Good News: The Scott-Pontzer Dragon Has Been Slain

By John Lowe

The much maligned 1999 Ohio Supreme Court decision, Scott-Pontzer v. Liberty Mutual Fire Insurance Company, was overturned today. The Scott-Pontzer decision, which had extended certain corporate insurance policies to cover employees involved in accidents unrelated to work, had caused, in the words of Justice O'Connor, "chaos in the courts." As a result of the Court's decision today in Westfield Insurance Co. v. Galatis, the law of Ohio is now that:

Absent specific language to the contrary, a policy of insurance that names a corporation as an insured for uninsured or underinsured motorists coverage covers a loss sustained by an employee of the corporation only if the loss occurs within the course and scope of employment.

The Court quoted Sir William Blackstone's Commentaries on the Laws of England, published in 1765: "precedence and rules must be followed, unless flatly absurd or unjust…" While noting its general adherence to the doctrine of stare decisis (lawyers' Latin for following principles laid down in prior judicial decisions), the Court quoted the Hawaii Supreme Court for the proposition that, "However, a Supreme Court not only has the right, but is entrusted with the duty to examine its former decisions and, when reconciliation is impossible, to discard its former errors." The Court went on to hold that Scott-Pontzer was "erroneously decided" and it "defies practical workability."

Chief Justice Moyer wrote a separate concurring decision in which he stated:

Having accepted this issue for review, the court today stands at a crossroads. The court may follow the doctrine of stare decisis and attempt to minimize the impact of Scott-Pontzer by creating a patchwork of exceptions to and limitations of the holding therein. Alternatively, the court may depart from a rigid application of the doctrine and, in a single pronouncement, right that which is clearly wrong…For the reasons stated in the majority opinion, I believe that the latter charts the better course toward restoring order to insurance law in Ohio.

This is a major win for employers and the insurance industry. Hopefully, this decision will help keep employers and their insurance carriers from being named as defendants in non-work-related law suits.