NAII Says Ore. Ruling Increases Court Cases, Regardless of Settlement Offers

An Oregon circuit court’s ruling awarding attorney’s fees to a person bringing a lawsuit would result in more court cases regardless of an insurer’s settlement offer, thus raising the cost of insurance, according to the National Association of Independent Insurers (NAII).

In a friend-of-the-court brief in the case of Fresk v. Kraemer, the NAII asked the Oregon Court of Appeals to reverse the ruling by the Multnomah County Circuit Court.

“Repercussions of the circuit court’s ruling would place defendants in an impossible situation where any action taken poses the risk of financial loss,” NAII Counsel Gregory LaCost commented. “This would increase the number of personal injury cases entered into the court’s docket because plaintiff lawyers would bring suit regardless of whether settlement drafts were tendered.

“Further, ruling that a person receiving an insurance settlement check cannot be required to release the insurer from further legal action, another provision in the circuit court ruling, would nullify a state law seeking to reduce lawsuits,” he said.

The case stems from an auto accident in which Miriam Fresk suffered injuries that resulted in $3,214 in chiropractic bills.

After settlement negotiations were unsuccessful, her attorney demanded $5,500 from Progressive Insurance Co., the insurer of the other driver, Nathan Kraemer. Progressive responded with an offer of $3,808. An arbitrator in non-binding arbitration awarded Fresk $2,750 and an additional $222 for out-of-pocket medical expenses. Because the award was less than Progressive’s initial offer of $3,808, attorneys’ fees were not awarded.

In a subsequent lawsuit, a jury awarded Fresk $2,930. Her attorneys moved for an award of attorney’s fee on the ground that Progressive’s initial offer was invalid because it was conditioned on her releasing the insurer from further legal action.

The trial court then awarded Fresk $25,922 in attorney fees and costs. In its brief, NAII maintained that award was contrary to the intent of pertinent laws that sought to encourage settlement of low-dollar value cases.