurus, which she had bought so that she could get to work and also attend college part time. Wichman, the first member of her family in four generations to earn a high school diploma, has lofty goals.

The impact of the crash crumpled the rear of the car, bent the frame and broke the left taillight. Wichman banged her head against the interior, causing a bump and neck pain. A rescue squad, responding to a bystander's call, strapped Wichman to a backboard in case she had a spinal injury and took her back to Bergan Mercy.

A scan and an examination ruled out serious injuries. After about three hours, Wichman was driven by a co-worker back to the accident scene, and she was allowed to drive her car home.

Omaha police, meanwhile, had started investigating what turned into a nine-car accident that stretched nearly a mile up 72nd Street.

They found that Alan Morris, 48, a boiler operator, had driven his black 1994 Chevrolet pickup into the back of Wichman's car. He then continued north, sideswiping a Jeep Cherokee, ramming the back of a Honda Civic, causing a four-car chain-reaction collision by rear-ending a GMC Yukon, and then crossing into the southbound lanes and hitting a Ford pickup pulling a trailer loaded with lawn equipment.

Witnesses told police that Morris' truck was going more than 50 mph on the six-lane street, which was crowded with rush-hour traffic. Six other people were slightly injured. Three of the cars were towed away, and the police report estimated total damage at about $25,000.

Morris told officers that he didn't remember the accident. Doctors at Creighton University Medical Center told police that Morris had low blood sugar — a reading of 40, less than half the normal 100 — and that his symptoms were consistent with low blood sugar.

Officer Mark A. McKenna said in his investigation report that no citations were issued because Morris' medical condition caused the accident.

In an interview, Morris said he has had medical problems but not diabetes. He seemed to suffer a seizure before the Nov. 4 accident, Morris said, but he'd never had one before then. Doctors said any other medical problems appeared unconnected to the accident, he said.

Morris said he lost his job after the accident. His truck was totaled, and he didn't have collision insurance, which would have covered damage to his own vehicle. There's a possibility that he will be permanently disabled, he said.

But Morris did carry liability insurance, as required by state law, through Liberty Mutual Insurance Co. of Boston.

Wichman said Liberty Mutual's damage estimate on her car was more than $3,000. For a vehicle with 130,000 miles, the Taurus may be totaled, depending on how the repairs go, she said.

She figured that Morris' policy would pay for the repairs or a replacement car, plus her hospital bill. She doesn't have collision coverage on the Taurus.

But then Liberty Mutual's representative dropped a bombshell:

Morris' policy requires that the company cover expenses for which he legally is liable, the representative said. Because Morris, according to the police report, was incapacitated by an unforeseen medical condition, he isn't legally liable, the representative said.

Glenn Greenberg, a spokesman for Liberty Mutual, said he couldn't comment on Wichman's claim because of privacy restrictions.

“We certainly do strive to settle all of our claims as promptly and fairly as possible,” Greenberg said. “We are reviewing the claim and will communicate the decision as quickly as possible.”

Morris said he hadn't heard what will happen to the motorists whose cars he damaged.

“It's out of my hands,” he said. “It's not going good for me, either.”

Wichman was flabbergasted.

“What's the point of liability insurance if the insurance company can get out of paying the damage?” she asked. “Why do we pay premiums?”

Wichman has insurance coverage in case she is hit by an uninsured motorist. But that wouldn't apply in this case, because Morris did have insurance.

Mike Glaser of Marcotte Insurance Agency in Omaha, past president of the Independent Insurance Agents of Nebraska, said his office had a claim denied about a year ago for the same reason.

“I'm disappointed as a person that a company would do this,” he said. “You know — stand up and pay it.”

Finding a loophole to escape paying a claim isn't the intent of insurance, he said. “It's to take care of catastrophes and get you back to where you were before the claim happened.”

Carol McClelland, executive director of the agents association, said she had never heard of a company denying a claim for the reason cited by Liberty Mutual. Insurance companies have to protect their shareholders by not paying claims they shouldn't, and sometimes the decisions are difficult, she said.

“Companies have to balance that totally Mr. Spock type of analysis against human suffering and PR for the company,” she said. “They have to weigh that judgment against what seems right.”

Bruce Ramge, deputy director of the Nebraska Insurance Department, said insurance companies rarely refuse to pay liability claims when policyholders cause accidents, even in the case of medical problems. He said he could remember only one other such case in the 25 years he has been with the department, though he said others may have occurred and not come to his attention.

Christy Neighbors, general counsel for the department, said auto liability insurance policies follow state law that requires them to pay claims for which policyholders are legally liable.

But the “unavoidable accident doctrine,” set out in a 1957 Nebraska court case and still in effect, says that a driver can be freed of legal liability if he can prove he was incapacitated by a sudden, unanticipated illness, with no history of a similar problem. Nebraska's law is fairly typical of those in other states.

Each case would be decided on its own, Neighbors said, so there's no way to say whether the doctrine would apply to the Omaha accident.

“To me, this would be a question of fact,” she said, namely, whether the driver's medical condition was foreseeable and thus the driver was negligent and the claim should be paid.

The Legislature could change the law to make drivers liable for damage even in case of unanticipated medical conditions, Neighbors said.

The department follows up on complaints about denied claims and would do so in this case if it received a complaint.

After she heard that she might not get paid, Wichman said, she had trouble sleeping and eating. Her head hurt worse. She worried constantly.

She drove the damaged Taurus for a time but realized that she might get stopped for having a damaged taillight. The bent frame probably wasn't safe, either, she said. Her grandfather lent her an old Chevy pickup, and she parked the Taurus.

Buying another car will delay her education at least a year, Wichman said. She wants to complete her bachelor's degree to boost her $15-an-hour salary and advance her career. Plus, she is still making monthly payments on the Taurus.

She has hired an attorney, who would get part of any payment she receives.

“I figured I'd let him do the worrying for me,” she said.

“The thing that bugs me is the existence of the loophole. I'm not extremely mad at his insurance company, because I know other insurance companies would do it, too. I thought that's the whole point of liability insurance: to cover the unexpected.”

Contact the writer:

444-1080, steve.jordon@owh.com

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