On August 25, 2009, the Connecticut Supreme Court ruled in favor of the firm’s clients in a case involving an effort by insurance companies to limit their obligations to pay automobile glass claims such that the insurers are able to pay less than what their policies require them to pay. The Supreme Court’s decision reverses a Connecticut trial court decision holding that an insurance company could escape liability for paying otherwise valid glass claims by sending out advance reimbursement letters to every glass shop setting forth pricing lower than what the glass companies were charging. The theory, something the insurers have been referring to as “unilateral contract,” has been advanced by insurers in an effort to avoid paying additional amounts on previously short paid claims. The Connecticut Supreme Court unanimously rejected the insurer’s defense, sending the case back to the trial court to be decided on the merits.
This is the second time the case between Auto Glass Express, Inc., Ed Steben Glass, Inc. and Hanover Insurance Company has been to the Connecticut appellate courts. Initially, the trial court found in favor of Hanover on the theory that, because the glass companies had cashed checks underpaying the claims at issue, they could not later sue the insurer to seek additional funds. In December 2006, the Connecticut Court of Appeals unanimously reversed that decision and sent the case back for a retrial.
On retrial a different trial court judge ruled in favor of the insurers holding that the letters sent before claims were submitted limited the insurer’s liability to the terms contained in the letters even though the glass companies never accepted those terms. On appeal, the Connecticut Supreme Court directed that that case bypass the court of appeals and go directly to the high court where it ruled in favor of the firm’s glass company clients.
The Court also interpreted Hanover’s insurance policy language to require the insurer to pay invoices that are reasonable in the marketplace. The focus of that inquiry is on the amount billed, not on the amount paid, and is consistent with a 2000 decision of the Minnesota Court of Appeals on the same issue. The was the interpretation that the glass companies have been asserting should apply from the beginning of the case. With the Supreme Court adopting the glass companies’ position on Hanover’s obligations, the dispute between the parties will now be resolved utilizing that interpretation.