Arnold v. Insurance Company of Pennsylvania – Truck Accident Insurance Wrangling

We all know automobile insurance companies can be difficult opponents in fair compensation negotiations. However, when you’re injured in an on-the-job crash, there is the assumption that it should be fairly straight forward. After all, we have a whole workers’ compensation system in place to ensure claims are paid out relatively quickly.
But when we’re dealing with third-party defendants, secondary insurance policies and disputes over the extent of proximately-caused injuries, the waters can get muddied. There may be more than one source from which to recover damages, and insurance companies are always looking to bolster their own bottom line.

Still, judges have little tolerance for insurance companies that drag their heels on legitimate claims or fail to cooperate with court orders. This can result in a finding of bad faith that can be very costly for the insurer.

In the recent case of Arnold v. Insurance Company of Pennsylvania, the North Carolina Court of Appeals was tasked with considering $2.4 million sanction against an insurance company for failure to comply with the court’s discovery orders in a trucker’s accident injury lawsuit.

Here’s what happened, according to court records:

Plaintiff was a garbage truck driver who was working when he was struck by an uninsured motorist, causing him serious injury. The truck driver was personally covered by workers’ compensation benefits. His employer’s truck was insured by a policy underwritten by defendant in this case. The policy carried an uninsured motorist coverage benefit in the amount of $1 million.

Plaintiff filed a claim for collection of uninsured motorist benefits from the insurer, and notified his employer also, which was already paying workers’ compensation benefits. Plaintiff and the insurer sparred on the extent of injuries arising from the accident, so plaintiff demanded arbitration. Ultimately, an arbitration panel awarded plaintiff $635,000 – with a workers’ compensation lien to subtract whatever he’d already previously collected in workers’ compensation benefits.

Following that finding, plaintiff filed a lawsuit against his employer and the insurer for claims of breach of contract, unfair trade practices and bad faith for allegedly “willfully refusing to promptly investigate, evaluate, arbitrate and pay” the UM claim for benefits.

As part of this lawsuit, plaintiff filed a motion to compel defendant to produce related documents. However, on multiple occasions and despite a judge’s orders, defendant failed to do this or failed to do so to the satisfaction of the court.

The court then issued a $2.4 million sanction against the insurer – or $75,000 per day of non-compliance – to be paid directly to plaintiff.

However on appeal, the appellate court deemed this action improper because it served as a punishment on the defendant, as opposed to compensation to plaintiff for losses incurred as a result of civil contempt. Further, actions for civil contempt required the judge to follow a different set of procedural orders. While the judge could have taken other action as far as sanctions – including entering a default judgment for plaintiff, ordering payment of plaintiff attorney fees or striking defendant’s counterclaims – an order of non-compensatory damages in this case was improper.

Therefore, the appellate court vacated the $2.4 million sanction. Still, the case against the insurer can continue, and the trial judge does have the option of imposing other sanctions, if he so chooses.

Our Winston-Salem truck accident lawyers are prepared to analyze the facts of your case to determine all of your options for compensation.

Contact the North Carolina injury lawyers at the Lee Law Offices by calling 800-887-1965.

Additional Resources:
Arnold v. Insurance Company of Pennsylvania, Dec. 31, 2014, North Carolina Court of Appeals

More Blog Entries:
Giles v. Eagle Farms Inc. – Drinking and Driving and Workers’ Compensation, Dec. 25, 2014, Winston-Salem Car Accident Lawyer Blog

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