Lawmakers as well as the courts have taken seriously the responsibility of insurance companies to treat insureds fairly and to promptly compensate injured parties for reasonable expenses related to covered incidents. When insurance companies fail, it’s called “bad faith.”
Bad faith insurance claims can result in verdicts that far exceed the original coverage limit. Still, these findings are increasingly common because insurance companies are seemingly always looking for ways to minimize liability. So they delay or outright deny claims or push outrageously low settlements on people who paid for coverage.
Recently in Pennsylvania, a settlement agreement has reportedly resulted in the largest-ever bad faith insurance payout in the state’s history, according to The Legal Intelligencer. The case of Hennessy v. Allstate Insurance resulted in a $22 million payment, where a jury had previously found the auto accident victim’s damages to top $19 million. The original policy limit was $250,000.
Our bad faith insurance lawyers note this third-party claim was brought by a man who was a passenger in a car driven by the company’s insured in the summer of 2005. The driver rear-ended another vehicle, which resulted in the first car stalling in the middle of the road. As the passenger was pushing the car off the side of the road, a third vehicle rear-ended the second vehicle, causing it to spin to the side and crush the plaintiff.
As a result, the plaintiff, a young man, was forced to undergo an above-the-knee amputation of one of his legs. His job prospects have been severely limited. He has phantom pain. He is unable to walk properly. All of these issues, his attorneys say, are likely to plague him the rest of his life.
Plaintiff filed suit against the driver of the first and third vehicles. The driver of the first vehicle was found 45 percent negligent, while the third driver was found 55 percent negligent. The third driver never responded to the lawsuit, and a default judgment was entered against him. Due to that state’s joint severability laws, the first driver was held responsible for the entire $19 million in damages.
On appeal, the driver argued he shouldn’t be held responsible for the amputation, as that was a direct result of the third crash. However, the court found the proximate cause of the plaintiff’s injury was the first crash, which consequently caused the second and third collisions. This chain of events meant defendant wasn’t relieved of liability.
The bad faith claim arose because the defendant’s auto insurance company refused to pay the full policy limit of $250,000 in coverage to plaintiff. Although the $19 million judgment was against the defendant directly, he assigned his rights against the company for indemnification over to the plaintiff.
The settlement agreement encompasses that $19 million, as well as another $3 million for the delay in damages plus interest.
Plaintiff’s attorney called the litigation “protracted,” but persistence ultimately paid off, adding the agreement was a testament to what can be accomplished through civil law when there is a grave injustice.
If you have been injured in an accident, contact the Hollander Law Firm at (888) 751-7770 for a free and confidential consultation. There is no fee unless we win.
$22 Mil. Settlement Reached in Allstate Bad-Faith Case, Sept. 30, 2014, By P.J. D’Annunzio, The Legal Intelligencer
More Blog Entries:
Ambiguous Insurance Policies Construed in Favor of Insured, Sept. 13, 2014, Boca Raton Car Accident Lawyer Blog