{"id":895972,"date":"2019-06-05T12:25:06","date_gmt":"2019-06-05T18:25:06","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=895972"},"modified":"2019-06-05T12:25:22","modified_gmt":"2019-06-05T18:25:22","slug":"jury-to-decide-if-carrier-risked-bad-faith-trial","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/jury-to-decide-if-carrier-risked-bad-faith-trial\/","title":{"rendered":"Jury to Decide If Carrier Risked Trial Because It Had Nothing Left to Lose"},"content":{"rendered":"\n

Claims Journal<\/a> | May 23, 2019<\/p>\n\n\n\n

A federal judge in Rhode Island has cleared the way for a trial to decide whether Columbia Casualty Insurance, in bad faith, put its own interest over its policyholder\u2019s by gambling on a trial instead of settling a claim that resulted in a $25 million jury verdict.<\/p>\n\n\n\n

Boston-based Ironshore Specialty Insurance Co. sued Columbia, accusing the Chicago-based carrier of pulling a fast one. Ironshore says Columbia risked a jury trial in a malpractice claim only because it knew it would have to shell out the full $9 million in coverage provided to settle the case.<\/p>\n\n\n\n

By not settling, Columbia exposed Ironshore and its policyholder to even greater losses. A jury in August 2015 awarded claimant Carl Beauchamp $25.6 million in damages \u2014 which came to $35 million with prejudgment interest \u2014 forcing Ironshore to pay all of the $11 million in coverage that it provided as a third-tier insurer. That was the largest negligence verdict in Rhode Island history at the time, the court said.<\/p>\n\n\n\n

Columbia filed a motion with the U.S. District Court in Rhode Island to dismiss Ironshore\u2019s suit on the grounds that a carrier cannot be liable for bad faith unless it has been accused of breaching an insurance contract. Columbia said its insurance contract was with Rhode Island Hospital\u2019s parent organization, Lifespan, not Ironshore.<\/p>\n\n\n\n

On Monday,\u00a0U.S. District District Judge William E. Smith ruled\u00a0that Ironshore did not have to be a party to a contract with Columbia to bring a bad faith claim.<\/p>\n\n\n\n

\u201cThe crux of the dispute here is whether Columbia\u2019s settlement tactics in the Beauchamp action were reasonable and legitimate efforts to reduce Lifespan\u2019s exposure to damages, or were executed in bad faith and in reckless disregard of Lifespan\u2019s best interests,\u201d the judge explained in his opinion.<\/p>\n\n\n\n

Ironshore also scored a victory against Columbia by persuading Smith to bar one of Columbia\u2019s expert witnesses, a retired judge who wrote a report finding that Columbia\u2019s actions were consistent with industry standards.<\/p>\n\n\n\n

Both litigants are heavyweights in the liability market. Columbia Casualty Co., based in Chicago, had $572 million in direct written premiums in 2018, all but $5 million of that in liability lines, according to National Association of Insurance Commissioners\u2019 data. Ironshore Specialty Insurance Co. had $990 million in direct written premiums last year, all but $77 million of it in liability lines.<\/p>\n\n\n\n

Columbia provided the second tier in malpractice insurance coverage through an umbrella policy covering Rhode Island Hospital. The hospital was self-insured for up to $6 million in losses. Columbia covered amounts beyond that retention up to $15 million. Ironshore covered the excess: anything more than $15 million up to $32 million.<\/p>\n\n\n\n

The dispute between the carriers stems from Beauchamp\u2019s claim. The hospital had admitted that Beauchamp had suffered permanent brain damage because of its negligence. The only issue left to settle was the amount of damages.<\/p>\n\n\n\n

Columbia said Beauchamp\u2019s attorney demanded $32 million to settle the case and refused to come down from that number. The carrier says it earnestly negotiated a pre-trial \u201chigh-low\u201d agreement that guaranteed Beauchamp at least $15 million in damages and no more than $31.5 million.<\/p>\n\n\n\n

The jury verdict triggered the high-end of that agreement, effectively exhausting all of Rhode Island Hospital\u2019s insurance coverage.<\/p>\n\n\n\n

Smith said now it\u2019s up to a jury to decide if Columbia ignored its policyholder\u2019s \u201creputational risk and used Ironshore\u2019s money to roll the dice in hopes of getting snake eyes.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

Claims Journal | May 23, 2019 A federal judge in Rhode Island has cleared the way for a trial to decide whether Columbia Casualty Insurance, in bad faith, put its own interest over its policyholder\u2019s by gambling on a trial instead of settling a claim that resulted in a $25 million jury verdict. Boston-based Ironshore… Continue reading Jury to Decide If Carrier Risked Trial Because It Had Nothing Left to Lose<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[10720,10721,9914],"tags":[9895,10758],"class_list":["post-895972","post","type-post","status-publish","format-standard","hentry","category-bad-faith-insurance-coverage","category-insurance","category-insurance-coverage","tag-advise-consult","tag-insurance-coverage-bad-faith","entry"],"jetpack_publicize_connections":[],"yoast_head":"\nJury to Decide If Carrier Risked Trial Because It Had Nothing Left to Lose - 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