CHARLESTON – Erie Insurance Property and Casualty Company may have violated state law, according to Justice Brent Benjamin of the West Virginia Supreme Court of Appeals.
Benjamin cast suspicion on Erie Insurance in a July 25 opinion supporting a unanimous Court decision against the insurer.
The Court in June affirmed Ohio County Circuit Judge James Mazzone, who ordered Erie Insurance to disclose the amount it reserved on a claim of Elizabeth Murfitt.
Murfitt alleges that Erie Insurance showed bad faith in handling an auto accident that shattered her wrist.
Prior to trial, Erie Insurance offered $47,000 to settle her claim. On the second day of trial, Erie Insurance settled for $800,000.
"It appears Erie consistently offered to settle Ms. Murfitt's claim for less than her incurred medical bills and without regard for her lost wages for nearly two years prior to the commencement of the trial of the underlying personal injury action," Benjamin wrote. "Then, within the month before the personal injury trial was to commence, Erie's settlement offer increased exponentially without any objective evidence of newly discovered facts justifying such a dramatic increase."
He wrote that the amount Erie Insurance reserved for her claim "constitutes primary evidence of whether the insurer attempted, in bad faith, to settle a claim for substantially less than the amount it deemed reasonable and equitable compensation for the injuries sustained."
"If the reserves are vastly greater than the settlement offers made, such fact may show that Erie violated West Virginia law by attempting, in bad faith, to settle Ms. Murfitt's claim for far less than Erie reasonably believed its value to be," Benjamin wrote.
In a footnote he hinted at hypocrisy. If Erie Insurance faced a claim that it violated state law, he wrote, it would eagerly disclose its reserves if they were reasonably related to its settlement offers.