Liberty Mutual Ins. Co. v. Schwanenberg

Under ORS 656.583(1), an insurer must inform a claimant about a potential conflict of interest.

Petitioner Liberty Mutual Insurance Company (Liberty) sought review of the Workers’ Compensation Board’s (Board) judgment which voided Claimant Christine Schwanenberg's (Schwanenberg) assignment to Liberty for 3rd party negligence damages. Schwanenberg's husband died in a work-related helicopter crash. Liberty gave Schwanenberg 60 days to decide whether to assign any 3rd-party negligence damages to Liberty. Before the 60 days had expired, Liberty sued multiple third parties for negligence; however, Liberty did not sue Columbia Helicopters (Columbia), the company who had designed the helicopter that crashed. Schwanenberg asked the Board to void Liberty's entire claim. The Board granted Schwanenberg's request holding that Liberty's letter was void because Liberty failed to tell Schwanenberg that Columbia was insured by Liberty. The Court of Appeals upheld the Board's decision stating that Liberty's failure to inform Schwanenberg about Columbia's client status was a material omission. Affirmed.