By: Joseph A. Smith
Recently in Chester County Pennsylvania, Nationwide was ordered to pay $18 million dollars in punitive damages as a result of its bad faith actions in handling the valid claim of one of its insured. But this was not an ordinary claim, it took almost 20 years for justice to be served and Nationwide spent over $3 million dollars in attorneys' fees, all to avoid paying an additional $12,500.
Back in 1996, the plaintiffs, the Bergs, were involved in an accident where a Chevrolet Suburban ran into their Jeep. The Bergs were insured by Nationwide and after taking it to a repair shop the Jeep was initially declared totaled. But the Bergs were never told. Instead, Nationwide got a second opinion saying the vehicle could be repaired for $12,500, half of the cost of the payout if the vehicle was totaled. So Nationwide had the Jeep repaired, but because the frame was so damaged it had to be welded back together and then cut just to allow for the engine to be put back into the vehicle. The vehicle never drove right again and the Bergs were none the wiser until a few months later when they received a call from a former mechanic from the shop telling them about the improper repairs. If the Bergs had been in another serious accident it would have come apart completely.
In 1998, the Bergs retained a small father-son law firm and filed suit against Nationwide. That same year, after the Bergs paid the last lease payment on the Jeep, Nationwide changed its mind and totaled the car, buying it from the bank for $18,000. Had someone else bought the vehicle and been in an accident as a result of the improper repairs, Nationwide would have been on the hook. After the Bergs filed suit, Nationwide had a damage specialist examine the car. He found that the front wheels were not aligned, the frame remained damaged, and parts that were to be replaced had not been. These findings were not turned over to the Bergs until 2003 due to Nationwide's argument that they were attorney work product, despite Nationwide later claiming that the investigation was just part of the standard claims procedure.
During the lawsuit, the attorneys discovered a damaging document that had been included in Nationwide's claims practice manual stating that Nationwide's "claim handling philosophy" was to seek "continued reinforcement of Nationwide being a 'defense-minded' carrier" and that the company aimed at "litigation avoidance" by adopting "more aggressive posture in handling cases of lesser probable exposure (i.e., cases not exceeding $25,000)."
So almost 20 years after the accident Nationwide has spent $3 million on legal fees to defend the case, and has to pay $18 million in punitive damages in addition to $3 million for the plaintiff's legal fees, all to avoid doing the right thing in the first place – paying the $25,000 to declare the Jeep totaled. Unfortunately, Sherri Berg passed away from cancer seven weeks before the judge's verdict.
Nationwide has appealed the judge's decision, reminding us yet again that its number one priority, just like every insurance company, is not its customers, but its own bottom line. This reinforces the importance of contacting experienced and dedicated attorneys if you've been involved in a car accident. The car accidents attorneys at Chaikin, Sherman, Cammarata, & Siegel, P.C. have decades of experience battling the insurance companies to ensure our clients get the compensation they deserve. Call us today to discuss your case. We represent victims and families throughout the DC metro area.