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Case Number: 2:21-cv-00130
Judge: Dale A. Kimball
Court: United States District Court for the District of Utah (Salt Lake County)
Description: Salt Lake City, Utah insurance law lawyers represented Plaintiff who sued Defendants on bad faith breach of an insurance contract theory.
Plaintiffs Hal Jenkins, as assignee of certain claims of CLJ Healthcare, LLC ("CLJ"), and CLJ, as to certain non-assigned claims, (collectively "Plaintiffs") filed a complaint against Defendants in connection with their sale and administration of an insurance policy.
As alleged in the Complaint, Prime issued a professional liability insurance policy to CLJ effective December 22, 2012, to December 22, 2013 (the "Policy"), which covered CLJ and Nedra Dodds, M.D. ("Dodds").2 The Policy was sold through Evolution, and the declarations page reflected $50,000 in professional liability and $100,000 in aggregate coverage.
In February 2013, April Jenkins, a patient under the care of Dodds, died after receiving liposuction treatment. Hal Jenkins, as representative of April Jenkin's estate, thereafter submitted a claim to Prime as a result of the incident. McBride, Prime's attorney and Senior Vice President, responded in April 2013 that the Policy limit was $50,000.
In August 2013, Hal Jenkins filed suit against CLJ and Dodds in the State Court of Cobb County for damages sustained as a result of April Jenkins' death (the "Jenkins Claim"). McBride, allegedly acting as CLJ's counsel, tendered $50,000 to Hal Jenkins as settlement for the Jenkins Claim. Prime also wrote a letter to CLJ stating that the Policy provided $50,000 in coverage for the claim.
The Complaint alleges that at no time prior to the filing of the Jenkins Claim did Prime inform CLJ that it could challenge Prime's determination of the Policy limit. Further, Prime allegedly did not inform CLJ that the cost to defend the Jenkins Claim would quickly exceed $50,000 or that CLJ could tender its own funds to help resolve the claim. McBride eventually retained counsel to represent CLJ and Dodds in October 2013.
In April 2014, Hal Jenkins made a settlement demand to Prime of $100,000 with certain contingencies. Prime tendered $39,000 in response but allegedly did not discuss the tender with CLJ.3 CLJ asserts that had McBride properly advised it of its options, it would have arranged to pay the difference between Hal Jenkins' demand and Prime's tender.
In May 2014, McBride informed CLJ that the Policy limit of $50,000 had been depleted and that Prime would no longer defend CLJ and Dodds. In July 2014, the Cobb County court allowed counsel hired by Prime to withdraw from CLJ and Dodds' representation. Around that time, while allegedly acting as CLJ's counsel, McBride attempted to obtain a waiver from CLJ and Dodds that the Policy limit was $50,000 and that the available funds had been depleted through the defense of the Jenkins Claim.
;Hal Jenkins subsequently dismissed Dodds from the action, leaving CLJ as the only defendant. A default judgment was issued against CLJ, and a jury awarded damages against CLJ in the amount of $60 million in December 2018 (the "Jenkins Judgment").
At the heart of Plaintiffs' claim in this case is their contention that the Policy provided $100,000 in coverage. They assert that Prime's incorrect determination that the Policy limit was only $50,000 resulted in Prime's wrongful rejection of Hal Jenkins' settlement demand and the premature withdrawal of CLJ and Dodd's defense. Plaintiffs also claim that certain expenses were improperly charged to the Policy. In short, Plaintiffs presume that had Prime tendered $100,000 to settle the Jenkins Claim or if CLJ had been informed that it could contribute its own resources to meet the settlement demand, the Jenkins Claim would have been resolved quickly.
Jenkins v. Prime Ins. Co. (N.D. Ga. 2021)
In Utah, the Insurance Bad Faith Act (IBFA) allows policyholders to sue their insurance companies for bad faith breach of contract. To establish a claim under the IBFA, the policyholder must show that:
The insurance company had a duty to act in good faith.
The insurance company breached that duty.
The policyholder suffered damages as a result of the breach.
The duty of good faith under the IBFA is a high one. It requires the insurance company to act honestly, fairly, and reasonably in all of its dealings with the policyholder. This includes investigating claims promptly and thoroughly, and making decisions about coverage in a timely and efficient manner.
The insurance company can breach its duty of good faith in a number of ways. For example, the insurance company may:
Delay or deny a claim without a legitimate reason.
Fail to investigate a claim properly.
Make a decision about coverage that is arbitrary or capricious.
Fail to provide the policyholder with information about their rights under the policy.
If the insurance company breaches its duty of good faith, the policyholder may be entitled to damages. These damages can include:
The amount of the claim that was denied or delayed.
Punitive damages, which are designed to punish the insurance company for its bad behavior.
The policyholder's legal fees.
It is important to note that the IBFA does not require the policyholder to prove that the insurance company's actions were intentional. The policyholder only needs to show that the insurance company acted unreasonably.
If you believe that your insurance company has breached its duty of good faith, you should consult with an attorney. An attorney can help you assess your case and determine whether you have a claim under the IBFA.
Here are some additional things to keep in mind about bad faith claims in Utah:
The IBFA has a two-year statute of limitations. This means that you must file your claim within two years of the date of the breach.
The IBFA allows for punitive damages. Punitive damages are designed to punish the insurance company for its bad behavior and to deter other insurance companies from engaging in similar behavior.
The IBFA is a complex law. If you have any questions about your rights under the IBFA, you should consult with an attorney.
Outcome: 08/29/2023 144 NOTICE OF APPEAL as to 139 Order on Motion for Summary Judgment,,, Order on Motion to Exclude,,, Order on Motion for Miscellaneous Relief,,, Memorandum Decision,, 85 Memorandum Decision, Order on Motion to Dismiss, 140 Judgment,, 48 Clerk's Judgment, filed by Hal Jenkins. Appeals to the USCA for the 10th Circuit. Filing fee $ 505, receipt number AUTDC-4793311. (Savage, Brent) (Entered: 08/29/2023)
08/29/2023 145 Transmission of Preliminary Record to the USCA for the Tenth Circuit re 144 Notice of Appeal. (Attachments: # 1 Appendix) (eat) (Entered: 08/29/2023)