Posted on Jun 06, 2009
Woman who sued doctor's insurer awarded $3.8 million
Ruling: Insurer acted in bad faith
By Andrew Wolfson • email@example.com • June 6, 2009
When Debbie Daniels was scheduled to undergo a hysterectomy in 2003, her doctor suggested he do a "tummy tuck" as well.
But the obstetrician/gynecologist didn't tell her that he'd never been trained to perform the procedure that gets rid of excess skin and fat.
She also didn't know he'd been kicked off the staff of another hospital for doing tummy tucks without proper credentials -- or that he did the procedure unlike any other doctor, according to court records.
Two days after Dr. David Lee Grimes cut Daniels open and stitched her back up, her wound burst, leaving a basketball-sized hole in her belly 7 to 8 inches deep, one of her lawyers said. She had to undergo emergency surgery -- the first of many -- and be placed in a medically induced coma for a month.
Left permanently disabled, Daniels, then 39, a respiratory therapist in Paducah, sued her doctor. An expert witness hired by his insurance company told the carrier that she was "appalled" by what Grimes did -- that it was "inexcusable and indefensible," according to internal documents the company was later forced to disclose.
But for nearly two years, the company – -- American Physicians Assurance Corp., which insures many Kentucky doctors – -- refused to engage in settlement discussions. When it finally made an offer, after nearly two years, it proposed paying Daniels only $75,000, even though the company's internal documents showed it had valued her damages at $1 million, according to court records.
Unemployed, destitute and unable to keep her two children fed and housed, Daniels eventually accepted the $650,000 the company offered on the eve of the trial of her suit in 2006.
But she reserved the right to sue the company for the settlement delay. And on Wednesday, a Jefferson Circuit Court jury, after a weeklong trial and 11 hours of deliberations, awarded her $3.8 million, finding that the insurance company acted in bad faith by delaying payment of her claim when it knew its client was liable.
The verdict included $3,479,277 in punitive damages.
to do the right thing and treat people fairly."
One of her lawyers, Hans Poppe, said it "lets insurance companies know the citizens of Kentucky are watching them" and that they will pay for "forcing injured people into unnecessary litigation with frivolous defenses."
The insurer, which has offices in Louisville and is based in East Lansing, Mich., doesn't comment on litigation, according to Ann Storberg, vice president of investor relations, although she said the company's policy is to pay claims when liability is clear.
All states have laws like Kentucky's unfair claims settlement practices act, but Kentucky is one of only a few where juries, rather than state insurance commissioners, impose penalties for violations in cases brought by a patient against their doctor's insurer, Poppe said.
The statute says it is unlawful for insurers to fail to attempt "in good faith to effectuate prompt, fair and equitable settlements of claims in which liability has become reasonably clear."
Kenton County verdict
This week's verdict was the second in Kentucky in five weeks in which a jury punished an insurer for acting in bad faith with a third party -- a doctor's patient.
On April 30, a Kenton County jury returned a $2.5 million verdict against Medical Protective Insurance Co. for failing to promptly settle a damage claim with a woman whose doctor severely damaged her inner ear during a simple wax-removal procedure.
She had won a $1.6 million award for her medical damages through arbitration, but the jury found that the insurer made her litigate after liability was clear. Evidence showed an adjuster collected a bonus by reducing claims, said the woman's lawyer, Austin Mehr.
Don Darby, who defends medical malpractice and other claims, said the two verdicts should prompt insurance companies to settle various kinds of cases, including auto accident claims, more quickly.
"Overall, more cases will be settled at a higher number," he said.
Michael Hance, who is president of the Kentucky Justice Association, a plaintiffs' trial lawyers group, predicted that the verdicts will prompt insurers to "treat injured people fairly and stop playing a numbers game."
Richard Schiller, who defends lawsuits for insurance companies, said the verdicts "won't scare them into settling" but will make them evaluate cases more carefully and more fully document decisions not to settle.
The verdict against American Physicians Assurance was the second largest of at least 30 bad-faith judgments returned in Kentucky since 1998, according to Kentucky Trial Court Review. The largest, from Scott County, was later reversed.
Daniels' suit was tried before Jefferson Circuit Judge McKay Chauvin. Because Poppe was a witness, another lawyer, Kenneth Friedman, of Bremerton, Wash., helped represent her.
The company's lawyer, Walter Haggerty, of Cincinnati, declined to be interviewed. Poppe said the company offered several defenses, including its claim that its only obligation was to its insured -- Dr. Grimes -- not Daniels.
The company also claimed it couldn't settle as long as Grimes said he had done nothing wrong, and that Daniels contributed to her own injuries because she was a smoker.
Poppe said Grimes should have known not to give Daniels a tummy tuck because she smoked and had other health problems.
Grimes, who practiced in Paducah, is now a resident in preventive medicine at the University of Kentucky. He didn't respond to messages.
Poppe said Daniels is still in constant pain and will be permanently at risk of medical complications. But he said she will now have enough money to pay her mortgage and cover her prescriptions and medical care needs.
"I can only hope that insurance companies will think twice before dragging people through what they put me through," Daniels said.