Federal court orders Nationwide to pay $8M for negligence, bad faith

A jury determined last year that the insurer acted negligently and in bad faith in denying a claim for a deceased auto accident victim

Insurance News

By Lyle Adriano

Nationwide Mutual Insurance Co. was ordered by a federal judge to pay over $8.1 million in damages. The order comes after a jury came to the conclusion last year that the insurer acted negligently and in bad faith in denying a claim for the death of an auto accident victim.

Over $5.7 million of the judgment represents a state court jury award in a previous trial in 2009.

The underlying case behind the judgment is a 2005 auto accident in which a commercial van operated by Seung Park ran a red light and crashed into Stacey Camacho’s Toyota Tercel. The 25-year-old mother lost her life in the tragedy, but her two-year-old son Jacob survived her.

Following the accident, Park pleaded guilty to vehicular homicide and was sentenced to serve seven years in prison and another five years on parole.

Camacho’s husband, Jesus Camacho, and mother and executor, LaJean Nichols, then employed the services of Charles McAleer of Decatur-based McAleer Law. McAleer sent Nationwide a time-limited (within 10 days) demand for Park’s $100,000 policy limit. In exchange for the policy limit, McAleer offered a limited liability release the protected Park from any liability for other claims involved with the accident, “except to the extent that other insurance coverage was available from which the Camacho family could seek additional funds,” according to U.S. District Judge Amy Totenberg’s order.

Nationwide, however, rejected the offer. The insurer said it would only pay if the family offered a general release from which they would have to pay the company back if any other claims were made related to medical liens.

When no agreement was reached, McAleer and Nelson Tyrone III of Tyrone Law Firm in 2006 filed a wrongful death suit against Park in Fulton County State Court.

In the suit, the jury awarded Camacho and Nichols $5.85 million. Park also assigned his right to sue Nationwide for negligence and bad faith for being unable to settle the claims against him. The Camacho family pursued the bad faith claim filed 2011 after retaining new legal representation.

Nationwide argued that Park’s negligence was the proximate cause of the damages against him. The insurer also asserted that McAleer was “intent on setting Nationwide up for a bad faith claim.” Nationwide challenged the position that the bad faith claim was a tort.

“Nationwide’s alleged failure to settle was not the proximate cause of the $5.8 million verdict, and if its conduct did not cause the verdict, then the excess verdict amounts to nothing more than a bad faith penalty, and Georgia law is clear that there must be clear evidence of bad faith before penalties can be assessed,” the company said.

Thus, a trial ran from Aug. 31 to Sept. 8, 2015 to determine whether the insurer acted negligently or in bad faith. On Sept. 8, the jury found for the plaintiffs.

The district judge’s order awarded $5,730,000, plus $2,405,873 in interest.

Ultimately, the insurer could have avoided the judgement had it agreed to pay its insured’s $100,000 policy limit without any strings attached, said the lawyers representing the plaintiffs in the case.

Related Stories:
Morning Briefing: Global insured losses far below average
Morning Briefing: New name in insurance as merger is completed

Keep up with the latest news and events

Join our mailing list, it’s free!