• Insurance: Simple Errors Fuel Bad Faith Verdicts
  • September 13, 2006 | Authors: Joan N. D'Ambrosio; Savannah Sellman
  • Law Firm: Duane Morris LLP - San Francisco Office
  • Insurance companies may not be able to avoid bad faith lawsuits; however, they cannot underestimate the importance of witness preparation when defending claims brought against them. This was affirmed in the March 2006 verdict in Stephen P. Jurinko and Cynthia Jurinko, h/w as Assignees of Paul G. Marcincin, v. The Medical Protective Co., where the U.S. District Court for the Eastern District of Pennsylvania awarded $7.9 million in a bad faith case against MedPro, including $6.25 million in punitive damages. The case arose from a medical malpractice action that resulted in an excess of policy limits verdict.

     

    The plaintiffs alleged that MedPro acted in bad faith when it (1) failed to tender policy limits to settle the claim and (2) assigned one lawyer for two physicians, thus preventing him from vigorously defending each physician.

     

    In finding bad faith, the court relied on a MedPro employee’s testimony that he assigned one lawyer for both doctors despite knowing that doing so created a conflict of interest. He also testified that he assigned a single lawyer to represent both doctors to “save money” and admitted to unfair gamesmanship in negotiating tactics. However, in reality, the lawyer was appointed simply to file an answer to the pleadings. At the trial, the doctors had separate counsel.

     

    Review of the briefs and pleadings indicates that MedPro did not act in bad faith, that its tactics were consistent with industry practices and that the court’s finding is attributable to the employee’s testimony, which could have been rectified by vigorous deposition and trial preparation. Proactive training of claims personnel and the allocation of attention and resources to other risk management practices, as well as proper preparation during litigation, can help insurance companies avoid situations such as Jurinko.