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Not their fault? Insurer appeals $18 million bad faith verdict p2

Fri Aug 1st, 2014 on     Bad Faith Insurance,    

We are talking about a bad faith case against Nationwide Mutual Insurance Co. The policyholders won the most recent round in the years-long litigation, with the court ordering Nationwide to pay $18 million in punitive damages. Nationwide is appealing that decision.

This case was from Pennsylvania, not Florida, and punitive damages are usually a matter of state law. The good news is that the standards do not differ much from state to state. In this case, the court asked itself if Nationwide had deliberately delayed the litigation or had consciously disregarded the potential harm to the policyholders that delays would cause. In essence, the court’s determination hinged on whether Nationwide was indifferent to the risks of delay.

Most of us are familiar with the idea of inundating an opposing party in a lawsuit with motions and discovery requests, burying the other guy in paper. Generally — well, in the movies, at least — these are David versus Goliath cases, lawsuits that pit the “little guy” consumer against a big corporation, lawsuits in which one party has vast resources and the other very little. The tactic is to delay, delay, delay until the little guy runs out of cash and finally drops the matter.

Those cases would be examples of bad faith. The delays harm the little guy (often the plaintiff) by consuming all of his resources. What people may not realize is that the delay costs the court system, too.

The law — or The Law, as a friend would have it — highly values “judicial economy.” The idea is that the courts will strive to resolve issues quickly and efficiently without in any way impeding justice (or Justice). The responsibility is not the courts’ alone, though. Attorneys must also promote judicial economy. Unnecessary delays and stalling tactics fly in the face of judicial economy, and judges take the issue seriously.

So, harm to the client and defiance of the principle of judicial economy are often the main ingredients of a punitive damages award.

We’ll continue this in our next post.

Source: Insurance Journal, “Penn. Family Awarded $18M in Bad Faith Suit Against Nationwide,” July 14, 2014 

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