JOHN J. O’BRIEN, JD, C.L.U., C.P.C.U.
A Professional Corporation
Attorney, Insurance Consulting & Expert Testimony
lionsthree@aol.com
March 10, 2008
XXXXXXXXX, P.C.
XXXXX Law Firm, L.L.P.
XXXXXXXXXXX
XXXXXXXXXXXXX
Re: XXXXXXXX Matter
Dear XXXXXX:
This will confirm that you have asked me to review a case in which you have represented XXXXXt. You spoke to me briefly over the telephone and on February 12, 2008, you sent me a packet of material which I have reviewed. I am an insurance attorney, consultant, teacher, practitioner and expert. I have been offered as an expert in insurance claims practices and bad faith issues in state courts and federal courts and have been accepted as such by those courts. Although I am an attorney, I hasten to add that typically do not see my role as an advisor on South Carolina law as I believe the lawyers and judges are completely competent to interpret and apply the insurance law of our state. I therefore offer my opinion as someone with experience and knowledge of best practices in the claims area and those behaviors and practices that are unreasonable and arise to bad faith.
Factually, I have determined that XXXXXXXX was involved in an automobile accident on February 13, 2006 where her vehicle was rear ended by a vehicle being driven by a XXXXXXXX. XXXXXX had stopped her vehicle for traffic when XXXXXX ran his vehicle into the rear of her vehicle. The police report indicates that he was engaged in a conversation on a cell phone at the time of the accident. It appears that the accident and any resulting property damage and personal injury were the result of the negligence of XXXXXX. This conclusion can be reached through a review of the police report alone. I also received a criminal record report from you documenting a fairly extensive criminal record and a poor driving record for XXXXXX. In addition, I received photos of XXXXXX’s vehicle and repair estimates. The vehicle sustained substantial damage and was determined that the cost to repair the vehicle would exceed the value of the vehicle.
I was also supplied with medical records of XXXXXX pertaining to the injuries suffered at the accident. It appears that XXXXXX was treated the day following the accident by Health First Rapid Care. She was also treated by Palmetto Primary Care Physicians on February 16, 2006. She presented herself for initial evaluation to Craig D. Harris, MD, PA on February 20, 2006. She was experiencing pain as severe as 9 on a scale of 10 and she had been controlling pain since the date of the accident by medication. The diagnosis was cervical sprain, thoracic sprain and lumbar sprain. She had a previous history of sacroiliac pain that was exacerbated by the motor vehicle accident. I had the opportunity to read the treatment narrative prepared by Dr. Harris.
Those reflect that the pain experienced by XXXXXX continues through May of 2006 and that the doctor cannot rule out a more serious injury such as disc hernia ion/protrusion or other disc abnormality. I also reviewed the records of Southeastern Spine Institute as well s the records of Trident Pain Center, Summerville Medical Center and Charleston Neurological Associates. It appears that I have all the medical records of XXXXXXX relating to her treatment for injuries that resulted from this accident. Obviously, the facts of the accident and the treatment or medical records are important for the insurance company to have to compensate a claimant for his loss.
It appears that XXXXXX was insured by XXXXXXXXX Insurance Company and that his insurance policy had a policy limit for third party damages of only $15,000. You have sent me copies of correspondence from you to XXXXX and to his insurance company. Apparently, you were hired by XXXXXX shortly after the accident because I note that you correspond with both XXXXXX and XXXXX on February 22, 2006. In the letter you indicate that you will be sending a demand letter after you have documentation of your client’s claim. XXXXXX was aware of the claim since they interviewed XXXXXXX on February 15, 2006.
My review of the correspondence demonstrates that on July 13, 2006, you did send a demand letter to XXXXXXXX to the attention of XXXXXX. That demand letter seems well documented as to the condition and damages of your client as a result of the accident. Granted, you are advocating for your client so you are putting your best foot forward but in any case it is clear at this juncture that the insured driver is clearly at fault, that your client has suffered a serious injury requiring continued medical treatment, that she continues to miss work as a result of the incident and that her job pays well and requires considerable physical exertion since she drives for U.P.S. At this juncture, it appears that you do not know the policy limits. You do offer to settle the claim for the policy limits. Your offer is to settle the claim for the lesser of policy limits or your demand of $174,963.84. You indicate your intent to pursue an underinsured motorist claim on behalf of your client. It appears that XXXXXXX of XXXXX has been involved in the case from the initial accident up through trial based on my reading of the file.
You point out in your letter that punitive damages could be awarded in this case in view of XXXX’s responsibly and past record. I understand that the policy limits were only $15,000. The reasonable response to your demand in view of all the circumstances of this case and the information which the insurance company had in July of 2006 would be to tender the policy limits. The insurance company owes a duty to the insured to protect the insured’s interest. The insurance company is required to act reasonably under the circumstances presented. In my opinion, the insurance company did not act reasonably in view of the information presented to them and having the opportunity presented here to settle the case for the $15,000 policy limits.
On August 9, 2006, you wrote another letter to XXXX which contained the results of the MRI as bulging discs and stated that the medicals had then reached $13,292.58. Once again, you offered to settle the case for policy limits. At this juncture the insurance company would have been aware that the policy limits were only $15,000 and that the medical bills were nearing that.
Clearly, it was unreasonable and negligent behavior for the company to not tend the policy limits in the case. Your handwritten note on the copy of the letter that I have was that there was no offer or response to your two prior letters and it was a big case and you would be filing suit. You sent the original letter with the note to the insurance company. Still no response was received. Again, in my opinion; the insurance company through its behavior violated the duty of good faith that it owes to its client. There was a clear opportunity presented to settle the matter for the policy limits and to avoid a law suit against their client and a possible verdict far in excess of the policy limits. This opinion is based on my experience and knowledge of what is reasonable as far as settling third party accident claims. Here without going into much investigation at all, there was a clear case of liability, medical expenses alone without considering loss wages, pain and suffering and permanent injury that made the acceptance of your offer the reasonable choice. Ignoring that offer amounted to a breach of the duty the insured company owed to XXXXX in my opinion.
It appears that you filed suit on September 14, 2006 and had the complaint served. On September 12, 2006, you had mailed a courtesy copy of the complaint to the insurance company. The filing of the law suit did not cause the insurance company to tender their policy limits. In fact, an attorney was hired by the insurance company to answer the complaint. You wrote the attorney on January 9, 2007 and sent him medicals now totaling over $16,000.00. At this point it appears that you have learned that the tortfeasor only carried a minimum $15,000 policy and you reiterate your offer to the insurance company to settle for that $15,000. You notified the carrier of the possibility of an excess verdict and in fact, made a note on the letter that the adjuster would have a lot of explaining to do when a large verdict is returned on this case. The reasonable position to take at this juncture would be to settle the case for the $15,000 policy limits and not subject the insured to a law suit.
Medical costs continued to elevate in the case and in March of 2007, medicals had reached over $44,000 and these specials were faxed to the insurance company’s attorney. Despite this situation, the insurance company did not respond to your offer to settle within policy limits. The seriousness of the injuries was also covered during the deposition of February 1, 2007 of the defendant. There was a continuation of your client’s deposition scheduled for February 1 and there is a position taken by the attorney hired by the insurance company that he needed additional time to have you send him medical records. I cannot testify as to what went on there but in any case, it is very clear that any reasonably prudent claims adjuster would have concluded with the information in hand in February of 2007 and in fact, several months before that, that it was reasonable to settle the case for the policy limits. In fact, the insurance company did not come around to offering the policy limits until two weeks before the trial scheduled in October of 2007. The case went to trial and a verdict entered for $65,000.00.
The facts available early on in this case clearly show a case of one hundred percent liability. The question then remains is what is the extent of the injured party’s injuries. The insurance company knew that your client was injured because they were advised of this when they interviewed her two days after the accident. You did a very credible job of supplying them with information where they could weigh the seriousness of those injuries. The background of their insured and driving record of their insured would increase the chances of a large verdict. While medical expenses are not the only consideration to look at in evaluating a claim, when those medical expenses come near to the amount of coverage, it is a reasonable position to offer the policy limits. It is negligence or in some cases reckless, to subject an insured to an excess verdict. I cannot in my opinion see any reason why the full policy limits were not offered within the time frame you were prepared to accept them because within that time frame, the facts and the material that the insurance company had in its possession would dictate that any reasonable and prudent claim person would tender the policy limits. Given your client’s injuries, it was obvious that any verdict would exceed the policy limits and that is what happened. Appraising the circumstances surrounding the accident and the history of the insured, there was no chance that the verdict would not be in favor of your client.
While I said that I do not offer testimony in the law, I believe that under the circumstances the law in South Carolina would require the insurance company to pay the claim since it was unreasonable for them not to settle. Clearly, waiting to make the offer to settle on the eve of the trial is not good faith but smacks more of bad faith since there was no reason for the delay. Also, in this particular case, ignoring the opportunity to settle could arise to intentional bad faith behavior.
It is my understanding that you simply wanted my written opinion; however, I would be available to testify or for a deposition if needed.
Very truly yours,
John J. O’Brien
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