SETTLEMENT FOR BAD FAITH BREACH OF CONTRACT

In 2010, a part-time bookkeeper was injured when he slipped and fell while using the restroom on his employer’s premises.

The bookkeeper’s employer maintained workers’ compensation insurance and commercial general liability insurance policies with the same insurance company. The initial claim for compensation, made under the general liability policy, was denied, so the bookkeeper made a claim under the workers’ compensation policy.

That claim was also denied, and another attempt at compensation was made with the insurance company’s general liability department. That claim was denied on the basis that the worker was acting in the scope and course of his employment. The insurance company turned down the bookkeeper’s policy limit settlement offer.

The bookkeeper then sued his employer in state court. The insurance company refused to defend the employer, and the court entered judgment for the injured worker in an amount exceeding $1 million plus costs and interest. This came after an initial settlement offer of $15,000.

The bookkeeper then sued the insurance company, and the insured employer also filed cross claims against the insurance company for bad faith and breach of contract. The parties agreed to mediate the case and reached a settlement for $4.8 million in August 2015.