6th Circuit Affirms Decision Shielding Insurance Pros from Stale Claims

By: Ryan Bockmuller & Michael Byrne

The United States Courts of Appeals for the Sixth Circuit has recently affirmed a decision from the federal District Court in the Southern District of Ohio which will serve to protect insurance professionals from stale claims arising from policies issued more than four years prior.

Under R.C. § 2305.09, professional negligence claims, including those against insurance professionals, are subject to a four-year statute of limitations. Statutes of limitation dictate the length of time a plaintiff has to file a claim against a defendant. If the applicable statute of limitations has run, or expired, before the suit is filed, the claim asserted will be barred.

Under Ohio law, the date the clock starts to run is normally the date of the defendant’s wrongful conduct. However, there are two exceptions which can toll, or delay, the running of the statute of limitations, namely, the delayed-damages rule and the discovery rule. The delayed-damage rule provides for tolling the statute of limitations, under certain circumstances, until the injury actually occurs and the plaintiff suffers actual harm. The discovery rule can toll the statutes of limitation for some claims until the injured party becomes aware, or should have been aware, that defendant’s conduct was the cause of their injury. In Whitman v. Tucker, No. 18-3532 (6th Cir. 2019), the court denied application of either exception.

The Whitman decision showcases two main applications of Ohio precedent in its analysis of the statute of limitations in professional negligence claims. First, the court applied the holding of Flagstar Bank, F.S.B. v. Airline Union’s Mort. Co., 947 N.E.2d 672 (2011), finding that the discovery rule does not apply in professional negligence cases. Recall that the discovery rule can toll the running of a statute of limitations until the injured party discovers (or should have discovered) their injury.

The court also applied LGR Realty, Inc. v. Frank & London Ins. Agency, 98 N.E.2d 241 (2018), finding that the statute of limitations for a negligence claim against an insurance agent begins to run when the insurance policy is issued. This is important because it establishes a firm, identifiable date which governs the statute of limitations for negligence actions filed against insurance professionals, preventing claims arising more than four years from the date the policy was issued.

Although not related to the statute of limitations analysis, it is worth noting that the court also applied Beard v. N.Y. Life Ins. & Annuity Corp., No. 12AP-977, 2013 WL 4678105 (Ohio Ct. App. Aug. 27, 2013), which held that only the individual who personally receives subpar advice or services may sue for professional negligence. In other words, the children, spouse, or representative of a decedent may not pursue a claim for professional negligence based on services or advice rendered to the decedent.

The Whitman decision is an important case for insurance professionals as it provides clarity and certainty to professional negligence cases and reinforces many industry-friendly applications of Ohio law.

For more information or questions regarding this article, contact Ryan Bockmuller at rbockmuller@mrrlaw.com or Mike Byrne at mbyrne@mrrlaw.com.