41 Trial Lawyer • Spring 2023 See Brenna Collachi p 42 Bob Bonaparte’s article p. 30. Safe harbor A PIP or UM/UIM insurer may prevent an attorney fee claim if they send an effective safe harbor letter within six months of receiving proof of loss.6 In a PIP claim, a safe harbor letter is effective if the insurer: 1) accepts coverage of the claim; 2) agrees to submit any disputes to binding arbitration; and 3) limits the issues at the arbitration to the amount of benefits due to the insured.7 In a UM/ UIM claim, the safe harbor letter is effective if the carrier: 1) accepts coverage of the claim; 2) agrees to submit any disputes to binding arbitration; and 3) limits the issues at arbitration to the liability of the un/underinsured driver and the amount of damages due to the insured.8 In Collacchi’s case, there was no safe harbor letter because State Farm denied coverage on three UIM policies. Similarly, in any of your PIP or UM/UIM cases, if the carrier simply denies coverage of the claim (for example, due to nonpayment of premiums or an anti-stacking argument) then attorney fees may be pursued in litigation if the other elements of ORS 742.061 are met. Benefits due In PIP claims, an important question on fee entitlement is whether a PIP carrier’s denial of medical bills following an IME or medical records review is a dispute over “the amount of benefits due to the insured.” If it were, then an IME and subsequent termination of PIP benefits would not sail a PIP insurer out of safe harbor. Luckily, there is a clear answer to this question: no, this is not a dispute within ORS 742.061(2)’s meaning. In Grisby v. Progressive Preferred Ins. Co., 343 Or 175, 182–83 (2007), the court held that a dispute over causation or the reasonableness and necessity of treatment is a coverage dispute. In other words, a PIP carrier who starts the claim in safe harbor can subsequently sail themselves out of it when denying benefits after an IME. Sail out of safe harbor Similarly, a UM/ UIM carrier who starts a claim safely sheltered in safe harbor can later sail themselves out of it. To sail out of safe harbor, a UM/UIM carrier must raise and dispute issues beyond the liability of the at-fault driver and damages owed to the insured.9 Relevant case law demonstrates a few of the issues that go beyond the liability of the un/underinsured driver and damages owed to the insured. For example, arguing that the insured has not complied with the terms of their contract, that the UM/UIM claim has already been settled, or compelling the insured to file an action in court to enforce an arbitration award will all sail the insurer out of safe harbor.10 The reasoning behind these decisions can be extended to other insurer defenses, such as claim or issue preclusion in a UM claim with an adverse related workers’ compensation decision. It can also be extended to apply when a UM/UIM carrier denies it must provide coverage and pay damages for the punitive damages an insured would have been able to pursue and recover from the atfault un/underinsured driver. A word of caution though. An UM/UIM insurer’s argument that a collision did not cause the alleged injury is a dispute over the damages owed to the insured within ORS 742.061(3)’s meaning.11 In what forum are fees available? An important question in UM/UIM claims is whether an attorney fee claim arises if an insurer sails out of safe harbor while the matter is being resolved via binding arbitration under ORS 742.504(10). The plain text of ORS 742.061 provides insurers with the strong argument that the answer is no and a civil claim must be filed in a trial court in order for an attorney fee claim to arise.12 There is also, unfortunately, unhelpful dicta in related case law supporting this position.13 Finally, ORS 742.504(10) itself precludes the award of attorney fees in UM/UIM arbitrations.14 As a result, the clear safe course when an insurer sails out of safe harbor is to file a lawsuit in circuit court and allege an attorney fee claim under ORS 742.061.15 Brenna Collacchi was 21-years-old when a drunk driver ended her life. Attorneys Aaron Reichenberger and Mike Rosenbaum were able to obtain all the compensation Collachi’s family had coming to them.
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