Previously on this blog, we have explored several cases that profiled the often contentious role that insurance companies play in auto accident litigation. In the interest of seeing that consumers get the benefits of the policies they pay for and to promote a speedy resolution for third parties who have legitimate claims, the Louisiana legislature enacted a law that requires insurers to pay claims within 30 days of being notified with a satisfactory proof of loss by the insured. La. R.S. 22:1892. An insurer’s failure to do so, if “arbitrary, capricious, or without probable cause,” can mean a penalty for the insurer of up to 50 percent of the claim amount, in addition to attorneys’ fees and costs. This requirement was at the center of the recently decided case, Krygier v. Vidrine.
On October 11, 2006, Kenneth Krygier was a passenger in a rented Chevy Cobalt being driven by his co-worker, Billy Toon. Krygier and Toon were on the way to their employer’s office in Covington when their vehicle was rear-ended by a Ford Explorer operated by Karen Vidrine and insured by Liberty Mutual. Toon also carried an insurance policy with Progressive that provided uninsured/underinsured motorist (“UM”) coverage to all occupants of an “insured” vehicle. Vidrine’s policy with Liberty Mutual had a limit of only $30,000 per incident, so when Krygier filed suit against Vidrine for the injuries he suffered in the crash, he also named Progressive and his employer as defendants. Progressive first denied responsibility for UM coverage because it alleged the rented Chevy wasn’t an “insured vehicle” under Toon’s policy, Krygier was not a “covered person” under the policy, and Vidrine was not underinsured. The parties filed cross-motions for summary judgment on these questions, and in December, 2007, the trial court determined that coverage under Progressive’s policy extended to Toon’s rental car and to Krygier as a guest passenger.
As part of the discovery process, Liberty Mutual served on all parties a copy of the policy with the $30,000 limit it had issued to Vidrine covering her Explorer. Nevertheless, Progressive took the position that it did not have sufficient documentation establishing that Vidrine was underinsured at the time of the accident. In January of 2008, Krygier gave a deposition during which he testified about his injuries, his ongoing medical treatments, and his pain and suffering. Krygier also provided documentation regarding his employment, lost earnings, and medical treatment in response to Progressive’s discovery requests. In November, 2008, Krygier filed an amended petition for damages in which he sought penalties, attorneys’ fees, and costs based on Progressive’s failure to tender its policy limits upon receipt of satisfactory proofs of loss. Krygier received only $15,000 from Vidrine’s Liberty Mutual policy (the balance of which was paid to Toon). Krygier alleged that, based on this result and the outcome of prior proceedings in the matter, Progressive was well aware that Vidrine did not have sufficient insurance to cover the damages he sustained in the accident. Progressive’s failure to pay, Krygier argued, amounted to a violation of the statute requiring a timely tender of payment. Accordingly, Krygier asked for $50,000 in penalties (half the policy’s $100,000 limit), together with reasonable costs and attorneys’ fees. The trial court granted Krygier’s motion, finding that Progressive was “arbitrary and capricious in failing to promptly tender policy limits,” and awarded penalties in the amount of $50,000 to Krygier. The judgment further awarded Krygier “the remaining interest owed on the policy limits, plus attorneys’ fees and costs.” Progressive appealed to an unsympathetic First Circuit. The court stated, “we find reasonable persons could reach only one conclusion, i.e., that Progressive acted arbitrarily, capriciously, or without probable cause in not tendering its policy limits within thirty days of” first learning of Krygier’s legitimate claim. The court affirmed the $50,000 penalty awarded by the trial court.
In this case, Krygier’s misfortune was only compounded by Progressive’s efforts to protract the litigation and delay payment. In situations like this, it is especially important for an accident victim to have an experienced attorney on his side to ensure he gets the recovery he deserves.
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