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Insurance Law

Supreme Court Allows Discussion Of Insurance In Personal Injury Trial

You know the rule of evidence. Mentioning the availability of insurance, during a personal injury trial, is a big N-O. The rule is designed to prevent prejudice in the verdict, which might result if the jury is aware that an insurance company, and not the defendant, will be responsible for paying the verdict. But the Alaska Supreme Court allowed evidence of insurance in Ray v. Draeger, No. S-15347 (Alaska July 17, 2015), [subscribers can access an enhanced version of this opinion: | Lexis Advance].

In July 2009 Kimber Ray rear-ended an automobile in which Megan Draeger was a passenger. Draeger filed suit against Ray. Ray admitted liability so the trial focused on the extent of Draeger’s injuries and other damages related to the accident. Ray’s insurer, GEICO, paid for her defense.

“Ray filed a motion in limine based on Alaska Evidence Rule 411, [subscribers can access an enhanced version of this opinion: Lexis Advance], seeking to preclude reference at trial to the fact that Ray was covered by liability insurance with respect to Draeger’s claims. Draeger partially opposed the motion, arguing that she wished to cross-examine Dr. John Ballard, an orthopedic surgeon hired by Ray’s counsel to give expert testimony at trial, regarding potential bias. In particular, Draeger sought to examine Dr. Ballard about the fact that a substantial portion of his work as a medical expert is derived from referrals from insurance companies and that he had been hired many times by GEICO in particular.”

Putting aside what happened in the courts below, the Supreme Court, sounding like a law student’s evidence outline, summarized the issue and relevant tests as follows: “Alaska Evidence Rule 411 provides that ‘[e]vidence that a person was or was not insured against liability is not admissible’ to prove ‘whether the person acted negligently or otherwise wrongfully.’ But the rule allows courts to admit this evidence when offered for another purpose, such as to show ‘bias or prejudice of a witness.’ When Rule 411 does not bar evidence, it may still be excluded under Alaska Evidence Rule 403. Rule 403 provides that relevant evidence ‘may be excluded if its probative value is outweighed by the danger of unfair prejudice, confusion of the issues, or misleading the jury,’ among other factors. Alaska Evidence Rules 411 and 403 thus work in conjunction: If the trial court decides that evidence of liability insurance can be admitted despite Rule 411, the court must then perform a Rule 403, [subscribers can access an enhanced version of this opinion: Lexis Advance], balancing analysis to determine whether the evidence’s probative value outweighs the danger of unfair prejudice. ‘Under Evidence Rule 403, the trial court bears primary responsibility for determining admissibility of evidence.’ As we have held previously, trial courts generally ‘have broad discretion in applying [the Evidence Rule 403] balancing test.’”

The court spent a lot of time explaining all of this balancing of interests and a simple summary is as follows: “The trial court’s substantial connection analysis should look primarily to ‘whether a witness has a sufficient degree of connection with [a] liability insurance carrier to justify allowing proof of this relationship as a means of attacking the credibility of the witness.’ Where an expert witness has significant ties to the insurance industry as indicated by receiving a sizable portion of his or her income from insurance work, being hired by a firm that derives a large portion of its income from insurance companies, or facts that otherwise suggest an interest in the outcome of the litigation, the probative value of that substantial connection is likely to outweigh the danger of unfair prejudice, and is thus likely admissible to show bias under Rule 411 and Rule 403.”

Here the court concluded that Dr. Ballard has a substantial connection with the insurance industry, such that it was improper (although ultimately held to be harmless error) for the lower court to exclude all reference to insurance as more prejudicial than probative. The court observed that Dr. Ballard received between $300,000 to $350,000 a year for his insurance reviews – “a large percentage of his total yearly income of up to $800,000, which includes his private orthopedic practice. Dr. Ballard was also hired for the case by a company that does 98% of its work for insurance companies or defense attorneys. “The financial entanglements of both Dr. Ballard and the consultancy through which he was hired create a substantial connection to the insurance industry.”

Coverage Opinions is a bi-weekly (or more frequently) electronic newsletter reporting or providing commentary on just-issued decisions from courts nationally addressing insurance coverage disputes. Coverage Opinions focuses on decisions that concern numerous issues under commercial general liability and professional liability insurance policies. For more information visit

The views expressed herein are solely those of the author and not necessarily those of his firm or its clients. The information contained herein shall not be considered legal advice. You are advised to consult with an attorney concerning how any of the issues addressed herein may apply to your own situation. Coverage Opinions is gluten free but may contain peanut products.

    Randy Maniloff is Counsel at White and Williams, LLP in Philadelphia. He previously served as a firm Partner for seven years and transitioned to a Counsel position to pursue certain writing projects including Coverage Opinions . Nonetheless he still maintains a full-time practice at the firm. Randy concentrates his practice in the representation of insurers in coverage disputes over primary and excess obligations under a host of policies, including commercial general liability and various professional liability policies, such as public official’s, law enforcement, educator’s, media, computer technology, architects and engineers, lawyers, real estate agents, community associations, environmental contractors, Indian tribes and several others. Randy has significant experience in coverage for environmental damage and toxic torts, liquor liability and construction defect, including additional insured and contractual indemnity issues. Randy is co-author of “General Liability Insurance Coverage - Key Issues In Every State” (Oxford University Press, 2nd Edition, 2012). For the past twelve years Randy has published a year-end article that addresses the ten most significant insurance coverage decisions of the year completed.

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