It is not surprising when an insurer refuses to pay a covered claim. It is surprising when an insurer gets hit with a court order to pay millions for bad faith denial of a customer’s claim. And it is even more surprising when a federal appellate court upholds that order, as the 11th Circuit Court of Appeals did on July 7, 2017.   http://media.ca11.uscourts.gov/opinions/unpub/files/201614225.pdf

The case arises out of a 2005 automobile accident that occurred when a Nationwide insured driver ran a red light, killing a young mother who was driving the car he hit. After the accident, Nationwide’s insured pleaded guilty to vehicular homicide.

Nationwide had the opportunity to settle the wrongful death and estate claims of the mother’s surviving family members for the $100,000 policy limits and certain releases. Nationwide would only agree to settle if the family agree to indemnify Nationwide for any other claims or payments sought under the Nationwide policy. The family refused and filed a wrongful death case in Georgia state court against the insured driver. A jury awarded the family $5.83 million in wrongful death damages. After the verdict, the insured driver assigned to the family his right to bring a claim against Nationwide for bad faith failure to settle.

The family filed suit against Nationwide in Georgia federal court. The parties agreed that a jury would determine liability, leaving the determination of damages to the judge. Nationwide argued that it was unfairly “set up” for bad faith and that that there is no tort of bad faith denial of insurance claim. The jury found Nationwide liable for negligent or bad faith failure to settle the claims made by the family against Nationwide’s insured. The district judge then ordered Nationwide to pay the family $5,730,000 in damages, plus interest of, at that time, $2,405,873. Nationwide appealed and lost.

Nationwide has litigated this case for 12 years. Isn’t it about time to pay Nationwide?

The case is Jesus Camacho, et al. v. Nationwide Mutual Insurance Co., Case No. 16-14225.