On November 5, 2003, in the much anticipated decision of Galatis v. Westfield (2003), 100 Ohio St.3d 216, the Ohio Supreme Court severely limited Scott-Pontzer v. Liberty Mutual Fire Ins. Co. (1999), 85 Ohio St.3d 660 and expressly overturned Ezawa v. Yasuda Fire & Marine Ins. Co. (1999), 86 Ohio St.3d 557. The Court "... restrict[ed] the application of uninsured and underinsured motorist coverage issued to a corporation to employees only while they are acting within the course and scope of their employment...." Galatis, 100 Ohio St.3d at 217.

The Galatis Court found that Scott-Pontzer was “wrongly decided” and had created “chaos” in Ohio courts by defying practical workability and creating massive and widespread confusion in insurance coverage litigation. Galatis intended to restore order to the legal system by returning to fundamental principles of insurance contract interpretation. After Galatis, Courts will permit recovery under Scott-Pontzer only to those employees in the course and scope of employment at the time of a loss. Galatis effectively ended the barrage of litigation in courts throughout the State of Ohio by eliminating numerous claims.

However, uninsured/underinsured motorist claims of insureds who have not themselves suffered any bodily injury present an interesting problem for insurers in the wake of Galatis. The pre-2001 version of Ohio’s uninsured/underinsured motorist statute, R.C. 3937.18, did not require an insured to sustain bodily injury in order to recover damages under a policy of insurance. Under two separate Ohio Supreme Court decisions, an insured does not have to suffer bodily injury but can still recover damages for medical expenses and loss of consortium resulting from the injury to another person. See, Sexton v. State Farm Mut. Auto. Ins. Co. (1982), 69 Ohio St.2d 431; Moore v. State Auto. Mut. Ins. Co. (2000), 88 Ohio St.3d 27. These claims, referred to as “Sexton/Moore” claims, are often seen in the context of a wrongful death claim.

In Lumberman’s Mut. Cas. Co. v. Bebsz, 8th Dist. App. Nos. 82919, 82903, 2003-Ohio-7072, Laura Bebsz sustained injury in a motor vehicle accident which occurred on January 5, 1999. As a result of these injuries, Laura and her husband, Raymond, sought uninsured/underinsured motorist coverage under several policies of insurance issued to Raymond’s employer. The majority determined that the accident did not occur in connection with Raymond’s employment and pursuant to Galatis, neither Raymond nor Laura were insureds under the subject policies of insurance.

However, in an opinion concurring in part and dissenting in part, Judge Anne Kilbane noted that pursuant to Moore, Raymond Bebsz had a viable claim for medical expenses resulting from his wife’s injuries as well as for the loss of her consortium. Specifically, the dissent noted that the record did not reveal in what capacity Raymond Bebsz was employed at the time of his wife’s accident, nor did the record reveal his work schedule. Laura Bebsz was injured at 11:45am, and thus, Raymond may have been “on the job and doing his work” at the time of his wife’s accident. Therefore, his loss “could have occurred within the course and scope of his employment” pursuant to Moore and Galatis.

No Ohio court has to date followed Judge Kilbane’s dissent in Bebsz. Courts employing Galatis require a loss to be “related” to the employment under which policy coverage is sought. Under the prevailing view, Judge Kilbane’s dissent would fail in Ohio courts. However, the Eighth District Court of Appeals’ opinion in the matter of Karl Quickle v. Progressive Casualty Co., 8th Dist. App. No. 82818, is still pending. With issues similar to those discussed in the Bebsz dissent and with Judge Kilbane on the appellate panel, the “Galatis Loophole” could potentially become the majority view in the Eighth District.

L. Megan Faust is a partner in Roetzel & Andress’ Akron, OH office and has over ten years of experience in civil trial practice. Ms. Faust’s practice concentrates in the areas of insurance coverage and bad faith litigation.

Jennifer L. Souza is an associate in Roetzel & Andress’ Akron, OH office. Ms. Souza’s practice concentrates in the area of insurance coverage litigation.

Jerome Wyss is an associate in Roetzel & Andress’ Akron, OH office. His practice includes insurance coverage litigation.