Schaeffer v. Allstate Insurance Co

Franklin County Court of Common Pleas; Tenth Appellate District; Supreme Court of Ohio

Palmer's efforts lead the Ohio Supreme Court to rule that "binding arbitration" for one party and "non-binding" arbitration for another is unconscionable which changes Ohio uninsured motorist insurance laws to protect consumers.

In a collision caused by the negligence of an uninsured motorist, Jeanette Schaefer suffered a serious and permanent brain injury. Jeanette Schaefer and her husband, David, had an automobile insurance policy with Allstate that provided uninsured motorist coverage with limits of $100,000 per person and $300,000 per occurrence. A dispute over whether Jeanette Schaefer's condition resulted from the accident or an earlier head injury due to a fall led to an arbitration hearing where the panel found that there was not enough evidence to support the brain injury claim. However, David Schaefer received $500 and Jeanette Schaefer received $1,500 for other injuries. According to provisions of their policy, any arbitration award that does not exceed $12,500, the limits of Ohio's financial responsibility law, is binding. The Ohio Supreme Court eventually ruled that the arbitration provision was unfair and "unconscionable" because it could be binding for policyholders, but nonbinding for Allstate. According to the court, the arbitration provision went against public policy by "impeding, rather than facilitating, the prompt administration of justice." A jury later awarded each of the Schaeffers the maximum of $100,000 provided under the policy.