For accident victims who have suffered severe injuries, or even wrongful death, as the result of actions or mistakes of another, claims are made against those responsible and usually they have insurance policies that apply to the situation. In fact, there may be several different insurance companies who are providing coverage in the case – especially when there are several defendants involved (e.g., first party, third party, excess).
It’s no surprise to many that there will be times when an insurance company does not act fairly in handling an accident claim. Accident victims will be dealing with savvy professionals who are trained and experienced not only in minimizing liability but trying to negate responsibility on the part of their policyholder if they can find a way to do so.
There are laws on the books of both Indiana and Illinois as well as other states that require these insurance companies to act “in good faith,” but that does not mean that they always do so. When they don’t, those bad actions can sometimes form a separate legal case of their own.
Consider the following:
1. November 2015: $14.3 Million Judgment Against Insurance Company for Bad Faith Failure to Settle
Last fall, the biggest insurer for doctors’ medical malpractice in the state of Illinois was found after a full jury trial to have acted in bad faith in the failure to settle a medical negligence case over in Skokie. In the case, the parents of a baby born with serious and permanent brain damage filed a lawsuit against Rush North Shore Hospital in Skokie, as well as the Emergency Room doctors that treated their infant child and the baby’s obstetricians.
They sued for medical malpractice, arguing that their baby daughter was born with severe brain damage because of oxygen deprivation. Their daughter passed away at the age of three years old.
The hospital and the Emergency Room doctors settled with the parents. After the settlement was finalized, they were out of the case, leaving only the obstetricians as parties left to answer for their actions.
These doctors had medical malpractice coverage with Illinois’ most popular medical malpractice insurance company, ISMIE Mutual Insurance. They would not settle and the case went to trial before a jury. The jury awarded them $6.17 Million against the obstetricians. The obstetricians’ malpractice policy limits were $3 Million for death and $2 Million for the mother’s injuries, and after things were paid out the parents were still owed over $1 Million under the judgment.
So they sued the medical malpractice insurance company for acting in bad faith in failing to settle the case before trial. They argued that the insurer breached its duty to act in good faith insofar as limiting the obstetricians’ risk of being liable financially on a jury’s judgment.
How? The parents argued that to protect its bottom line, the insurance company was not forthright with the parents about the amount of coverage available under the company’s policy for wrongful death and that a settlement offer had been concealed by the company.
The bad faith insurance case also went to a jury, and in November 2015, that Cook County jury found ISMIE Mutual Insurance, should pay $14.3 Million to the plaintiffs, a total judgment that included the awarding of punitive, or punishment, damages to the parents.
And this was no fly by night insurance company. This 2015 bad faith verdict came down against the top provider of medical malpractice insurance in the State of Illinois.
2. June 2016: $5.8 Million Auto Accident Insurance Bad Faith Award Against Nationwide Mutual Insurance Company
Bad faith cases can result out of all sorts of accident cases, not just medical malpractice. For instance, Nationwide Mutual Insurance Company was sued in federal court for acting in bad faith on a fatal car crash claim.
What happened here? In that case, a commercial van ran a red light and slammed into a Toyota driven by a young mother with her little 2-year-old boy as her sole passenger.
The crash killed the mother; thankfully, the baby survived.
The grieving husband and his mother-in-law filed a wrongful death case on behalf of his dead wife, after Nationwide rejected their settlement offer (which was for the $100,000 policy limits) stating that the insurance company would pay on the policy only if the plaintiffs would sign a document that stated they would reimburse the insurance company if other claims were made based upon the accident (like for unpaid medical bills).
This wrongful death case went to a jury who awarded the husband and mother-in-law $5.85 Million. The defendant, the man who had run the red light and caused the wreck, signed over his claim to sue his insurance company for bad faith to the husband and mother-in-law, too.
They then filed a bad faith lawsuit against Nationwide Mutual Insurance Company and won, with the jury finding that the insurance carrier had acted in bad faith by denying the claim made for the wrongful death of the young mother, a victim of their insured.
Profits Over People: Insurance Companies Protect the Bottom Line
It’s a sad reality in this country that all too often, accidents are caused by companies (employers, manufacturers, etc.) that put profits over people and allow human beings to be in danger because it’s cheaper to risk an accident than to take the necessary steps to protect them from harm.
However, profits over people can also include the insurance companies who make a profit by providing contracts designed to protect defendants who are negligent and cause harm, or even death, to their accident victims. Bad faith in negotiating settlements and providing coverage for claims does happen in Indiana and Illinois, because the insurers are more interested in keeping their costs at a minimum.
More on insurance companies and bad faith in our next post. Be careful out there!
