The Complexity of Personal Injury Claims

As is often the case in serious personal injury cases, claims are made upon multiple parties and multiple layers of insurance coverage.  It is common, for a variety of reasons, to reach a settlement with some parties or layers of insurance coverage with the intent of partially releasing certain parties or insurance policies while leaving open the ability to go forward with trial in order to collect from remaining parties or insurance policies.

This enables injured victims to collect partial recovery of their damages without delay from those policies ready to settle, while continuing the case in pursuit of additional coverage. In the July 19, 2010 S.C. Supreme Court decision Fowler v. Hunter, the Court reviewed the lower courts’ decision regarding a settlement between a couple who were seriously injured when their motorcycle was struck by a doctor’s wife in a car owned by the doctor’s medical practice.

In the settlement agreement, the plaintiffs agreed to release the doctor’s wife and business from exposure to the execution of any judgment obtained at trial in exchange for the policy limits of the automobile liability policy (one million dollars), the policy limits of the doctor and wife’s personal umbrella policy (two million dollars) and a tender of one and a half million dollars from a commercial umbrella policy on the doctor’s medical practice.

Additionally, the Fowlers received as consideration in the settlement an assignment of claims the doctor and doctor’s insurance company had against the commercial umbrella policy agent for failure to properly fill out the commercial umbrella policy application.  This alleged professional negligence on the part of the agent deprived the doctor coverage of up to four million dollars.

As a result of this settlement agreement, the plaintiffs were able to receive 4.5 million dollars in exchange for the rights to pursue a jury trial judgment and professional negligence claim that could potentially recover the remaining 2.5 million dollars in coverage under the commercial umbrella policy.  The doctor’s wife, doctor and insurance companies would all be free from further exposure, and the only remaining exposed party would be the insurance agent.

The agent moved for summary judgment arguing that because the settlement technically removed the risk of exposure from the doctor’s medical practice or to the insurance company, it could not be proven that his mistake damaged the doctor or his insurance company.  In other words, that the settlement removed a necessary element of the negligence claim-damages.  The trial court agreed and granted summary judgment, but the Court of Appeals reversed.

The Supreme Court agreed with the Court of Appeals that the case should be allowed to go forward against the agent.  Because South Carolina courts favor settlement, as long as there is no collusion involved, such settlement agreements will be honored.  The remaining parties will not be allowed to defeat the assigned claims by technicality.

As a personal injury lawyer in South Carolina and Georgia , I believe this case is a victory for injured persons who desire to resolve claims with some parties or layers of coverage while leaving open the right to pursue remaining parties or coverage.  Agreements negotiated fairly, without collusion, will be enforced by our courts.