Delaware courts continue to refine the case law related to uninsured (“UM”) and underinsured motorist coverage (“UIM”) as codified in 18 Del. C. § 3902.  In proceeding with a UIM claim, an insured bears the burden of establishing that a particular loss falls under the coverage provisions of the applicable insurance policy.  If met, the burden then shifts to the insurer to establish that a policy exclusion applies to preclude such coverage.

In a recent decision by the Delaware Superior Court, the Court concluded that “owned-but-uninsured” exclusions in insurance policies are invalid as they relate to the availability of UIM coverage.  In Jessica Lee v. GEICO Choice Insurance Company, Plaintiff filed a claim for UIM coverage after settlement with a tortfeasor for damages she incurred in a motor vehicle accident.  Upon submission of the claim, Plaintiff learned her policy had been canceled prior to the accident for failure to make premium payments.  At the time of the collision, Plaintiff resided in the same household as her sister, who had a separate insurance policy with GEICO that also provided for UIM coverage.  Plaintiff submitted a claim under her sister’s policy, which was denied by GEICO, and the lawsuit followed.

The Court evaluated Plaintiff ’s claims in the context of prior UIM case law.  As Delaware courts have held, UIM coverage is personal to the insured, rather than vehicle-related.  The Court first found it to be “undisputed” that Plaintiff qualified as an insured under her sister’s policy, which was defined to include “[r]elatives of [the named insured] if residents of his household.”  The burden then shifted to GEICO to establish that the owned-but-uninsured exclusion applied to preclude coverage.

The Court evaluated the nature of UIM coverage as personal to the insured in the context of Frank v. Horizon Assur. Co., which also held other-motor-vehicle exclusions void as against public policy.  Unlike Delaware’s no-fault insurance law, 18 Del. C. § 3902 does not include language authorizing the use of exclusions “customary to the field”. The absence of this language led the Courts in Frank and, subsequently, Lee, to conclude that any exclusions and/or restrictions to UIM coverage must be specifically authorized by statute.  Furthermore, the Court in Lee held that owned-but-uninsured exclusions are contrary to the public policy behind § 3902, which is “the protection of innocent persons from the negligence of unknown or impecunious tortfeasors.”  In light of this holding, the Court said it need not address the coverage status of Plaintiff ’s own vehicle.

Although the Lee decision does not significantly alter the landscape of UIM case law, it underlines Delaware courts’ emphasis on the public policy behind UM/UIM coverage as codified in 18 Del. C. § 3902.  As the courts continue to adjudicate cases involving UM/UIM coverage, insurers must be mindful of the expansive nature of the statute and the court’s deference to the protection of insureds who contract for such coverage. For more information on this article, contact Noelle Torrice at  ntorrice@fandpnet.com

F&P was proud to sponsor and attend last night’s Fannie Angelos Program for Academic Excellence 4^th Annual Gala.  The event is co-chaired by F&P principal Imoh Akpan.

Each November, the gala is held in an opulent setting at the Belvedere Hotel and features dinner, drinks, and wonderful speakers from throughout Maryland’s legal community.  This year, speakers included Kurt Schmoke, president, University of Baltimore, Kristen Clarke, president and executive director, Lawyers’ Committee for Civil Rights Under Law, and Kai Jackson, Anchor for Fox 45 News.  The event is a celebration of the unique, history-making program, which won the American Bar Association’s 2017 Diversity Leadership Award.

The Fannie Angelos Program for Academic Excellence is the result of a unique collaboration between the University of Baltimore School of Law and Maryland’s four Historically Black Colleges and Universities (Morgan State, Coppin State, Bowie State, and University of Maryland Eastern Shore). The Program helps prepare top undergraduate students both to enter law school and to excel once they are admitted. The Program, one of the most successful of its kind in the nation, has helped over 90 students gain admission to Law School.

F&P Principal Andrew Stephenson, will be traveling to Las Vegas next week to speak at the 2017 Risk Management Summit.  The conference will be held October 15 – October 17 at the Cosmopolitan and will focus on the theme of “Unlocking Possibility.”  During the breakout session titled “The Impact of Dash Cameras,” Andrew will discuss how dash cameras affect the claims investigation process and why they are important, providing factual examples.  The Summit opened its doors to small and middle market companies last year to provide “ideas, concepts and products that will facilitate innovation, success and transformation” in the field of risk management and business operations.

For more information about the Summit, please visit the website at https://summit.eservicesco.com.

 

As featured in Behind the Wheel, a quarterly publication of the Maryland Motor Truck Association.

Written by Albert B. Randall, Jr. and  Matthew George Kuspa

Currently, twenty-nine states, including Maryland, have legalized the use of marijuana for medicinal purposes.  Maryland lawmakers first approved of medical marijuana in 2013.  Soon after, lawmakers revamped Maryland’s medical marijuana program by vesting the Maryland Medical Marijuana Cannabis Commission (“MMCC”) with the responsibility of establishing Maryland’s medical marijuana industry.  The MMCC engages in policy-making and oversees licensing and registration measures pertaining to Maryland’s medical marijuana program.

Nevertheless, Maryland’s medical marijuana program has been plagued by repeated delays and challenges to the fairness of its licensing procedures.  In 2016, the MMCC awarded 15 preliminary growing licenses and 15 preliminary processing licenses.  Yet, as of July, only one grower and one dispensary have received final approvals from the MMCC.  If the other applicants are not granted a final license by August 15th, those businesses risk losing an opportunity to be a part of Maryland’s medical marijuana industry.  As for the other two businesses that received approval, Maryland can likely expect to see some of the 9,000 registered patients begin using medical marijuana cards sometime later in 2017.

Despite successful state efforts in legalizing medical marijuana and establishing lucrative industries, marijuana still remains a Schedule I substance under the Controlled Substances Act (“CSA”).  This unresolved tension between federal and state law creates many uncertainties for employers across the country.  Accordingly, jurisdictions take varied approaches on whether employees are entitled to workers’ compensation benefits with regard to on-the-job injuries caused by or treated with medical marijuana.  Furthermore, employers instituting drug-free workplace policies in states that have legalized medical marijuana run the potential risk of encountering state law disability discrimination or wrongful discharge claims from employees using medical marijuana.  Take Garcia v. Tractor Supply Company, for example – a New Mexico U.S. District Court case demonstrating the liability conundrum that faces employers in states that have legalized marijuana.

In Garcia v. Tractor Supply, the employee tested positive for marijuana on an employment drug test due to his medical marijuana use.  Pursuant its drug-free workplace policy, the employer terminated the employee on the basis of the positive test results.  The employee subsequently brought a state law disability discrimination claim against the employer and argued that the employer unlawfully terminated him based on his medical condition.  Fortunately, the court concluded that the employer was not required to accommodate the employee’s medical marijuana use because the CSA preempted New Mexico’s medical marijuana act.

Despite the employer’s victory in Garcia, there is no way to predict the fate of employers in many other jurisdictions, including Maryland, that have yet to analyze the legality of employee discipline for medical marijuana use.  In fact, a recent Massachusetts Supreme Court decision reaffirmed employer concerns about the legal risks associated with enforcing zero-tolerance work policies.  In Barbuto v. Advantage Sales & Marketing, LLC, the court overruled a motion to dismiss and held that a cause of action for disability discrimination could exist against an employer for terminating an employee after testing positive for medical marijuana.  The Massachusetts’s high court rejected the employer’s argument that accommodation of an employee’s medical marijuana use is per se unreasonable because it is illegal under federal law.  Instead, the court reasoned that an exception to the employer’s drug policy to permit the marijuana use was a facially reasonable accommodation given that medical marijuana was the most effective means of treating the employee’s debilitating condition.  The court noted, however, that the employee could still lose on the disability discrimination claim if the employer demonstrated that approval of medical marijuana use would cause undue hardship.  Nevertheless, the Barbuto court’s approach is worth noting as this decision is likely to influence other states.

When it comes to medical marijuana use by drivers with a commercial driver’s license (“CDL”), there is less uncertainty about the governing rules.  Commercially-licensed drivers of commercial motor vehicles (“CMV”) must pass DOT physicals in order to obtain medical cards.  Additionally, CDL drivers of CMVs are subject to DOT drug testing regulations, which explicitly bars the illicit use of Schedule I drugs.  Even in the wake of increased state medical marijuana laws, the DOT stands strongly by its longstanding policy prohibiting any marijuana use by transportation employees.  The DOT’s stance became particularly clear when its Office of Drug and Alcohol Policy and Compliance issued a Notice six years ago in response to a Department of Justice Guidance.

In October 2009, the Department of Justice (“DOJ”) issued guidelines for federal prosecutors in states that legalized medical marijuana use.  The DOJ’s guidance stated that federal prosecutors should not focus federal resources on individuals whose actions are in compliance with existing state medical marijuana laws.  Accordingly, the DOJ made clear that this guidance neither legalized nor provided medical marijuana use as a defense to a CSA violation.  However, one thing was not clear:  whether the DOJ’s guidance would also affect the DOT’s position on marijuana use by safety-sensitive transportation employees.  After receiving several inquiries from employers in the industry, the DOT sought an opportunity to reinforce its position and issued a “Medical Marijuana” Notice in June 2009.

In its Notice, the DOT firmly stated:  “We want to make it perfectly clear that the DOJ guidelines will have no bearing on the Department of Transportation’s regulated drug testing program. We will not change our regulated drug testing program based upon these guidelines to Federal prosecutors.”  The DOT subsequently emphasized that despite the successful legalization of medical marijuana across states, all safety-sensitive employees – which includes truck drivers – will remain prohibited from using marijuana so long as it constitutes a Schedule I drug.  The Notice carefully reminded employers in every state that its drug testing regulations did not permit medical marijuana use under a state law to serve as a valid medical explanation for a transportation employee’s positive drug test result. To drive this point home, the DOT included the text of the relevant section of the regulation:

• 40.151 What are MROs prohibited from doing as part of the verification process?

As an MRO, you are prohibited from doing the following as part of the verification process:

(e) You must not verify a test negative based on information that a physician recommended that the employee use a drug listed in Schedule I of the Controlled Substances Act. (e.g., under a state law that purports to authorize such recommendations, such as the “medical marijuana laws” that some states have adopted.)

The DOT’s 2009 Notice certainly cleared the smoke for employers of CMV drivers in every state:  all drivers subject to DOT testing are not permitted to use marijuana, even if use of marijuana is in compliance with state law.

Understandably, confusion regarding medical marijuana use by CMV operators seems to arise with respect to businesses that employ non-CDL drivers.  Under federal law, non-CDL drivers are not subject to DOT drug testing.  As a result, some employers do not test non-CDL drivers for marijuana under the belief that it is legal for these employees to use medical marijuana in states that have legalized it.  However, this belief is false.  As previously discussed, all drivers of CMVs must pass DOT physicals conducted by a certified medical examiner (“CME”) in order to obtain medical cards.  Although non-CDL drivers are not subject to DOT drug testing, Part 391.41 of the Federal Motor Carrier Safety Administration’s Regulations state that the use of Schedule I drugs will automatically disqualify any driver from being certified to operate a CMV.  Thus, upon examination of a non-CDL driver, a CME could choose to request a non-DOT drug test before issuing a medical card.  If a non-CDL driver subsequently fails such a drug test due to medical marijuana use, he or she will not qualify for a medical card to drive a CMV.  An employer is then faced with the unexpected loss of a qualified non-CDL driver due to a failure to screen the driver for marijuana.  Such an outcome necessarily creates setbacks for businesses relying on non-CDL drivers to keep their vehicles on the road.

The bottom line? Regardless of a state’s medical marijuana law, all drivers of CMVs should be a part of a drug test program that includes testing for marijuana.

The amalgamation of litigation surrounding medical marijuana demonstrates that state medical marijuana laws present a minefield for employers.  As previously discussed, employers seeking to provide a drug-free workplace run the potential risk of liability for disability and employment discrimination under state laws.  Unfortunately, discrimination claims are not the only liability risks facing employers.  The involvement of driving inevitably raises a myriad of public safety concerns.  Thus, drug use by drivers, while on-the-job or at home, also exposes employers to tort liability for claims of negligent hiring and retention.  So long as marijuana remains illegal under federal law, employers should continue to review drug testing policies in light of burgeoning state efforts to legalize medical and recreational marijuana.

link to article – https://www.fandpnet.com/wp-content/uploads/2017/09/MarijuanaMotorIndustry.pdf
link to full Behind the Wheel quarterly newsletter – http://online.anyflip.com/ejlw/tfkc/mobile/index.html