What happened: A Washington appeals court reversed $47 million in punitive damages and dismissed an insurance consumer protection claim from a $103 million judgment against Nationwide, but upheld the bad faith finding.
Who’s involved: Nationwide Affinity Insurance Company of America and a Washington policyholder.
What’s at stake: The original judgment totalled $103,229,771.04; more than $87 million in awards were reversed.
Why it matters: The court ruled that delay in paying a third-party claimant is not the same as denying benefits - drawing a clear boundary for claims teams.
Where it stands: Decided on appeal; remanded for fee recalculation and reconsideration of injunctive relief.
Three children killed, a husband forced to sue his wife - and now an appeals court has gutted the resulting $103 million judgment.
Washington’s Court of Appeals, Division III, delivered a mixed ruling on November 10 in a case against Nationwide Affinity Insurance Company of America. The total judgment had reached $103,229,771.04. The court threw out a $47 million punitive damages award and dismissed an insurance consumer protection claim - wiping out $20 million in noneconomic damages and $20,136,000 in enhanced damages with it - but upheld findings that Nationwide acted in bad faith and was negligent.
Surviving: $5 million for bad faith, $2 million for negligence, plus shared economic damages. Attorney fees go back for recalculation.
The policyholder held a Washington auto policy with $200,000 in available liability coverage. In August 2017, she ran a stop sign in Alberta, Canada, and was hit by a semi-truck. She and her husband were seriously injured. Their three children were killed.
Nationwide knew its insured was entirely at fault and that claims would exceed limits. Her husband’s lawyer demanded full policy limits starting October 2017. But Nationwide refused to pay the family’s claims while a separate claim from the truck driver in Canada stayed unresolved - reasoning that settling with one claimant would end its duty to defend, leaving the policyholder exposed.
By August 2019, the husband sued his own wife for his injuries and the children’s deaths. As his lawyer put it, this was a situation “where there is neither a liability nor damages dispute.” Arbitration produced a $17,123,927.71 award. Nationwide paid it.
At trial, the jury found bad faith, negligence, and violations of Washington’s Consumer Protection Act and Insurance Fair Conduct Act, awarding $27,136,000 in compensatory damages and $47 million in punitive damages under Ohio law.
The appeals court reversed on two fronts. The IFCA - a state law that lets policyholders sue when an insurer unreasonably denies coverage or benefits - covers denial, not delay. Nationwide had paid everything owed under the policy before the statutory notice was even filed. Disputes over how fast an insurer pays a third-party claimant do not create a right to sue under that law.
On punitive damages, the evidence fell short of what Ohio demands - not just bad conduct, but hatred, ill will, or knowing disregard of harm. The court also ruled Washington law applied anyway, since the insurance relationship was formed and regulated there. Washington does not allow punitive damages.
Bad faith and negligence stand. The case goes back for recalculated fees and a fresh look at whether to order changes to Nationwide’s claims practices.
For claims teams handling multi-claimant losses that exceed policy limits, the takeaway is direct: a protect-the-insured strategy can become bad faith liability when it forces family members into court against each other.
The court’s findings are the result of a judicial determination. Further proceedings on remand may affect the final outcome.
