AIG could pay dearly for refusing to budge on a claim settlement offer of $2.65 million for nearly a year after receiving estimates that a jury would likely award the claimant $7.5 million for her injuries.
A jury did eventually award $7.5 million in damages and the plaintiff then sued AIG again for not making a prompt and fair settlement offer before the cas
e went to trial. The First Circuit Court of Appeals has ruled that whether AIG should have been more prompt with a fair of
fer should be decided by a jury. The appeals court vacated a federal district court’s grant of summary judgment on that issue to AIG.
In January 2015, when she was 34 years old, Paula Appleton sustained life-altering injuries in a car accident. Appleton was the passenger in a car that her fiancé, n
ow husband, was driving when a pickup truck struck their car from behind and propelled it underneath the tractor-trailer in front of them, nearly flattening their vehicle
. Emergency responders had to extricate Appleton from the car and then transport her to a hospital via helicopter. There, Appleton was diagnosed with severe injuries, including a hemorrhage, pelvic fracture, hip fracture,
leg fractures, and a ruptured bladder. She remained in the hospital for nearly three weeks and then spent four months in inpatient rehabilitation facilities.
Appleton eventually filed an insurance claim against the driver of the pickup truck and his employer, a company with a liability insurance policy with Nation
al Union Fire Insurance Co., administered by AIG. AIG received notice of Appleton’s claim in December 2015.
Mediations
Appleton’s counsel shared a demand package with AIG in August 2016. The package included a formal demand of $18 million to cover Appleton’s $600,000 medi
Watch More Image Part 2 >>>
cal lien, $3.72 million in future medical care costs, and $13 million in past and future pain and suffering. It also included a
n analysis of Appleton’s injuries, various medical reports, a life care plan and economic analysis, and a “day in the life” video depicting Appleton’s daily experience living with her injuries.
Over the next two years, from March 2017 to January 2019, Appleton and AIG exchanged settlement offers and expert reports but were unable to settle the case, despite participating in three mediation
s. In response to Appleton’s initial $18 million demand, AIG offered $7
50,000 and then raised its offer to $2 million during the mediation. Appleton rejected both offers and requested $17 million instead.
AIG indicated it needed additional evidence of Appleton’s alleged bladder injury and urinary incontinence. Appleton’s counsel shared with AIG reports from two urologists who said that Appleton suff
ered from “severe incontinence” due to injuries she received during the crash, and who predicted that the incontinence would worsen over time. Despite this additiona
l medical information, however, AIG only increased its settlement offer from $2 million to $2.65 million. Appleton rejected AIG’s offer and demanded $16 million instead.
After that second mediation was unsuccessful, solicited three independent estimates of a potential jury award in Appleton’s case between October 18, 2017, and January 4, 2018. First, defense counsel estimated a jury verdict of between $6.5 million and $8.5 million. Second, a group of senior AIG claims professionals valued the claim at an average of $4.9 million. After receiving these estimates, the insurer increased the reserves to pay Appleton’s claim from $4 million to $7.5 million. Third, AIG hired an external jury consulting firm to conduct a mock trial of Appleton’s case and simulate the results of 500 juries. On January 4, 2018, the consulting firm reported an average total damages award of $7.53 million.