Five months after reaching a confidential settlement with comedian Tracy Morgan over the 2014 crash on the New Jersey Turnpike that seriously injured the “Saturday Night Live” star, Wal-Mart is claiming some of its insurers are refusing to pay. Wal-Mart filed suit in a federal court in New Jersey, saying the insurers “in bad faith refused to consent to the settlements and have refused to pay their portions” under existing policies. This comes after Liberty Insurance Underwriters and Ohio Casualty Insurance filed their own suit in Middlesex County in October, claiming the terms of the confidential settlement were unreasonable and questioning whether Wal-Mart agreed to a “high amount” to avoid punitive damages that would have fallen solely on the company.
The Morgan accident received a tremendous amount of media attention because of his star status. Morgan, who was returning home on the turnpike after a performance in Delaware, was seriously injured with two others on June 7, 2014 when a Wal-Mart truck driven by Kevin Roper struck their limo van from behind. The crash killed fellow comedian James McNair, who performed under the name of Jimmy Mack, and set off a chain-reaction collision that eventually involved six vehicles and 21 people. The National Transportation Safety Board (NTSB) in August blamed driver fatigue for the crash, which occurred in a construction work zone.
NTSB officials found Roper had not slept for more than 28 hours prior to the accident. He drove 800 miles overnight from his home in Georgia to a Wal-Mart distribution center in Delaware. Roper then got behind the wheel of the Wal-Mart truck. The board said that Roper had been traveling 20 mph over the posted 45 mph speed limit and did not slow down until it was too late to avoid the crash.
Wal-Mart agreed in May to settle a lawsuit brought by Morgan and others in the van. The terms and conditions of the settlement were kept confidential. Wal-Mart, in its filing in federal court in Newark, said while some of its insurers met their obligations to cover their share of the amount of the settlement, others have not. The retailing giant said those insurers, including Liberty Insurance Underwriters and Ohio Casualty Insurance, have “refused to pay their portions of the settlements under the insurance policies they sold to Wal-Mart in Arkansas.”
Wal-Mart said it has already paid out the settlement to Morgan and the others. Liberty and Ohio Casualty, a Liberty Mutual subsidiary, claimed In the Middlesex County lawsuit that Wal-Mart agreed to a settlement without any attempt to negotiate. The insurers also said they were not consulted before a settlement agreement was reached. They “declined to reimburse Wal-Mart for the settlement” because the amount was alleged to be unreasonable and reached prematurely, before Wal-Mart’s liability was determined. A spokesman for Wal-Mart said:
The company (Wal-Mart) took full responsibility for the tragic accident and did what was right to ensure the well-being of those who were impacted. We funded the settlement agreements in full, but some of the insurance carriers have failed to pay their portion of the settlement amount.
I must admit that Wal-Mart may have caused itself a problem by settling in the manner described above if the insurers’ version is correct. Randy Hargrove, director of national media relations for the company, said Wal-Mart has had umbrella liability coverages for decades and paid premiums for years. He added:
This lawsuit is about the defendant insurance companies not living up to the requirements of their own policies. This is no different than any individual who holds an insurance policy, makes a claim for a covered loss, and then is told by the insurance company that despite the existence of coverage, they don’t intend to pay.
Having dealt with both Wal-Mart and numerous insurance companies in litigation for decades, I find it hard to be sympathetic to either side in this coverage dispute. I do feel for the victims of the crash, however, and want them to be fully protected and insulated from the dispute. They deserved to be adequately compensated and Wal-Mart needs to do a better job with its drivers from a safety perspective. The crash in this case happened because a driver, who never should have been allowed to drive the Wal-Mart truck, was obviously short on sleep and was fatigued.
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