A Lawrence County family will receive $18 million in damages for their severely injured son after pursuing a claim for bad faith arising from Erie Insurance Exchange's ("Erie") handling of a single car accident, which occurred on February 22, 2003. Attorney Dallas W. Hartman had previously obtained a $15.6 million dollar verdict on behalf of David and Joyce Piper, as Guardians of Stephen Piper, back on March 15, 2007, in connection with the underlying motor vehicle accident. That verdict, one of the largest ever in Lawrence County, grew to over $20 million dollars based on the addition of post-judgment interest since the original verdict was entered. The Pipers, on behalf of their incapacitated son, thereafter pursued a claim against Erie. The $18 million dollar settlement is one of Pennsylvania's largest settlements arising from a bad faith claim in the past decade and second only to a $20 million dollar settlement in the 2007 Tuski v. Princeton Insurance case.
On February 22, 2003, Stephen Piper, 15-years old at the time, sustained catastrophic brain injuries, leaving him incapacitated and unable to care for himself. Stephen was a passenger in a vehicle being driven by his 17-year-old brother, Kyle. The two were on their way to a church youth group when Kyle hit a patch of ice and spun out of control, crashing into a telephone pole, essentially splitting the car in half. Stephen was transported from the scene to St. Elizabeth's Medical Center in Youngstown, Ohio, via Life-Flight, where he spent several weeks in a coma. Two months after the accident, Stephen was transferred to The Children's Institute of Pittsburgh, where he underwent extensive inpatient rehabilitation through September 2003. As a result of the injuries he sustained in the February 22, 2003 accident, Stephen has been left with diminished mental capacity and permanent bodily and cognitive disabilities. Stephen's injuries have prevented him from ever being able to live independently and have caused him to lose all wage earning capacity.
At the time of the accident, Kyle Piper was insured by Erie under a policy of insurance providing $100,000 in bodily injury coverage. Shortly after the accident, Erie knew that their insured, Kyle Piper, was at fault for the accident and that as of August 6, 2003 Stephen was still at The Children's Institute. In addition, Erie knew that more than five (5) months after the accident, Stephen was still unable to talk and could only walk about 100 yards at a time. In May of 2003, Erie had set its reserves to settle the case at the policy limit of $100,000, but failed to offer that amount to settle Stephen's bodily injury claim. Instead of offering to settle Stephen's claim for the $100,000 policy, as one of her supervisor's had directed, Erie claims adjuster Lauren Lackey advised Stephen's attorney, Dallas Hartman, that she was still investigating this accident. According to Attorney Hartman, by September of 2003, six months after the accident, the insurance company still refused to pay the $100,000 bodily damage settlement, even after they had received all relevant accident reports and medical records, including documentation demonstrating that, to that date, Stephen had incurred medical expenses in the amount of $708,232.60.
Attorney Hartman continued to request that Erie offer the $100,000 in available bodily injury insurance coverage so that the family could pursue a claim for underinsured motorist benefits available under other vehicles owned by the Piper Family, which were also insured by Erie. When Erie finally offered to settle Stephen's claim against Kyle, Erie conditioned the third-party settlement upon Stephen, also giving up any other claims he may have had against Erie, including any claims for underinsured motorist benefits. Attorney Hartman cautioned Erie's adjuster that it was impermissible to tie the settlement of Stephen's claim against Kyle to Stephen's separate claim against Erie for underinsured motorist coverage. Attorney Hartman stated that "Erie was essentially attempting to steal $200,000 in available underinsured motorist coverage from the Pipers by trying to force Stephen to release his underinsured motorist claims against Erie in order to receive the $100,000 in insurance coverage from Erie for Kyle's negligence in causing the February 22, 2003 accident."
Based on Erie's continuous insistence that the $100,000 bodily injury settlement of Stephen's claim include the release of any and all claims against Erie, Stephen's parents, David and Joyce Piper, were forced to file a lawsuit on behalf of Stephen, due to his incapacity, against his brother and their son, Kyle. The automobile case was eventually tried before the Honorable Thomas M. Piccione in March 2007. Shortly before the automobile case went to trial, Erie actually filed its own law suit against Kyle Piper, asking the court to declare that its handling of Stephen's claim against Kyle was not handled in a "bad-faith" or inappropriate manner. On March 15, 2007, a Lawrence County jury returned a verdict in favor of David and Joyce Piper, as Guardians, on behalf of Stephen Piper, in the total amount of $15,602,612.79. The verdict consisted of $735,000 for past medical benefits; $8,317,612.79 for future medical expenses; $2,300,000 for past and future lost wages; $1,500,000 for loss of enjoyment of life; $2,000,000 for pain and suffering; $250,000 for embarrassment and humiliation; and $500,000 for physical disfigurement. Attorney Charles Garbett, of Luxenberg, Garbett, Kelly & George, P.C., defended Kyle on behalf of Erie at the trial in the underlying automobile case.
In response to the claim brought against it for "bad-faith," Erie argued that adequate documentation of Stephen Piper's injuries was not made readily available at first and that the adjuster handling the case continued to investigate liability even after the Erie home office had suggested settlement of the claim. Claims Adjuster Lauren Lackey claimed that she was actually waiting for documentation of the ambulance trip from the night of the accident; however, Stephen was never taken anywhere in an ambulance. Likewise, ERIE claims supervisor Bret Ellis alleged in his deposition that all that was necessary was "[s]ome form of medical documentation showing prognosis and diagnosis," however, no one from Erie ever conveyed that request to Attorney Hartman, nor was that request reflected in Erie's extensive claims notes. Moreover, the Life-Flight documentation, which was already in Erie's possession, should have sufficed to allow Erie to offer its policy limit.
As for the request that Erie be included on the release to settle Stephen's claim against Kyle, Erie claimed that the request to include Erie on the release was inadvertent, despite Adjuster Lackey's follow up letter claiming that the request was only being removed.
Attorney Joel Feller, of the Philadelphia firm Ross Feller Casey, was subsequently brought in to assist attorneys Dallas Hartman and Douglas Olcott of Dallas W. Hartman, P.C. in the "bad-faith" claim when it became apparent that Erie was seeking to blame Attorney Hartman for Erie's committal of "bad-faith." However, as Attorney Hartman noted: "A claim of 'bad-faith' is based solely on the conduct of the insurance carrier. Nothing I did, or could have done, in any way influenced the decisions being made internally by Erie in their handling of Stephen's claim against Kyle, as was ultimately proven by documentation contained in Erie's own claims file, uncovered during the course of this litigation."
Attorney Hartman stated: "I'm glad to see that Stephen will now receive the compensation the jury previously felt he was entitled to receive back in 2007. It is a tremendous relief for Stephen's parents, David and Joyce Piper. David and Joyce now know that there is now money available so that Stephen, who is currently 26 years old, will be able to be provided with the type of care and assistance that he needs for the rest of his life, and that he won't ever have to be placed in a nursing home once they are no longer alive or physically able to care for him. This settlement will also now allow the entire Piper Family to heal and move forward after Erie's "bad-faith" conduct forced these parents to have to sue their own child, Kyle, in order to obtain compensation that their other child, Stephen, was entitled to receive as a result of the severe injuries he received in this tragic accident. What Erie put this entire family through is unacceptable and this settlement holds Erie accountable for that conduct. Erie severely underestimated this family's resolve and the intelligence of Lawrence County's jurors. Erie never believed that a jury would award this type of money to someone who was suing his own brother. However, as can be seen by the amount of the jury's verdict, this jury understood how significant Stephen's injuries were, the costs associated with providing Stephen a lifetime of care, the economic loss suffered by Stephen due to his inability to work, and what it means for a fellow human being to sustain a loss of enjoyment of life, to endure pain and suffering, embarrassment, humiliation, and disfigurement."