O'Connor v. Country Mutual Insurance Co.
999 N.E.2d 705
Ill. App. Ct.2014Background
- O’Connor was injured in a June 2002 automobile collision with medical expenses exceeding $24,000.
- Country Mutual provided UIM coverage of $250,000 and $10,000 medical payments; it paid the $10,000 medical coverage and the tortfeasor settlement of $105,000.
- Country Mutual offered $40,000 under UIM in November 2004; O’Connor demanded $97,500; negotiations failed.
- The matter proceeded to arbitration in December 2005 on damages, resulting in an award of $213,295 with $115,000 set off, net $98,295, which Country Mutual paid.
- O’Connor filed a two-count action under § 155 of the Illinois Insurance Code in March 2007; trial court denied relief and Country Mutual prevailed.
- On appeal, the appellate court affirmed the trial court’s judgment denying § 155 relief.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Country Mutual’s conduct was vexatious and unreasonable under §155. | O’Connor argues arbitration award shows failure to evaluate fairly. | Country Mutual had a bona fide defense and reasonable evaluation. | Not established; judgment affirmed. |
| Whether §154.6 standards apply to §155 claim; lack of a claims manual violated §154.6. | Country Mutual violated §154.6 by lacking reasonable standards. | §154.6 is regulatory; no private remedy; on record evaluation was reasonable. | Trial court properly found no violation of §154.6 or §155. |
| Whether Country Mutual’s privilege on claim documents bars at-issue waiver arguments. | Privilege prevented cross-examination; waiver arguments improper. | Privilege preserved; no at-issue waiver required. | No improper waiver; privilege upheld. |
Key Cases Cited
- Norton v. West Bend Mut. Ins. Co., 406 Ill. App. 3d 741 (2010) (presence of bona fide defense defeats §155 claim)
- McGee v. State Farm Fire & Casualty Co., 315 Ill. App. 3d 673 (2000) (offer not per se unreasonable; substantial difference required)
- Buais v. Safeway Ins. Co., 275 Ill. App. 3d 587 (1995) (bona fide defense defeats §155 claim)
- Mathis v. Lumbermens Mut. Cas. Ins. Co., 354 Ill. App. 3d 854 (2004) (DOI rule violations are factors, not dispositive)
- American Service Ins. Co. v. Passarelli, 323 Ill. App. 3d 587 (2001) (regulatory provisions do not create private remedy)
- Lama v. Preskill, 353 Ill. App. 3d 300 (2004) (at-issue waiver concept discussed in §155 action)
- Cramer v. Insurance Exch. Agency, 174 Ill. 2d 513 (1996) (§155 remedy to deter insurer misconduct)