Insurer's Misappropriation of Policyholder's Expert Witness in UIM Proceeding Constitutes Bad Faith, but Insurer Defending UIM Claim Does Not Act in Bad Faith by Asserting Comparative Fault Defense against Policyholder. (Recent Court Decisions)

By Stempel, Jeffrey W. | Journal of Risk and Insurance, September 2001 | Go to article overview

Insurer's Misappropriation of Policyholder's Expert Witness in UIM Proceeding Constitutes Bad Faith, but Insurer Defending UIM Claim Does Not Act in Bad Faith by Asserting Comparative Fault Defense against Policyholder. (Recent Court Decisions)


Stempel, Jeffrey W., Journal of Risk and Insurance


Ellwein v. Hartford Accident and Indemnity Co., 15 P.3d 640 (Wash. 2001) (enbanc)

Nancy Ellwein was seriously injured in a 1989 auto accident, suffering permanent injuries that affected her brain function and vision. Unfortunately, she had the further misfortune of having been hit by an underinsured motorist. After the accident, several insurers became involved: Hartford on behalf of Ellwein, Allstate on behalf of the other driver, and SAFECO on behalf of bystander witness Kenneth MacDougall, whose car suffered minor damage from the main collision. Both SAFECO and Allstate paid property damage benefits to their policyholders and then brought subrogation actions against Ellwein. Hartford defended the subrogation claim on behalf of Ellwein, who urged Hartford not to jeopardize her tort claims against the other driver by conceding any comparative fault.

In connection with these actions, Hartford retained an expert witness accident reconstructionist, William Cooper. Cooper's investigation concluded that the other driver was speeding (18 m.p.h. over the relevant posted limit of 45 m.p.h.) and that he likely ran a red light when he hit Ellwein. Hartford took the position with other insurers that Ellwein was not at fault for the accident.

In 1991, Ellwein settled with the other driver for his policy limits of $100,000. Ellwein's injuries were several times that amount and she then sought underinsured motorist (UIM) benefits under her own Hartford policy, which had an upper limit of $1 million. Hartford, which had been aware of a possible comparative fault defense for some time, asserted it against Ellwein in the UIM action. In furtherance of this defense, Hartford retained accident expert Cooper--the same Cooper who had been Ellwein's expert witness--as Hartford's witness and provided Cooper with additional information designed to prompt him to render an assessment that Ellwein--his former "client"--was at least partially at fault for the accident.

On October 7, 1992, as predicted, Cooper gave a sworn declaration in which he revised his initial findings and conclusion. Specifically, Cooper stated that: (1) Gleason [the other driver] entered the intersection on a yellow light, not a red light as previously reported; (2) Gleason's speed was irrelevant because he was there to be seen; (3) Gleason had no reason to believe Mrs. Ellwein would turn in front of him due to the road design; and thus, (4) the accident was solely caused by Mrs. Ellwein's fallure to yield.

15 P.3d at 642 (emphasis added).

Ellwein retained a new expert for the UIM arbitration, who reached conclusions similar to Cooper's original conclusions during the first proceeding where he was working for Ellwein rather than the insurance company. The arbitration proceeded. Hartford offered $300,000 and later $400,000 to settle the claim. The arbitrator ultimately ruled that the other driver was "solely at fault" and awarded the Ellweins gross damages of $929,803.39. Ellwein then sued for bad faith, first filing in federal court and then dismissing to file in state court. After the arbitration award and the initial federal claim but before the state lawsuit

Hartford's home office senior supervisor, William Solito, destroyed the home office file on the Ellwein's claim. Solito explained that it was company policy to destroy the home office file when a claim is closed, and the only items not still available in the field office file were his notes regarding discussions he had with his superiors regarding the Ellwein's claim. Solito, however, admitted that he understood there "was a chance, not a likelihood" the case would be re-filed.

15 P.3d at 643.

The bad faith trial first ended with a hung jury. On retrial, Hartford prevailed. Ellwein sought review, arguing (1) she should have had the benefit of an evidence spoliation instruction against Hartford based on Solito's destruction of the file; (2) Hartford as Ellwein's insurer could not in good faith interpose a comparative fault defense to the UIM claim; and (3) Hartford exhibited bad faith by turning Ellwein's initial expert (Cooper) against her. …

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Insurer's Misappropriation of Policyholder's Expert Witness in UIM Proceeding Constitutes Bad Faith, but Insurer Defending UIM Claim Does Not Act in Bad Faith by Asserting Comparative Fault Defense against Policyholder. (Recent Court Decisions)
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