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Sale v. Allstate Insurance Co.





Appeal from the Circuit Court of Cook County; the Hon. Warren D. Wolfson, Judge, presiding.


Rehearing denied August 30, 1984.

Plaintiff, Pamela Pinson Sale, conservator of the estate of Maxine Pinson, an incompetent, appeals (1) the trial court's dismissal of counts III, V and VII of her complaint for failure to state a cause of action; (2) a jury verdict in favor of defendant, Allstate Insurance Company (Allstate), on count IV: and (3) the trial court's award of attorney fees. Plaintiff raises the following issues for review: (1) whether the trial court erred by failing to instruct the jury of another trial judge's findings in a summary judgment order; (2) whether the trial court erred in dismissing counts III, V and VII of her complaint at law; (3) whether section 155 of the Illinois Insurance Code (Ill. Rev. Stat. 1979, ch. 73, par. 767) provides an exclusive remedy for wrongful conduct of an insurer; (4) whether it was error to tender certain instructions to the jury; (5) whether she is entitled to a new trial because of false answers given by a juror on voir dire; and (6) whether the trial court erred in determining the amounts of attorney fees.

We affirm in part and reverse in part and remand.

On October 15, 1974, Maxine Pinson filed a four-count complaint against defendant Allstate. She alleged that on February 12, 1972, she was seriously injured in an automobile accident. At that time Pinson was covered by defendant's automobile insurance policy, which included a provision for extended personal injury protection or "no fault" insurance. Under the no-fault plan, defendant agreed to pay all reasonable medical expenses and lost earnings at a maximum rate of $150 per week for a period of 260 weeks during permanent disability. The policy incorporated by reference article 35 of the Illinois Insurance Code (Ill. Rev. Stat. 1971, ch. 73, par. 1065.150 et seq.).

As a result of the accident, Pinson received a depressed skull fracture of her right temporal and parietal bones. During emergency surgery, one inch of her brain was removed. Her condition was diagnosed as organic brain disease syndrome due to trauma suffered in the accident. Pinson alleged that since the accident she had been unable to function independently and needed continual and constant medical care and supervision. Prior to the accident, Pinson worked for Scott Foresman Company and created advertisements for education textbooks. After her accident, Pinson was unable to prepare any copy.

Allstate made payments of medical and lost income benefits under the policy from the time of the accident in February 1972 until April 1973. Pinson alleged that Allstate wilfully refused to pay the benefits owing to her and sought to compromise the amount owing and expunge any future obligation to her.

In count I, Pinson alleged that defendant was liable for triple damages under article 35 of the Illinois Insurance Code for wilful refusal to pay under the terms of the insurance policy. In count II, she asked for judgment against defendant for the amount of unpaid benefits of $19,322.36 plus interest, and for treble damages of $57,967.08. In count III, she asked punitive damages of $100,000, and in count IV she asked damages of $200,000 for intentional infliction of mental distress.

On August 12, 1975, on defendant's motion, the trial court dismissed count I. The trial court clarified this order on December 4, 1975, stating that count I was dismissed only insofar as it pertained to the recovery of triple damages under article 35 of the Illinois Insurance Code. Pinson appealed and this court reversed and remanded the trial court's order. We held that section 603(b) of the Illinois Insurance Code (Ill. Rev. Stat. 1971, ch. 73, par. 1065.153) was incorporated into Pinson's insurance policy and that Allstate impliedly waived its unconstitutionality defense to the payment of treble damages to Pinson. The cause was remanded for a determination of whether Allstate's refusal to pay Pinson benefits was in fact wilful. Pinson v. Allstate Insurance Co. (1979), 68 Ill. App.3d 788, 791, 386 N.E.2d 638, 641.

On December 22, 1977, before the first appeal was decided, the trial court issued an order in which it found that Maxine Pinson was totally disabled within the meaning of her insurance policy and was entitled to lost income and medical benefits. Allstate was ordered to pay all lost income and medical benefits. The trial court found that Allstate wilfully refused to comply with its contractual obligation to Pinson insofar as it refused payment of lost income after reasonable proof of total disability and that it failed to pay medical care benefits as they were submitted.

On October 27, 1980, Pinson filed an amended four-count complaint. Subsequently, Pamela Pinson Sale, Pinson's daughter, became her conservator and was substituted as plaintiff in this case. Sale added counts V, VI and VII. The trial court dismissed count V and the amended count V and count VII. Immediately before the trial began, the trial court ruled that the jury would not be instructed as to Judge Dunne's findings in his December 22, 1977, order.


The trial began on September 22, 1981, on the issue of Allstate's refusal to pay benefits to Pinson (count IV). Numerous documents from Allstate's file on her were introduced during testimony. Following her accident on February 12, 1972, Pinson was hospitalized at Evanston Hospital, in Evanston, Illinois. Allstate received an authorization for medical information dated February 19, 1979, from Pinson's daughter.

A note, dated February 22, 1972, signed by Dr. Joseph Tarkington, who operated on Pinson, stated that she was difficult to get along with. Although she functioned well on her job, she had been an alcoholic for years; she had received numerous psychiatric treatments and often expressed a desire to die. Pinson's daughter felt that her mother had no will to live and would be angry if she survived.

In April 1972, Pinson was transferred to Normandy House, a nursing facility, where she remained until August 1972.

Maxine Wilieko testified that in 1972 she was employed as a no-fault specialist by defendant. In January 1972, Allstate offered personal injury protection which allowed a party to recover for medical expenses and loss of income regardless of who was at fault. If the claim exceeded a certain amount, it would be referred to a regional office; an even higher amount was referred to the home office, which is the highest level of authority. Wilieko handled Pinson's claim. She recalled that when she spoke by telephone to Pinson on April 25, 1972, the latter was coherent and realized that Wilieko was handling her claim. Wilieko sent an adjustor, Steven Hecht, to see Pinson. He saw her for about two minutes. In a report dated June 20, 1972, he wrote that Pinson was very feeble. Pinson said she was all right physically, but Hecht observed that she was slow to respond to questions, confused and barely audible. She did answer questions somewhat normally. A nurse concluded that Pinson would probably never be released to society.

Wilieko prepared a report, dated July 20, 1972, on Pinson's claim in which she wrote that coverage was applicable. On that date, $13,272.10 had been paid out and $45,500 had been put in reserve. Eventually the home office agreed to Wilieko's recommendation to reserve the policy and its limits. In another report dated July 20, 1972, after a visit to Scott Foresman, an Allstate employee reported that Pinson was a very good employee.

Ronald Casper, a casualty unit manager and district claim manager for Allstate, was called by plaintiff as an adverse witness. He supervised the Pinson claim. In Pinson's insurance policy, total disability was defined as the inability of the injured person to engage in his ordinary occupation. Pinson's claim was reviewed at three levels: at the district level, it was reviewed by a personal injury protection (PIP) examiner and by a casualty claims supervisor; at least two people reviewed the case at the regional level; and the then managing attorney, Ed Matus, reviewed it for the home office. In a letter dated August 18, 1972, Matus stated the following: "We may well decide to lump sum settle providing we have assurance that condition is totally disabling but general state of health indicates continued survival is expected."

On August 31, 1972, Pinson was transferred to Brookwood Convalescent Center. Sal Dragotta, an Allstate adjuster, visited her in September 1972 for 15 to 20 minutes. She was withdrawn and not communicative.

Plaintiff introduced two Allstate forms entitled "Attending Physician's Report" for Pinson. A question on the forms was "if still disabled, date patient should be able to return to work." One response was "indefinite"; the other response was "undetermined — probably never."

On April 6, 1973, Dave Auerbach, an Allstate adjuster with a reputation for tenacity, visited Pinson at Brookwood. His purpose was to see whether she was still totally disabled. Pinson was neat and well-dressed. Auerbach saw some books with intellectual content on her bedside table. Two or three times Pinson said, "that is all I have to say," indicating she was not going to answer any more questions. But Auerbach politely continued to question her. Auerbach testified that he was polite at all times and there was no tension during the interview. Based on Auerbach's report, it was the opinion of Casper (supervisor of Pinson's claim) that Pinson was still disabled.

An Allstate request for authorization for a payment to Pinson dated April 16, 1973, contained the following statements by its employees:

"Although this file is under investigation, I do not feel we have reason to stop payments at this time."

"At this time we have no actual proof that the bills were not as a result of this accident."

"Consider use Dr. Barbakoff, etc. to review medical records, etc."

On April 23, 1973, Allstate stopped its payments to Pinson. According to an Allstate document dated April 25, 1973, Pinson's attorney should be informed that further payments would not be made until the causal connection was resolved.

In July 1973, Pinson was transferred to another nursing home, the Magnus Farm.

By August 1973, Allstate had obtained all of Pinson's medical records, which it sent to Dr. Barbakoff for his review and opinion. According to a former Allstate employee, Gerald Seidl, serious injury claims were referred to Barbakoff, who had a reputation for writing reports favorable to the defense. Dr. Barbakoff reported that Pinson was an "individual with chronic mental illness who with the aid of psychotherapy, alcohol, cigarettes and coffee * * * was able to remain functional, although very brittle." (Records from a prior hospitalization referred to alcoholism and psychiatric help.) It was Barbakoff's opinion that the accident precipitated Pinson's breakdown.

After reviewing this report, Casper, who supervised the Pinson claim, wondered whether the accident caused Pinson's health condition or was merely the precipitating factor. Casper acknowledged that a pre-existing condition which aggravates an injury is not a defense for Allstate under a no-fault policy.

Cathy Haskin, an Allstate employee, described in a written report her telephone conversation with Pinson's daughter on September 26, 1973. Sale asked about her mother's insurance payments. She said her mother could not take care of herself; that she visited her mother the day before and Pinson did not know her.

On October 23, 1973, Haskin visited Pinson at the Magnus Farm. Pinson was receiving no therapy or psychiatric treatment. Haskin concluded that Pinson needed help. Under the no-fault policy, Allstate assisted in the rehabilitation of its insured. During the interview, Pinson was alert and understood and answered all of Haskins's questions. She was no longer being treated for injuries sustained in the accident. Haskin concluded that Pinson's "need to remain in a nursing home and her inability to work" related to her mental condition, and that her mental condition related to her past condition rather than her accident.

In a letter dated December 26, 1973, Haskin wrote to Pinson's attorney informing him that her investigation indicated that his client had completely recovered from the injuries she received in the accident, and that Allstate would make no further payments until he disproved Allstate's contention.

Allstate received through Pinson's attorney letters written in January and February 1974 which described her condition. A letter from her employer, Scott Foresman, described Pinson as a good employee with an "active, intelligent mind" who prepared advertising for high school textbooks. After her accident, Pinson was given small writing assignments. Although she showed some interest, she was unable to prepare any copy or give ideas or suggestions about the assignment, a reaction which was totally unlike her former one.

Dr. Tarkington, who treated Pinson at Evanston Hospital, wrote, "The fact that she [Pinson] was productive up to the day before the accident and has not been able to work since then is strongly indicative of the presence of underlying brain damage." Dr. Arthur Peterson, who treated Pinson while she was at Normandy House, stated that he felt very strongly that Pinson's physical and mental conditions were related to her accident. Dr. Floreani, who treated Pinson at the Magnus Farm, stated that Pinson's physical and mental conditions were directly related to her accident. Robbie Clifton, the nursing supervisor at Magnus Farm, wrote that Pinson "could not function alone at home and definitely would be unable to work."

In memoranda dated March 4, 1974, Charles Goodrode, a casualty claim supervisor, and W.M. Garvey, senior district claim manager, agreed that a compromise of Pinson's claim was in order. Goodrode wrote, "[t]his file in my opinion would be very costly to defend and the sympathy of the jury would be in favor of an old lady who can not at this time, care for ...

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