Allstate Must Pay Injured Motorists $16 Million

The couple survived the near fatal crash but suffered horrific injuries.

The lives of Edward and Virginia Johnson were forever changed on March 24, 2000. That’s the day Wayne Davis Jr. – despite having a blood alcohol level twice the legal limit – got behind the wheel of his pick up truck. Davis crossed the center line on U.S. 54 in Camden County and crashed head-on into the Johnsons’ car.

The couple survived the near fatal crash but suffered horrific injuries. Edward was hospitalized for 35 days, 21 of them were in a neuro-intensive care unit. For a portion of the time in NICU, Edward was in a coma. For the lengthy stay as well as treatment of a broken arm, crushed pelvis, a hip that was torn from its socket, a crushed sternum, a broken collar bone, and a thumb amputation, the hospital charged him $185,000.

Virginia also spent some of her 40 days in the hospital in the NICU. For the six surgeries needed to treat her crushed right ankle and kneecap, a broken femur, a dislocated ankle and a cut eyelid, the hospital billed her $135,000.

In addition to the strain of recovering from the life-threatening injuries, the couple had a 16-year-old daughter at home they needed to make sure was taken care of not only emotionally but financially.
Three days after the accident, Davis contacted his insurance agent and informed him of the crash. The insurance agent called Allstate and advised the company that their insured admitted he’d been drinking, that he drove on the wrong side of the road, he had hit another vehicle head on, and the two people who were seriously hurt had to been taken to the hospital by helicopter.

The couple contacted Davis’ insurance carrier, Allstate, and offered to settle for his $50,000 policy limits. Even though Missouri law gives insurance carriers 60 days to accept an offer, it took Allstate more than 6 months to respond.

Fortunately, the Johnsons had hired a lawyer who knew about the time limits and understood that his clients had legal options open to them.

After Allstate failed to settle, the Johnsons sued Davis. Davis then agreed to a judgment against him for $5 million including $1.5 million in punitive damages. In return, the Johnsons agreed they would not try to collect from Davis personally. Instead, Davis and the Johnsons could jointly sue Allstate for bad faith refusal to settle a claim.

A Jackson County jury concluded that Allstate had acted in bad faith and awarded compensatory damages of $5.8 million plus nine percent interest since the date of the consent judgment. The jury also hit Allstate with $10.5 million in punitive damages.

On July 29, the Missouri Court of Appeals for the Western District of Missouri upheld the verdict in Johnson, et al. v. Allstate Insurance Company. Presiding Judge Paul M. Spinden wrote: “Allstate’s failure to recognize the severity of the Johnsons’ injuries and the probability that the claim would far exceed Davis’s policy limits; its failure to investigate the claim and respond to the demand in accordance with the insurance industry standards and its own good faith claim handling manual; and its failure to advise Davis of the demand, his likely exposure for an excess judgment, and his right to retain counsel, are all circumstances supporting a reasonable inference that Allstate’s refusal to settle was in bad faith.”

This decision is important because it holds Allstate accountable for its actions. Hopefully, Allstate will be more responsive in the future, especially in cases involving serious injuries like those suffered by the Johnsons.

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