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Insurance Company Taken to Task for Poor Handling Claims

It is well settled under Louisiana law that insurers owe a duty of “good faith and fair dealing” to their customers. Each insurance company is required to adjust claims in a fair and prompt manner and to make reasonable efforts to settle claims when possible. La. R.S. 22:1973 establishes that damages may be awarded against an insurance company that fails to meet this duty. One category of wrongdoing includes:

“Failing to pay the amount of any claim due any person insured by the contract within sixty days after receipt of satisfactory proof of loss from the claimant when such failure is arbitrary, capricious, or without probable cause.”

The statute also permits a wronged insured to collect penalties from the insurer “in an amount not to exceed two times the damages sustained or five thousand dollars, whichever is greater.” The purpose of this law is to discourage insurers from failing to live up to the promises they make to their customers in their insurance policies and for which the customers pay premiums.

On October 27, 2004, Carl Guidry and his granddaughter were driving in Guidry’s pickup truck. They were rear-ended by Amber Guidry (no relation) and Guidry’s truck was knocked forward. Guidry suffered from neck and back pain following the accident. Two weeks later, on November 11, 2004, Guidry and his granddaughter were again rear-ended while driving in Guidry’s truck, this time by an SUV driven by Evelyn Smith. Guidry experienced further neck and back pain, as well as shoulder pain, after the second collision. Guidry sued both Amber Guidry and Evelyn Smith, and also sued his own uninsured/underinsured motorist (UM) carrier, Progressive. Guidry settled with Amber Guidry’s insurance carrier in the first accident for the policy limits of $10,000. At trial, the jury found that Guidry did not suffer damages in the first accident, but found that he did suffer damages in the second accident; they jury awarded Guidry medical expenses in the amount of $19,860 and general damages of $10,000. The jury also found that Progressive had been “arbitrary and capricious” in handling Guidry’s claims for general damages and medical expenses from both accidents; specifically, Progressive never tendered any money to Guidry for either claim. Accordingly, it awarded Guidry $50,000 for Progressive’s breach of duty and $10,000 in attorney fees. Then the trial judge awarded Guidry $100,000 in statutory penalties against Progressive.

Progressive appealed the penalty award to the Third Circuit. The court upheld the award after a review of Progressive’s handling of Guidry’s claims. Progressive admitted receiving proper notice of Guidry’s accidents in September, 2006 but disputed that Guidry could establish the amount of his damages. The general rule for UM carriers is that if the insured can show that “he was not at fault, that the other driver was uninsured or underinsured, and that he was in fact damaged,” the UM insurer cannot avoid liability just because the insured is unable to prove the exact extent of his general damages. Instead, the insurer “must tender the reasonable amount due as a sign of its good faith and its willingness to comply with the duties imposed upon it under the insurance policy.” See McDill v. Utica Mut. Ins. Co. The tendered amount would not be to settle the case, but to show good faith. Once the good-faith tender is made, the insurer must take “substantive and affirmative steps” evaluate the claim. In this case, Progressive opened its claim file in September, 2006 but did not depose Guidry’s treating physician and orthopedist until June, 2008–nearly two years later. It failed to pay Guidy any money towards the $3,500 in costs to repair his truck. Also, Progressive failed to tender any of the medical payment coverage ($5,000 per accident) included in Guidry’s policy, even though it ample evidence that injuries had resulted from the second accident. Guidry finally had shoulder surgery some four years after the second accident to relieve his debilitating pain, which was paid for by Medicare. Thus, the court concluded that “the jury was not unreasonable in finding that Progressive breached its duty to Mr. Guidry by failing to pay the amount of any claim within sixty days and by failing in its duty to timely investigate the accidents.”

What should have been a simple resolution for Mr. Guidry turned into a four-year-long nightmare of shoulder pain because his insurance carrier mishandled and delayed the payment he was entitled to receive under his policy. This case shows the value of an experienced accident attorney who can advocate on behalf of an injured victim.

If you have been injured, don’t accept the run-around from an insurance company. Contact the Berniard Firm today at 1-866-574-8005 to obtain the recovery you deserve.