Jury Awards Injured Cyclist Almost $3 Million for Geico’s Bad Faith

When you sign a contract with your insurance company, you do so in good faith. Basically, that means when something goes wrong, you’ll tell the truth; in return, the insurance company will be honest and fair in its assessment – or, so the theory goes.

When your insurance company doesn’t treat you fairly within the terms of the contract, or purposely delays or stalls a payment on a claim, or puts its best interest before yours, it is acting in bad faith. That is what federal jury in Georgia decided happened to bike rider Terry Guthrie, after he was hit by a car in 2012. Geico’s bad faith actions led the jury to award Mr. Guthrie nearly $3 million, though Geico is responsible for just over $2 million of the award.

How Geico acted in bad faith

Mr. Guthrie was riding his bike at the time he was hit by a car. As The Telegraph summarized, “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.” Mr. Guthrie sustained injuries to the neck and back, and asked for $30,000, the limits for the policy. Instead, Geico countered with $12,500 and refused to budge.

Mr. Guthrie didn’t have medical insurance at the time, and his bills came to around $10,000 – but that was only for the medical treatments he had already received. Given the injuries were to his back and his neck, follow-up care would be needed, and Mr. Guthrie couldn’t pay for that without a larger settlement amount. As such, his lawyer explained that the settlement award Geico offered would actually put Mr. Guthrie at “financial risk.” Again, Geico refused to negotiate, siding with the adjuster’s decisions about the true value of Mr. Guthrie’s injuries. So Mr. Guthrie sued Ms. Winslett in Superior Court, and asked for close to $2.9 million.

Neither Winslett nor Geico ever answered the complaint, so the judge issued the default judgement for the full amount. Geico was found 70% liable, and the driver 30% liable. (We’ll come back to these numbers in a bit.)

Why didn’t Geico respond?

This is where the story gets, well, strange. According to Property Casualty 360, a popular insurance blog:

The insurer had been declared in default after the defendant driver — who had borrowed the Geico customer’s car and was driving on a suspended license — allegedly failed to tell the insurer she’d been sued.

The case had several unusual complications, including Geico’s claim that it had offered to settle the injured man’s claims for $12,409—less than half of the $30,000 policy limit his lawyers demanded—but had been frustrated by “fruitless” efforts to follow up on the offer with his lawyer.

There were also allegations that the defendant driver was difficult to reach and tore up a letter from Geico because she was “messed up that day” and “probably on crack or pot” when it arrived.

The judgment clearly got Geico’s attention. After all, they could have settled the case for $30,000, but they refused, and made a slew of excuses as to why they shouldn’t have to pay the award. They doubled-down, hiring another lawyer on Winslett’s behalf to see if they could have the judgment set aside. Remember: by this time, Geico is claiming they had no idea about the lawsuit, and only learned about it after the default judgment was set. Because they failed to pay a fair settlement in the first place, and because Mr. Guthrie was broke, he declared bankruptcy. Then, his “trustee for the U.S. Bankruptcy Court, Middle District of Georgia, filed an involuntary bankruptcy claim against Winslett, attempting to collect the nearly $3 million.” Geico then had to hire another attorney to fight the bankruptcy petition. As Guthrie’s lawyer told The Telegraph:

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.

To recap: Geico’s actions in this claim cost the company close to $2 million in awards, not to mention the costs of hiring additional lawyers. Had they done the right thing six years ago, and agreed to the policy limits of $30,000, everyone would have been happy. Instead, because the jury found both Geico and Ms. Winglet responsible – for the crash, for the ongoing litigation, for the bad faith, etc. – Geico will have to pay just over $2 million.

The wheels of justice may turn slowly sometimes, but they do turn. At Plattner Verderame, P.C., our team of Phoenix bad faith lawyers can help you seek fair and appropriate compensation for your claims. If you were injured, or sustained property damage in Arizona, and your insurance company is dragging its feet, let us help. Please call 602-266-2002 or fill out our contact form to learn more.