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$14.3 million against insurer who lied on brain injuries claim

Delaware and all other states recognize a claim against an insurer for bad faith in handling an insurance claim. A jury in another state recently entered a verdict of $14.3 million against an insurance company and in favor of the parents of a deceased 3-year-old daughter. The parents had brought a medical malpractice suit against the negligent obstetricians, claiming that they caused the brain injuries that ultimately killed the girl. Although the original suit was against the doctors and the hospital, a later procedural twist made the parents in effect the plaintiffs against the doctors' insurance company on a claim of bad faith.

The original medical negligence suit resulted in a $6.2 million jury verdict in May 2009 against the two obstetricians. It was determined that the doctors were negligent in delivering the baby, and thus liable to the parents for the medical malpractice damages award. However, the insurance company for the doctors paid less than $4 million of its $5 million policy limits.

The parents learned that the insurance company was deceptive to the doctors as to just how much coverage was available. The company also failed to advise the doctors that the parents would have accepted less than $5 million at one time. The doctors were left with a more than $1 million bill owed to the parents due to the deception and fraud of their insurer.

As often happens in Delaware and other states in such cases, instead of trying to collect the balance from the doctors, the parents took an assignment of the doctors' rights against the insurance company for bad faith handling of the claim of brain injuries. The jury agreed that the insurance company acted improperly and in bad faith, and in violation of its fiduciary duty to its insured. The verdict included $13 million for punitive damages and over $1 million for the remainder of the insurer's liability owed to the parents. Interestingly, because the verdict is a bad faith insurance case, it is not subject to the statutory limits on a malpractice recovery in that state.

Source: cookcountyrecordlocm, "Jury orders ISMIE to pay $14.3 million for 'bad faith' in representing doctors sued for child's death", Jonathan Bilyk, Nov. 16, 2015

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