Torts: Bad Faith and Nonpayment or Delay of Payment of PIP benefits (MVRA)

Elements of Proof

The Kentucky Motor Vehicle Reparation Act, KRS 304.39, et seq., provides an exclusive remedy where an insurance company wrongfully delays or denies payment of no-fault benefits. There is no other Kentucky statute, regulation or case law which permits Foster to claim work loss for BRB. The MVRA is the exclusive remedy. Grzyb v. Evans, 700 S.W.2d 399 (Ky.1985), provides that where a statute both declares the unlawful act and specifies the civil remedy available, the aggrieved party is limited to the remedy provided by the statute. General damages are not available when a specific remedy is provided such as in this case. KRS 304.39–210 states that the penalty for any delay in payment of basic reparation benefits is payment of interest at the rate of 12% per annum on the delayed benefits, or 18% per annum if the delay was without reasonable foundation. Interest, which is set out in certain situations in KRS 304.39–220, and the award of attorney fees are the remedies provided to an insured if an insurance company fails to pay basic reparation benefits in a timely manner and/or without reasonable foundation.

Grzyb, supra, involves a special body of law, the Kentucky Civil Rights Act, KRS 344 et seq. FB Ins. Co. v. Jones, 864 S.W.2d 926 (Ky.App.1993), does not control because it relates to general insurance law questions. The Kentucky MVRA preempts general insurance law where an insurance claim arises as a result of physical injury caused by a motor vehicle accident and establishes remedies for violations of the statute. This can be compared to the civil rights provision of Grzyb. MVRA is a comprehensive act which not only relates to certain tort remedies, but also establishes the terms under which insurers pay no-fault benefits, and provides for the penalties to which insurers are subjected if they fail to properly pay no-fault benefits.

Here, the circuit judge dismissed the claim of Foster seeking punitive damages under the Unfair Claims Settlement Practices Act, but allowed the suit based on the MVRA to proceed to a jury trial. Because the MVRA is the exclusive remedy, the decision of the circuit judge was correct.

Foster v. Kentucky Farm Bureau Mut. Ins. Co., 189 S.W.3d 553 (SC 2006).

2004-SC-000461-DG