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High court hears if insurance company can intervene in arbitration

After an auto insurance company declined to cover a person who contracted HPV in an insured person’s car, the Missouri Supreme Court will determine whether the insurance company has a right to intervene in a $5.2 million arbitration award.

GEICO General Insurance Company had denied coverage for plaintiff M.O. and her settlement offer in her claim that the insured party had negligently infected her in his car. M.O. and the insured party underwent arbitration, which resulted in a $5.2 million award.

M.O. notified GEICO of this a day before she filed the award before a trial court for confirmation. GEICO motioned to intervene. The court entered judgment in favor of M.O. two minutes before it granted GEICO the right to intervene.

During Dec. 14 oral arguments before the Missouri Supreme Court, Judge Mary R. Russell noted this defeated the purpose of statute 537.065, which outlines insurance companies’ right to intervene.

“But the fact that intervention was allowed as permitted by the statute is precluded from having any effect if it occurs after the judgment,” Russell said. “The fact that [the judge] sustained the motion to intervene after entering the judgment is not what was contemplated by the statute, intended by the statute.”

David Mayer of Monsees & Mayer represents M.O. During oral arguments, he noted that he agreed the order of events was not ideal, but it would not have affected the judgment as a prejudicial error.

“I wish it was done in the other order, absolutely,” Mayer said. “Would it really have mattered? We all know it wouldn’t have.”

Douglas Beck of Shook, Hardy & Bacon represented GEICO during oral arguments. Chief Judge Paul C. Wilson asked Beck on rebuttal to clarify GEICO’s legal stake.

“Here’s the distinction: If I have a five percent chance of losing something, I have an interest in whether when I lose, it’s for $100 or $100 million,” Beck said. “I have an interest in having that determined judicially on the merits.”

Judge Patricia Breckenridge noted that GEICO seemed to waive that right early on.

“Now, you lost that right to participate and defend, and so are you saying that by allowing that intervention, the legislature overturned the precedent as to the consequences of you denying coverage, denying defense?” Breckenridge said.

Beck said yes.

“Because the only time the right to intervene exists is when an insurance company has denied coverage,” Beck said. “It’s a prerequisite in the statute. The statute only applies if an insurance company is being given the opportunity to defend without reservation and refuses to do so.”

The case is M.O. v. GEICO et al., SC99732.

RELATED: GEICO fails to intervene in $5.2M arbitration award