Atlantic received the forwarded letter on June 2, 2015 and assigned the case to claims adjuster Barbara McConnell that same day.

Ms. McConnell's claim file notes from June 3-4 confirmed that Atlantic considered Mr. Netto's claim to be a possible uninsured motorist (“UM”) claim. The notes indicated that Atlantic contacted a county representative to discuss Mr. Netto's potential claim. Ms. McConnell subsequently admitted in a deposition that no one from Atlantic gave Mr. Netto any information regarding the policy.

Mr. Netto reached a settlement with the at-fault driver and the Mississippi Workers' Compensation Trust, which the Mississippi Workers' Compensation Commission approved.

Thereafter, Mr. Netto's counsel, having learned that Atlantic was the county's insurer through an unrelated suit, sent a second letter directly to Atlantic through its website. That letter informed Atlantic of the settlement and raised a possible claim:

The policy limits have been collected from the at-fault driver, and we intend to make a UM claim. Currently there are two (2) possible UM policies at issue – the county's and Mr. Netto's GEICO policy. I believe the first step is to determine whether Mr. Netto is eligible to make a claim under the county UM policy, pending the policy language, since he was a passenger in a county owned truck and has a worker's compensation claim.

Considering the foregoing, I ask that you assign an adjuster to this claim and provide the relevant policy documents so that we can determine which UM carrier is primary.

More than a year passed without a response from Atlantic. Mr. Netto and his wife filed suit, seeking damages under the uninsured motorist policy Atlantic had issued to the county.

Atlantic moved for summary judgment, arguing that Mr. Netto was excluded from coverage due to his failure to obtain Atlantic's consent before settling.

The U.S. District Court for the Southern District of Mississippi denied the motion, holding that Atlantic had “not provided summary judgment evidence demonstrating Plaintiffs possessed actual knowledge of the provisions of the subject insurance policy or the identity of Pearl River County's insurer prior to the July 21, 2015 settlement.”

Atlantic appealed to the Fifth Circuit.

The Fifth Circuit's Decision

The Fifth Circuit affirmed.

In its decision, the circuit court explained that although the consent-to-settle exclusion in Atlantic's uninsured motorist insurance policy “would bar recovery” under applicable Mississippi law if Mr. Netto were a named insured, the Mississippi Supreme Court had never considered the enforceability of the exclusion against an unnamed additional insured.

The circuit court then ruled that, to rely on the exclusion, an insurer must show that the unnamed additional insured “knew or should have known” of the insurance policy at issue and of the consent-to-settle provision.

The Fifth Circuit added that an insurer could make such a showing “by introducing evidence that it made reasonable efforts to inform the unnamed additional insured of the policy terms, or that the unnamed additional insured had access to a copy of the policy.” It observed that there “certainly may be other forms of evidence.”

The Fifth Circuit concluded by observing that there was “no evidence” that Atlantic had attempted to inform Mr. Netto of the policy terms and, indeed, that there was testimony that the policy was not released to county employees as a matter of county policy.

The case is Netto v. Atlantic Specialty Ins. Co., No. 18-60588 (5th Cir. July 2, 2019).