Bad Faith Insurance –

Bad faith is hard to prove in Texas.  The standards for getting a bad faith judgment are high standards.  But it can be done.  It just depends on the circumstances of the case.

The Telegraph, a Macon Georgia, newspaper published the results of a bad faith case involving Geico insurance.  The article is titled, Federal Jury Finds Geico Acted In Bad Faith, Awards Smiths Station Cyclist $2.763 Million.

Here is what the article tells us.

A federal court jury awarded a Smiths Station man $2.763 million because an insurance company acted in bad faith after he suffered injuries in a 2012 accident in which he was struck by a vehicle while riding his bicycle.

Geico, which insured the motorist who hit Terry Guthrie refused to settle the claim for the policy limits shortly after the accident and acted in bad faith throughout the legal process, according to court documents.

Geico could have settled for $30,000 back in 2012, according to Guthrie’s attorney, Charles Gower.  Guthrie suffered back and neck injuries.  Instead, Geico offered less than $12,500, which was not much more than his $10,000 in medical bills.

Guthrie was hit by an SUV driven by Bonnie Winslett, and the fact that Winslett was responsible for the accident which knocked Guthrie off his bike and into a utility pole was not disputed, according to court records.  After the accident, Geico informed Winslett that it would handle the matter with Guthrie’s attorney, Gower.

Guthrie did not have medical insurance and was unable to obtain additional medical care needed after the accident.  Three months after the accident, Gower sent Geico a letter offering to settle the case for the policy limits. Geico refused and offered to settle it for $12,409, according to court records.  Attorneys for Guthrie claimed that by not settling the case for the policy limits, it exposed Winslett to financial risk.

Guthrie sued Winslett in Muscogee County Superior Court.  The complaint was not answered by the defendant nor Geico and Judge Gill McBride issued a default judgment of $2.916 milllion, the amount that Guthrie’s attorneys requested.
Recognizing its obvious bad faith in exposing its insured to a more than $2.9 million judgment when it had the opportunity to settle Terry Guthrie’s claim for $30,000, Geico moved quickly to appoint outside fee counsel to represent Bonnie in an effort to have the default judgment set aside,” the complaint alleged.  However, rather than mitigating the bad faith that Geico had already committed by failing to settle the case for the policy limits, Geico’s subsequent actions only served to compound its bad faith.
When Geico failed to get the default judgment set aside, a trustee for the U.S. Bankruptcy Court filed an involuntary bankruptcy claim against Winslett, attempting to collect the nearly $3 million.  Geico hired legal counsel to fight the involuntary bankruptcy petition.

Clearly, Geico’s decision to fight the involuntary bankruptcy was not motivated by any interest to protect Bonnie, who only stood to benefit from the bankruptcy, but was driven entirely by Geico’s desire to protect itself from the bad faith lawsuit it knew would be forthcoming from the bankruptcy trustee if the involuntary bankruptcy proceeded.

The judgment, when paid or settled, will be awarded to the bankruptcy trustee, and Guthrie is the only creditor in the bankruptcy case.  Gower expects Geico to appeal the decision.