On Behalf of | Mar 11, 2020 | Liability

In Essex Insurance Co. v. William Kramer & Assoc., 331 Conn. 493, 205 A.3d 534 (2019), the Connecticut Supreme Court issued an important decision regarding the statute of limitations for claims brought by insurers against TPAs.

Under Connecticut law there is a three-year statute of limitations for negligence actions brought by insurance companies against independent TPAs. When does this statute begin to run? That was the question addressed by the Connecticut Supreme Court in this case.

The TPA was hired to adjust hurricane damage to an insured apartment complex in Florida. During the adjustment of the claim, the TPA failed to notify the insurer that the apartment complex had a mortgage on it. Because of this failure, the insurance company issued its claim payment directly to the insured, thereby exhausting the policy limit. The mortgagee was not listed as a payee on the claim payment check and the insurer did not inform the mortgagee that it was going to make the final payment directly to the insured. Thereafter, the insurer was sued by the mortgagee. In 2010 the mortgagee amended its complaint that had been brought against various parties, to include the insurer. Ultimately, the insurer settled that claim. More than 6 years after the TPA’s adjuster closed its file on the apartment complex, the TPA challenged the lawsuit, arguing that the claim had been brought against the TPA beyond the three-year statute of limitations.

Connecticut law recognizes a continuing course of conduct doctrine which can toll a statute of limitations period on tort claims until the claimant’s cause of action accrues or injury occurs. Connecticut Law, §52-577 requires that tort actions be brought within three years of the date of the act or omission complained of. Under the Continuing Course of Conduct Doctrine, the statute of limitations during an ongoing continuing course of conduct doctrine alleviates the harshness of the statute of limitations when there is a continuous course of dealing between the parties. Under the doctrine, the limitations period is tolled if a duty remains in existence after the original wrong sued upon. During the tolling period there needs to be evidence of either a special relationship between the parties giving rise to a continuing duty or some later wrongful conduct of a defendant related to the prior act.

In the present case, the Supreme Court found that there was neither a special relationship between the insurer and the TPA in the three years before the insurer sued the TPA. The insurer had paid its last bill of the TPA long before the three year statute of limitations expired. The duties owed by the TPA to the insurer ended when the insurer issued its final check and the TPA closed its file. Therefore, the dismissal of the TPA was appropriate on statute of limitations grounds.