Insurance Companies and Adoption

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The following section is an ongoing column where readers can ask questions regarding legal matters. To ask your own question, send it to Stable Management, P.O. Box 644, Woodbury, Conn., 06798, or email jenn@stable-management.com.

Who is Legal Owner of a Foal From an Adopted Mare?

[Names have been changed]

Mar. 28, 2001 we adopted a Standardbred mare from the American Standardbred Adoption Program (aka A.S.A.P.) in Wisconsin. We paid a $250 adoption fee and filled out the necessary papers.

The horse’s history is that she was a racer and then was used strictly for breeding. Evidently there were some complications with previous foalings and so the owner donated her to A.S.A.P. with the stipulation that she not be bred again.

The mare was adopted by Bill, who had her for a year to a year and a half. This March, Bill put the mare back into the A.S.A.P. program and we adopted her.

When we picked the horse up, Bill told my husband that he suspected she was with foal and if we didn’t want the foal he would take it.

Two months later she had a filly. The next thing we know we get an e-mail from Bill stating that they would like to pick up their foal after we wean it and that they would pay the costs that we incurred.

We were given papers stating that we “owned” the horse and only A.S.A.P. retained the right to take her if we mistreated her in anyway. So, we wrote him back and told him he could not have either horse.

Another note from Bill informed us that they deliberately bred the horse and because his brother was the stud owner he owned the foal.

Now we have learned that Bill’s brother is suing the A.S.A.P. for a $600 stud fee, negligence in moving a mare so close to term and also for ownership of the foal.

A long story for a short question. Do they have any rights to our foal?

—Name Withheld

I can, however, give you a short answer: I’m guessing that there is no bill of sale or other document describing the transfer. If there is, what it says could be critical.

There is a section in the Uniform Commercial Code (UCC) dealing with unborn livestock. The UCC has been adopted by most, if not all, states. I believe it states that, absent any documentation to the contrary, whoever owns the mother at the time of birth owns the baby.

Putting Indemnification Language in a Waiver

I run a safe operation, carry insurance and have my boarders and riding students (or their parents) sign a waiver of liability, but I have been told that sometimes when people are injured, their health insurance company will bring a lawsuit to recover the cost of health care even when the individual does not wish to sue. It has been suggested that such suits might be stopped by putting a clause in the waiver stating that the boarder or rider agrees to indemnify the stable for any expenses arising out of legal judgments related to any accident or injury the individual might suffer while at the stable.

The explanation I was given is that this would render a lawsuit to recover health care costs moot. John Doe would sue to get the health cost of his broken leg only to turn around and repay the stable for the same costs.

Since the result would be a net zero dollar change between John Doe and the stable, the case would be not allowed in court.

I wonder if this clause would, in fact, have that effect? Are there any other legal means to protect against what I feel are insurance companies trying to get out of their obligations?

—Robin Crickman, Dancing Horse Hill, Wisc.

Let me start off by saying that all insurance companies, not only health insurance carriers, have a right to recover from anyone who negligently injures their insureds, such as your J. Doe. Contained within all insurance policies is an agreement to allow the insurance company to sue on your behalf.

“All insurance companies. . .have a right to recover from anyone who negligently injures their insureds.”

So that we can keep the players straight in this situation, let me list who they would be. We have J. Doe as the injured rider, who is insured for liability by Doe’s Liability Insurance and has health insurance with Doe’s Health Insurance. We also have the Stable where the accident occurred and Stable’s Insurance Company.

Doe is injured at the Stable and files a claim with Doe’s Health Insurance. Doe’s Health Insurance determines that it covers the claim and pays Doe. Now Doe’s Health Insurance contacts Stable and asks the Stable to pay the money it paid to Doe. For the Stable to have to pay the money, Doe’s Health Insurance must show that the Stable was negligent.

In this situation, you have to look at two different things. One is, who is the ultimate payee (Doe) and the other is, who is responsible for the debt (the Stable)? If Doe’s Health Insurance sues on behalf of Doe against the Stable for the cost of the medical services it rendered ($10,000 for example), and the court finds the Stable negligent and liable for the $10,000, the following would happen:

A. The Stable would be obligated to pay Doe’s Health Insurance $10,000. If the Stable has liability insurance, the insurance company would pay the money. If the Stable does not have insurance or an indemnity agreement with Doe, the Stable has to pay the money.

B. The Stable has an indemnity agreement with Doe. At that point, the Stable would say to Doe that because of the indemnity agreement, Doe is obligated to pay the Stable $10,000. (It might actually be more if the indemnity agreement includes an obligation to pay the Stable’s attorney’s fees.) Paragraph B does not change Paragraph A.

C. Assuming that Doe has the money (or is covered by his own liability insurance), then Doe would write out a check either to the Stable who would then forward the money to Doe’s Health Insurance, or directly to Doe’s Health Insurance. However, to further complicate matters, Doe’s Liability Insurance may argue that it didn’t sign the indemnity agreement and therefore, does not have to follow it, leaving Doe obligated to pay the Stable so that the Stable can pay Doe’s Health Insurance.

D. If Doe does not have any money, Doe’s Health Insurance would attempt to collect from the Stable, while the Stable would be attempting to collect from Doe. It’s important to note here that the Stable cannot use Doe’s failure to pay it for not paying Doe’s Health Insurance.

Ultimately, there is nothing that you can put in an indemnity agreement that will bind Doe’s Liability Insurance, unless you can get Doe’s Liability Insurance to sign the indemnity agreement. Otherwise, it is not a party to the agreement.

An indemnity clause signed by Doe is not going to provide 100 percent protection in all situations. It will, however, if properly written, provide some level of protection. Depending on the circumstances, sometimes it will provide 100 percent protection; sometimes it might provide no protection. Adding the language to a release, however, would be cost effective for the amount of protection it would provide.

“An indemnity clause signed by Doe is not going to provide 100 percent protection in all situations.”

In addition, an indemnity clause provides protection in other situations. For example, if Doe negligently injures Smith, then the Stable could use the indemnity clause to remove itself from the case should Smith decide to also sue the Stable. This type of situation is where an indemnity clause is most likely to be used and can be very effective.

I apologize that this answer is so long. Unfortunately, insurance law often is confusing in trying to determine what will be covered. For this reason, if no other, it is important for the Stable to have good liability coverage. That way the Stable doesn’t have to worry about the different health insurance policies that its customers have. It is also important to consult with an attorney in your state to make sure the wording of your indemnity agreement (or release) is as thorough as possible.