Insurer Hit With $52M Verdict After Refusing To Defend Dentist
A New Mexico dentist was stripped of his medical license and sued by the families of 17 patients who later died of complications related to opioids. The original case was filed in 2012. Doctors carry medical malpractice insurance policies that indemnify them from lawsuits filed from patients. That means that they take on the liability of the doctor. However, in this case, the insurance company refused to defend the doctor claiming that a policy exclusion applied to his case.
According to the lawsuit, the insurer immediately canceled the defendant’s policy after learning of the 17 deaths. However, they never recorded the 17 deaths and moved to avoid defending the doctor on those claims. The insurance company responded by claiming the defendant had not filed his claims on time. However, the insurance company couldn’t explain why they canceled the policy if not to avoid 17 wrongful death lawsuits.
Because the insurance carrier refused to cover the doctor, the judgments were attached to the doctor’s estate. Only two creditors were listed in the bankruptcy, two families that had won wrongful death lawsuits. Once the doctor declared bankruptcy, the judgments against the doctor would be discharged. Ultimately, the doctor would not have to pay anything to the families.
Ultimately, the bankruptcy estate paid $680,000 to the victims and placed the insurance claim as part of the estate. The plaintiffs will now be able to recover some portion of the $52 million the attorneys were able to recover from the insurance company. However, it took 10 years to get here.
Why do insurance companies do this?
Of 17 potential plaintiffs, there are only two with claims against the doctor’s estate. Many of the plaintiffs may have been scared off or discouraged by the extended litigation. Many may want closure for a traumatic experience. Ultimately, there is some percentage of plaintiffs that just don’t want to go through a trial, even if they don’t have to pay a dime. It’s a lot of emotional investment, retraumatization, and living within the context of an event that causes you psychological pain.
While the reward for sticking with it is now quite obvious, there’s no guarantee that you’ll get a verdict, or the cost of that verdict will be worth the reward. In this case, it was.
Did the insurance company win?
There’s an argument to be made that the insurance company actually won this lawsuit even with the verdict as high as it is. 17 wrongful deaths alleging misprescribing of opioids is tough to defend, no matter what. So, a bad faith insurance verdict of $52 million versus 17 wrongful death lawsuits. That would be about $3 million per plaintiff. It’s close to a draw, but it took ten years to get here and ultimately, there were fewer plaintiffs.
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