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Jury Awards $3.8 Million Against Insurer

A Jefferson County jury awarded $3.8 Million to a Paducah woman for an insurer’s unreasonable delay in settling her medical malpractice claim against a doctor who had performed an unorthodox surgical procedure he described as a “modified abdominoplasty” at Lourdes Hospital in July of 2003.  The surgery on Deborah Daniels, a respiratory therapist, resulted in life-threatening complications requiring multiple and extended hospital stays.  She brought suit against the surgeon, Dr. David Grimes, in June of 2004.  By May of 2005 her doctor reported she would never be able to work again.

Although the insurer had information indicating that Dr. Grimes’ liability for Daniels’ injuries was reasonably clear, American Physicians Assurance Corporation made no meaningful attempt to settle Daniels’ claim until July and August of 2006.  Even after their own board-certified medical consultant told them that Dr. Grimes surgery was “inexcusable and indefensible,” they continued to delay settlement efforts and offered only $75,000 to settle the case at a court ordered mediation. 

These delays left Daniels destitute and under severe financial stress.  Ms. Daniels testified that the day of mediation made her feel like her entire life and 20 year career were worth nothing in the eyes of the insurer.  The financial and emotional stress, and AP’s threat to void coverage, compelled her to settle her claim against Dr. Grimes for significantly less than the policy limit of $1 Million. 

After settling the claim against the doctor, Daniels brought suit directly against American Physicians alleging that its delay in settling the claim and its refusal to pay a fair sum for her injuries violated the Kentucky Unfair Claims Settlement Practices Act.  Her Louisville attorney, Hans Poppe , foresaw that he would need to be a witness at trial.  Therefore he sought out attorneys specializing in “insurance bad faith” litigation.  He hired the Friedman | Rubin firm with offices in Alaska and Washington. 

According to attorney Ken Friedman who tried the case, “AP Assurance said they did nothing wrong or unusual in this case and that every claim was handled in this same manner.”  Friedman continued, “I don’t think they realized until the end of trial that it was their ‘business as usual’ tactics that were on trial in this case.” 

The jury heard evidence that the claims adjusters were given financial targets to pay less in claims to injured patients in 2006 and adjusters had goals to push more claims to trial rather than settlement.  The jury awarded Daniels $350,000 compensatory damages and $3,479,277 in punitive damages. 

Friedman said “the jury deserves a lot of credit for analyzing a complicated set of facts and understanding what went wrong, and why.  They also deserve credit for rendering a verdict that will send a message to all insurers in Kentucky that they have serious obligations to make a good faith effort to pay valid claims promptly and fairly.” 

The jury wanted the company to get the message — the punitive award was the exact sum that the claims adjuster was told to cut from her block of claims in 2006.

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