In a lawsuit that has been in court since 1998, Nationwide Insurance Company was ordered to pay $18 million in punitive damages to the Plaintiff. The lawsuit, involving faulty repairs to a Pennsylvania family’s vehicle, was based on the bad faith conduct of the insurance company. This is believed to be the largest punitive award ever handed down in Pennsylvania in a lawsuit accusing an insurer of bad faith.
Berks County Judge Jeffrey Sprecher said in his ruling that Nationwide spent $3 million to defend its actions in a claim involving a jeep owned by Sherri Berg. The jeep should have declared a total loss after an accident that occurred in 1996 and replaced by Nationwide for $25,000. Instead of replacing the vehicle, however, Nationwide had the Jeep repaired for half that amount. Those repairs were also faulty and the vehicle was later found to be unsafe.
What was extraordinary about the crash was the epic legal fight that followed. It pitted a father-and-son law firm in Chester County, Pa., against Nationwide Insurance, an industry giant. It was very much like the battle involving “David and Goliath,” as told in God’s word, the Holy Bible.
Rather than replace the Jeep, the judge found that Nationwide had engaged in an extensive cover-up, hiding crash photos and other relevant information from Mrs. Berg and her husband. He said Nationwide followed a written “litigation strategy” that called for it to fight smaller claims tenaciously – even though such a strategy had been previously denounced by Pennsylvania courts as “unethical and unprofessional.” Judge Sprecher concluded his opinion with a caustic list that he said was Nationwide’s message to customers who sued, and to their lawyers. This is what the judge found to be Nationwide’s message and what was said is shocking:
• “Do not mess with us, if you know what is good for you.”
• “You cannot run with the big dogs.”
• “There is no level playing field to be had in your case.”
• “You cannot afford it and what client will pay thousands of dollars to fight this battle?”
• “So we can get away with anything we want to.”
• “You cannot stop us.”
Judge Sprecher, who has served on the bench since 1992, said that “Nationwide was willing to risk the Bergs’ lives to save itself money on a collision claim.” He said the company had bet on the idea that “what Plaintiff, and more importantly, what lawyer in his right mind” would pursue such a case year after year? The judge awarded Benjamin J. Mayerson, the lead lawyer in the case, and his father, Hy Mayerson, $3 million in fees, on top of their share of the punitive award.
Citing the millions spent and the dubious “litigation strategy,” Judge Sprecher found that Nationwide was guilty of bad faith in its handling of a meritorious insurance claim. Sadly, Sherri Berg never knew the family won this victory. She died of cancer at age 62 on April 25, seven weeks before the ruling.
I have to agree with Judge Sprecher’s findings. This is a classic case of an insurance company’s bad faith handling of a claim. Clearly, this is conduct that deserves severe punishment. The two lawyers who hung in there and finally won a tremendous victory for their clients are to be commended. This father and son team deserve a “gold star” for their dedication to their clients and for fighting the good fight for a worthy cause.
Sources: The Philadelphia Inquirer and Claims Journal
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