Peck Hadfield obtains $2,572,039 arbitration award for Draper woman harmed by insurance company’s bad faith processing of UIM insurance claim
On April 18, 2015, a three-member arbitration panel awarded Peck Hadfield client Melinda Crandall $2,549,946 in damages against American Family Mutual Insurance Company for the insurance company’s bad faith processing of her underinsured motorist (UIM) insurance claim. Shortly thereafter, the arbitration panel increased the total award to $2,572,039 to account for supplemental costs incurred by Ms. Crandall in the arbitration proceedings. This sum has been paid by American Family, and the case has been closed.
Ms. Crandall’s arbitration award concluded nearly four years of hard-fought, complex litigation in the United States District Court for the District of Utah followed by five days of binding arbitration proceedings held in Salt Lake City in April 2015.
Ms. Crandall’s case began in June 2008, when she was rear-ended by another driver while stopped in traffic on an on-ramp to I-15 in Sandy, Utah. Although the visible damage to both vehicles from the crash appeared relatively minor, the force of the crash injured Ms. Crandall and resulted in emergency transportation by ambulance to a nearby hospital emergency department. Ms. Crandall continued to suffer from the effects of the crash, and the insurance company for the 18-year-old driver who caused the crash promptly paid its $25,000 liability policy limits. Ten months after the rear-end crash, Ms. Crandall was diagnosed with a stroke caused by a torn carotid artery. Although the medical issues facing Melinda Crandall in 2008 were difficult and uncertain, both Ms. Crandall and her husband, Ben, drew comfort from the knowledge that they had purchased $1.1 million in combined underinsured motorist (UIM) insurance with American Family, and that the full UIM coverage was in effect at the time of the crash.
With the representation of Peck Hadfield partner Shaun L Peck, Ms. Crandall submitted her UIM claim package to American Family in the spring of 2011. The claim package included Ms. Crandall’s treatment provider reports and billings to date, a functional capacity examination, a life care plan and an expert economist’s report demonstrating that the then-present value of Ms. Crandall’s UIM claim far exceeded her $1.1 million policy limits. American Family scoffed at Ms. Crandall’s UIM claim.
Although in 2010 American Family set its loss reserves for Ms. Crandall’s UIM claim at $500,000 and its Utah-based claim team accepted the damage totals submitted by Ms. Crandall in 2011, American Family only offered a total of $200,000 to settle Ms. Crandall’s UIM claim in the spring of 2011. To reach this unreasonably low figure, American Family needed to disregard all evidence that the crash caused Ms. Crandall’s carotid artery dissection – including evidence from a neurologist hired by American Family itself early in the case to review Ms. Crandall’s medical records and evaluate her claim.
Ms. Crandall was forced to sue American Family in April 2011 for American Family’s improper handling of her UIM claim. Commonly such lawsuits are referred to as bad-faith insurance claims. These are not easy lawsuits to litigate to a successful conclusion. Insurance companies have the resources to spend huge sums of money to battle over every aspect of the case, and the legal issues are varied and complex. Ms. Crandall’s case was no exception. Discovery in this lawsuit lasted 3½ years, involved witnesses (including experts) in multiple states and required repeated hearings with the court just to get the case ready for trial. Scores of pretrial motions were filed by the parties and heard by both the federal court and the arbitration panel. Almost four years to the day after Ms. Crandall filed her lawsuit against American Family, the arbitration panel found merit to her claims and ordered that American Family pay her $2,549,946. This amount was subsequently increased by $22,093 to account for additional costs incurred by Ms. Crandall in the contested arbitration proceedings.
Ms. Crandall’s trial team included Peck Hadfield partners Shaun L Peck and Bretton K. Hadfield and associate John D. Luthy, with assistance of Travis Black of Travis Black & Associates and trial consultants Finlay Boag.