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Written by AMLO.

Insurance bad faith in Lincoln County

Johnson v. Kentucky Farm Bureau

Lincoln County, KY (2000)
The bad faith verdict of $1,050,000 against Kentucky Farm Bureau was the largest verdict in the history of Lincoln County

THE UNDERLYING CASE

Johnson was injured in a car accident with a drunk driver. She suffered connective tissue injuries to her neck, rotator cuff injuries to her shoulder, and a broken thumb. Her medical expenses totaled $15,000.00. The drunk driver`s insurer paid policy limits of $25,000.00 and she released the tortfeasor.

Johnson had underinsurance motorist (UIM) coverage with Kentucky Farm Bureau. Her policy limits were $50,000. However, when Johnson filed a claim for her UIM benefits, Kentucky Farm Bureau only offered her $10,000. Johnson refused to accept anything less than the $50,000 policy limits, and obtained a judgment against Kentucky Farm Bureau. The first jury awarded $30,000 for pain and suffering, $30,000 for lost earning capacity, $30,000 for future medicals and $8,400 for lost wages. After setting off the $25,000 received for the tortfeasor and $10,000 from PIP, Judgment was entered for $64,000. Since this exceeded the policy limits, Johnson sued Kentucky Farm Bureau, alleging bad faith. Plaintiff claimed defendant failed to investigate her claim or respond to her attorney`s payment demands.

THE BAD FAITH TRIAL

Mr. Mehr represented Johnson in the trial of the bad faith case in September 2000. After a three day trial, the jury awarded $1.03 million, including $1 million in punitive damages. This is the largest verdict in the history of Lincoln county. Mr. Mehr showed the jury outrageous parts of the training manuals that instructed the insurance company employees on how to lowball people on their claims, proving a stark contrast between the advertisements and the real way claims are sometimes handled.
Kentucky Farm Bureau appealed and the Kentucky Court of Appeals upheld the verdict. They appealed again to the Kentucky Supreme Court, where the case was argued in January 2004. The Supreme Court has granted a new trial of this matter in a 4-3 decision.

Four members of the Supreme Court believed a new trial was necessary because the trial court had erroneously admitted testimony about another similar case.

Notably, three members of the Kentucky Supreme Court had this to say about evidence MFTL uncovered and presented to the jury:

In its advertising and other communications with their policyholder, the insurance company endeavored to assure that UIM coverage would prevent her from suffering financially if she were ever injured by an irresponsible or financially underinsured motorist and that Farm Bureau would help her to recover from any loss as quickly as possible because "helping you is what we do best."

The evidence in this case indicates that in contrast to these pleasant reassurances, such were deceptive representatives because Kentucky Farm Bureau trained its adjusters to exploit financially weak claimants. The adjuster's training manual encouraged the adjusters to plant uncertainty in the minds of claimants; to seize upon "any fear anxiety and money needs for settlement purposes; to overreach and take advantage of the delays occasioned by litigation and to cause intimidation by the fact that Farm Bureau had a stronger base of power in any claim because it controlled the money. Insurance bad faith in Lincoln County