Bad Faith

Illinois Jury Finds Against Insurer in Bad Faith Case – Awards $13,000,000 in Punitive Damages 

A Cook County jury found against ISMIE Mutual Insurance Company (“ISMIE”) in a dispute that alleged ISMIE acted in bad faith in defending its insured obstetricians in an underlying medical malpractice suit.  The jury awarded compensatory damages of $1,350,000 and punitive damages of $13,000,000.

Alizabeth and Elvin Hanas won a $6,170,000 judgment against their obstetricians for claims related to the death of their daughter who was born with a brain injury caused by oxygen deprivation and for claims related to Alizabeth’s personal injury.  The ISMIE policy at issue had limits of $3,000,000 available to cover the claims related to the death of the child and $2,000,000 related to the mother’s personal claim.  Prior to the verdict in the underlying case, the Hanas settled with the hospital and ER physicians for $1,500,000.  Based on its policy limits, ISMIE paid $3,300,000 of the $6,170,000 judgment, leaving the Hana’s obstetricians personally liable for $1,300,000 plus interest.   ISMIE filed a notice of appeal and the Illinois Appellate Court affirmed the judgment.  Subsequently, the Illinois Supreme Court denied leave to appeal the underlying action.

The obstetricians assigned their bad faith claim against ISMIE to the Hanas.  The Hana’s Complaint included a cause of action for bad faith and a separate cause of action for breach of fiduciary duty.  It was under the breach of fiduciary duty where the Hana’s sought punitive damages.   According to the complaint, ISMIE acted in bad faith by not offering to settle their medical negligence case when it should have known that it was likely that a jury might award damages for more than the obstetricians’ ISMIE insurance policy limits.  The Hanas alleged that ISMIE was aware of a settlement offer for $5,000,000, but refused settlement without relaying the offer to the obstetricians.   The Hanas also alleged that the obstetricians made a demand to ISMIE to settle the underlying case within policy limits.   According to the complaint, ISMIE failed to accurately convey to the obstetricians what coverage they had available, i.e., the different limits for the claims related to the child compared to the mother’s personal injury claims.  The Cook County jury returned judgment against ISMIE awarding the Hanas both compensatory and punitive damages.  Hana v. ISMIE Mut. Ins. Co., No. 2015-L-005975 (Cir. Ct. Cook County, Ill).

Leave a Reply