Erie Insurance Group sought quick ruling on claim

PITTSBURGH, Nov 04, 2008 (Erie Times-News - McClatchy-Tribune Information Services via COMTEX) -- ERIE | Quote | Chart | News | PowerRating -- Erie Insurance Group fast-tracked then-Superior Court Judge Michael T. Joyce's underinsured motorist claim in 2002 so that the company would not lose the benefit of his rulings on one of the state's highest courts.

That was the testimony Monday from Ted Miller, one of the company's lawyers, who took the stand as Joyce's federal trial on mail fraud and money laundering entered its third week.

Miller told jurors that the company did not want to overpay Joyce when he presented an underinsured motorist claim in August 2002, stemming from injuries Joyce said he sustained in an Aug. 10, 2001, collision. But Miller plainly acknowledged that the company believed it was in its best interest to resolve the claim quickly because Joyce was viewed as being more sympathetic to the insurance industry than other state Superior Court judges at the time.

Miller said Joyce was not believed to "be in the pocket of the insurance industry." But he said the judge had authored a key ruling in June 2000 about insurance stacking that was generally perceived as favorable to the insurance industry.

While Joyce's claim was pending, Joyce would have to recuse himself from any cases involving Erie Insurance, Miller said.

That was not a risk the company wanted to take, he said.

"I thought he was more likely than some of the other judges on Superior Court to be sympathetic to the insurance industry," Miller said.

Miller was one of four witnesses to testify Monday as the government nears the end of its case. Assistant U.S. Attorneys Christian Trabold and Christine Sanner are prosecuting the case.

Joyce is accused of falsely claiming he suffered debilitating injuries in the 2001 slow-speed collision at the corner of West 12th Street and Asbury Road in order to collect $440,000 in insurance benefits. The government said as he made the insurance claims to State Farm and Erie Insurance Group, he continued to exercise and take on activities, such as flight school, that revealed his mental competence. It says he falsely led insurers to believe that the crash stymied his hopes of becoming a state Supreme Court justice.

It is seeking the forfeiture of items he bought with the insurance proceeds, including his Millcreek Township home and a Harley-Davidson motorcycle.

The defense claims that the accident aggravated a pre-existing condition that stemmed from a 1992 surgery to the vertebrae in his neck.

Also testifying Monday for the government were two neurosurgeons who said they did not find objective evidence of new injury to chronic problems Joyce suffered in connection with the 1992 surgery.

One of the charging agents in the case, Kelly Smith of the FBI, testified at length, presenting to jurors a stack of records that revealed Joyce's activities -- golfing, scuba diving, exercising and in-line skating -- at the time he claimed debilitating injuries.

Miller, a lawyer with Erie Insurance for 16 years, said he normally has nothing to do with claims adjusting.

He said he became involved in Joyce's case at Happy Hour on a Friday night in August 2002 at Outriggers, a waterfront tavern that has since been demolished.

Miller told jurors he was drinking a beer with a lawyer friend when Joyce, someone he has known for decades, approached them. Miller said somewhere amid the small talk, Joyce brought up the fact that he had an underinsured motorist claim pending against Erie Insurance.

Miller said the conversation lasted only minutes.

A few days later, Miller said he received a packet of information in the mail from Joyce.

The judge wrote a note on notepaper with the Superior Court emblem at the top. Joyce wrote to Miller that he was forwarding information regarding his claim that Miller had requested.

Miller said he had no recollection of requesting anything from Joyce.

The next morning, Miller told jurors, he wrote a memo to his boss, Jan Van Gorder, the company's chief counsel.

Miller told Van Gorder that Joyce had approached him at Outriggers and talked to him about his claim and then, unsolicited, sent Miller material about the claim.

Miller told Van Gorder that he did not remember asking Joyce to send him anything. He said he did remember saying something to Joyce about the fact that Joyce would have to recuse himself from Erie Insurance cases as the claim was pending.

He concluded his note to Van Gorder with the following: "I don't think recusal would be in Erie's best interest, particularly if it could go on for two or three years. On the other hand, we cannot otherwise pay a claim or inflate a particular payment simply because Judge Joyce is a claimant. However, I do think there is something to be said for having the resolution of this claim expedited. Perhaps, the Erie branch should be asked to have Ron Habursky handle this file so that it could be resolved as soon as possible. I thought I should pass this on to you and I leave it in your good judgment as to how to proceed."

Miller said the morning after he sent the note to Van Gorder, he met with Van Gorder and Gary Veshecco, the assistant chief counsel at Erie Insurance. The three decided to have Habursky, a litigation specialist, handle Joyce's claim.

Miller said the company was satisfied with the $390,000 settlement Habursky reached with Joyce.

When Joyce was indicted, Erie Insurance hired an independent group to analyze Erie Insurance's handling of Joyce's claim, he said.

The investigation determined the handling was proper, Miller said.

"I was happy with it," he said.

LISA THOMPSON can be reached at 870-1802 or by e-mail.

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