The Importance of Expert Testimony

September 16, 2016

From time to time, I conduct a workshop dealing with law and ethics for insurance agents. One of the topics I touch upon is the standard of care required of agents in performing their intermediary services. Invariably, that standard of care is established through the testimony of appropriate expert witnesses. Who are these experts? Generally, they are other licensed agents who have been involved in the business for a substantial period of time and have gleaned, from both education and experience, considerable knowledge about how reasonable agents conduct the business of insurance. Any seasoned agent could probably be considered an expert in various aspects of the business of insurance.

Recently, the Wisconsin Court of Appeals dealt with a case involving an insurance agent and a claim by a client that the agent was negligent in procuring insurance coverage. In that case, a woman asked her agent to procure health insurance coverage, and the agent did so. Specifically, the agent obtained insurance from the Association for Independent Managers (“AIM”). Following the obtaining of insurance, the woman underwent hip replacement surgery, and the bills were submitted to  AIM  for payment. The bills were not paid, and the woman discovered AIM was not a Wisconsin licensed health insurance provider, but was rather an insurance scam. Unfortunately, this happens all too frequently. Accordingly, she sued the agent. The agent denied liability. Specifically, the agent indicated his employer, the American Insurance Organization (“AIO”), recommended AIM as an insurance provider, and that AIO had assured him it had conducted a thorough check on all of the companies it had recommended. Before the case went to trial, the agent moved for summary judgment, and one of the grounds for summary judgment was that the woman had failed to establish,by appropriate expert testimony, whether or not the specific conduct of the agent violated the appropriate standard of care and the nature/extent of the damages sustained. Summary judgment is a procedure whereby the judge will decide issues of law, where the relevant facts are not in dispute. The trial court found in favor of the agent and dismissed the woman’s complaint for professional negligence. Needless to say, she appealed.

On appeal, the Wisconsin Court of Appeals noted that whether expert testimony is necessary in any given situation is a question of law for a court to resolve.  “Expert testimony is required when the issue under consideration involves ‘special knowledge or skill or expertise on subjects which are not within the realm of the ordinary experience of (humankind)’”.  Continuing, the court stated:  “Thus, expert testimony is generally required in malpractice cases, ‘to establish the parameters of acceptable professional conduct’”. Expert testimony is not required in cases where there is a breach that is so obvious it may be determined by the court as a matter of law or where the standard of care is within the ordinary knowledge and expertise of a juror. In applying the foregoing law to the case on appeal, the Court of Appeals concluded the issue raised in litigation concerning the agent’s alleged negligence, was not within the realm of ordinary experience and required expert testimony to assist the jury in deciding the issue. With respect to the damages, the court similarly noted that expert testimony is required to establish the appropriate level of damages because in the insurance business, damages from an agent’s failure to procure insurance are generally determined by the terms of the policy that the agent failed to procure. Therefore, expert testimony is necessary for purposes of explaining the scope of coverage under the policy. Accordingly, as a result of the woman’s failure to procure appropriate expert testimony to support her claim for negligence and damages, the case was dismissed.

This case illustrates the importance of expert testimony with respect to litigation against insurance agents for alleged professional negligence. Agents are insurance professionals, and as professionals, it is necessary that appropriate opinions by other professionals be considered in determining whether or not a particular agent has violated the applicable standard of care.