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Insurance company called to task, settles bad-faith claim

An insurance case from Pennsylvania is broadly relevant in Minnesota and throughout the rest of the county for highlighting the behavior that insurance companies sometimes engage in when they face litigation and claims for payment.

A young man in that state was badly injured in a 2003 car accident when the driver of the car in which he was a passenger -- his brother -- lost control and hit a utility pole. The man, now in his 20s, suffers lifelong mental and physical impairments.

Following the accident, he sued his brother. He was awarded a $15.6 million verdict following a trial on damages.

In a separate action, the boy’s family commenced a bad faith case against the family’s insurer, Erie Insurance Exchange, for failing to settle the claim, which was termed “grossly underinsured,” with a $100,000 limit for bodily injury.

An attorney in the matter stated recently that “any reasonable insurance professional would conclude that the value of [the claim] far exceeded the $100,000 policy.”

Instead of settling, the insurer allegedly stalled, failing to offer a settlement figure even after reportedly receiving the relevant medical records regarding the claim. When an offer was eventually made, the young man’s attorney challenged it on the ground that it was unreasonable for requiring a release of all claims against the company as a prerequisite to payment. The company was also noted as claiming that punitive damages could not be filed against it, since the bad-faith claim was tardily commenced, following expiration of the state’s relevant statute of limitation.

Reportedly, the bad-faith case was recently settled, with the insurer agreeing to pay a stunning $18 million to close the matter.

The case calls attention to the need for a knowledgeable and aggressive plaintiffs’ insurance attorney to challenge insurers in matters where bad faith -- for example, denied or delayed payments on legitimate claims, underinsuring and similar actions -- is an obvious issue.

“Left to their own devices,” profit-motive-driven insurance companies often don’t do the right thing,” say one commentator on the Pennsylvania case.

Source: The Pennsylvania Record, "Plaintiff's attorney secures $18 million settlement in insurance bad faith case stemming from car wreck," Jon Campisi, Jan. 3, 2014

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