Insurance Companies and Their Mistaken View of a Major Injury Case

This is the second in a series of blogs regarding a federal case going on now between an excess insurer and a primary insurer. I have had a very close vantage point in this trial. The reason is because I was successful in trying the underlying case and now the excess insurer is saying to the primary insurer, ” Why didn’t you settle within the policy limits when you could have?” As the first witness to testify in this battle between the two insurers, I like to think I have a lot of insight as to why it turned out that the case did not settle. One of the ways in which I feel informed is that I have now seen the documents that were exchanged between the two insurers and within each insurance company. What do the documents tell us about the minds of the insurance companies? Well, they focus on the plaintiff’s counsel (that would be me) on the appearance that I make and on the plaintiff and the appearance and tone that he was expected to make. We knew that and we expected that.

But I don’t mind speaking frankly. It seems that these documents just fill the need to comply with a reporting requirement of an insurance company. There are regular reports, known as “Litigation Status Reports.” Very interestingly new developments in the case do not necessarily get included in these litigation documents. Mistakes were made by the insurance companies. Gross misperceptions of what could go on at the trial were made in these reports.

I have described this case as one that fell through the cracks of the insurance company. Certainly sound claims practice would have revealed how strong of a case that I had. Between what was paid to my client and what the insurers are spending in the subsequent lawsuit between them, I would say the 10 million dollars have been spent.

One of the most telling things – even though their checklist included references to how the plaintiff will appear, how the defendant will appear- is a complete and total absence of a serious, unvarnished consideration of how the various parties will really play before a jury.

In this case, my client was entirely believable and, in my view, the defendants were totally unbelievable. Nevertheless, the insurance company ignored that and instead relied on a standard in the industry which seemed to put an obligation on my client to check the apparatus that he was working on. (He did check gauges on the machinery by the way, just not to the extent the defense expert contended that he should have.) Consequently, the insurance company for the defendant failed to see how their insured could ever be held liable.

Theirs (the insurers’) was a fundamental misunderstanding of what would happen in a 6 day trial. It ignored the credibility issues that would come to play in the trial. After all, isn’t that what trials are about: witnesses are subject to cross-examination, their demeanor on the witness stand is evaluated, and a factfinder becomes very capable at determining who is telling the truth and who is not.

To my shock, the defense lawyer and the insurance company felt, as I learned by reading their internal memos, had said that even if a jury were to believe the plaintiff -in other words, even if the jury thought that the plaintiff was lied to- the jury would still feel that my client was the professional and therefore was responsible for his acts. Let’s ponder that for a second. If someone is lying -the defendant’s witnesses- the insurance company expected a jury to find for the liars! This is completely oblivious to what goes on in the real world and in a courtroom. The courtroom is, to a large extent, the real world.

I find it incredible. With all these binders of documents not one person in two insurance companies questioned what a jury would do if the defendant’s witnesses were thought of as liars. The thick binders of documents from the primary insurer and from the excess insurer show that no one considered how the case could turn out when it was subjected to the hurly burly of litigation. All the assessments from experienced insurance claims people and their lawyers failed to take into account the most important thing, how each side would present themselves and the effect of credibility in the courtroom. There was no mention of what could happen if my client were to be believed and their client was not to be believed. The result is that they are paying 10 million dollars.