A U.S. district court issues two pretrial decisions allowing dueling experts to testify about the standards and practices of the insurance industry with regard to non-contractual payments for establishing a guardianship and a special needs trust (SNT) for an injured party. Christine Decamp, as Guardian of the Property of Timothy G. Decamp, Jr., et. al. v. State Farm Fire & Casualty Company (M. D. Fla., Tampa Div., No. 8:20-cv-1747-VMC-TGW, Sept. 7, 2021).
In 2009, Florida resident Jasmina Woltcheck was involved in a motor vehicle crash in which her vehicle struck a pedestrian, Timothy DeCamp, Jr. Mr. DeCamp sustained permanent and incapacitating injuries, including traumatic organic brain injury, and was confined to a wheelchair. As a result of his injuries, he was unable to care for himself or manage his affairs.
Ms. Woltcheck was covered by a State Farm automobile policy with bodily injury liability coverage of $50,000 per person. State Farm agreed to pay that sum for Mr. DeCamp’s injuries and required the execution of a release. The sum was not accepted because demand was also made for additional monies to pay for the appointment of a guardian and to secure a special needs trust for Mr. DeCamp, among other things. State Farm refused to make any supplemental payments which were not required by contract or to contribute to such costs.
Ms. Woltcheck then assigned her rights against State Farm to Mr. DeCamp, who filed suit alleging that State Farm had breached its good-faith duties owed to Ms. Woltcheck. In support of their respective claims, each party retained an expert and filed a Daubert motion to exclude the other’s opinion testimony:
Mr. DeCamp’s expert testified that:
- State Farm failed to resolve the matter and protect its insured from a significant excess judgment, which was contrary to the custom and practice in the industry.
- A settlement should have been immediately accepted for a total payment of $65,000 assuming the cost of a guardianship was at least $15,000.(“No sane person faced with that opportunity” would not have accepted it, the expert opined.)
- In refusing to pay or contribute to the expense of the guardianship to resolve the catastrophic claim, State Farm was not acting consistent with the custom and practice in the industry.
- It is irrelevant that the policy did not promise to pay for guardianship costs or special needs trust fees because insurance companies frequently pay “routine loss expenses” that they are not required to pay under the terms of a policy.
State Farm’s expert testified, in part, that:
- Under the totality of the circumstances, State Farm had “met its fiduciary obligations and complied with applicable industry standards.”
- The State Farm policy clearly and unambiguously did not obligate State Farm to pay for the guardianship or the special needs trust or to pay for the legal and other fees associated with their establishment.
- The industry standard is not now, nor has it ever been, that a carrier must make extra contractual payments over and above its purchased policy limits to effectuate a settlement in order to be in good faith.
The trial court denied the parties’ motions, with the limitation that neither expert would be permitted to offer a legal conclusion, and allowed the expert’s testimony to proceed subject to cross-examination.
For the order regarding Mr. Decamp’s expert, click here.
For the order regarding State Farm’s expert, click here.