INJURY LAW BLOG

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Medical malpractice judgment can generate a bad faith lawsuit

Posted by Smiley & Smiley on Nov 18, 2015 7:58:07 AM

An insurance company generally has a duty to act in good faith with respect to paying claims on behalf of its insured customer. When a company acts in bad faith in rejecting unjustifiably a reasonable and clearly supported demand amount, it may later be sued and held responsible for the full amount of the injured person's damages, irrespective of the policy limits. These general concepts are applicable in New York and other states, and they apply to medical malpractice cases as well as other injury and damages claims.

That was the scenario that played out in another state regarding the negligent delivery of a baby in 2004, which resulted in severe brain damage and death three years later. A jury recently awarded the child's estate $14.3 million, which includes $13 million in punitive damages. The jury was sitting in a case that the parents had filed against the insurance company that insured the doctors who performed the delivery.

In earlier proceedings, the hospital and certain technicians had settled for $1.5 million. The original malpractice lawsuit filed against the two obstetricians had resulted in a 2009 Cook County jury verdict of $6.17 million against the two doctors. The insurance company, ISMIE, had policy limits of $3 million for the death and $2 million for the mother's injury claim, but paid only $3.3 million of the verdict.

The parents pursued a common procedure in bad faith insurance claims by securing by assignment the rights of the insured doctors against the insurance company.  The parents proved in the bad faith case that the insurance company turned down an offer that would have protected the doctors from such a steep financial exposure in the medical malpractice case; moreover, it was found that they lied to the doctors regarding the amount of insurance coverage applicable to the claims. Therefore, the bad faith suit alleged that the insurer violated its duty to negotiate in good faith on behalf of its insured doctors. This procedure is generally applicable in New York as well as other states.

Source: Chicago Tribune, "Jury decides insurer should pay $14.3 million in medical malpractice case", Ameet Sachdev, Nov. 11, 2015

Topics: Medical Malpractice

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