MARCH 2006 BAD FAITH CASES EXPERT TESTIMONY ON LEGAL MAL PERMITTED WHERE CARRIER KNOWINGLY APPOINTED SINGLE COUNSEL TO REPRESENT TWO INSUREDS DESPITE CONFLICT OF INTEREST (Philadelphia Federal)

In Jurinko v. Medical Protective Company, a dermatologist and pathologist had failed to diagnose Jurinko’s skin cancer.  Jurinko brought suit in the Philadelphia Court of Common Pleas.  The same carrier provided a single lawyer to represent both doctors in the early part of the case, even though there were potential cross claims and a conflict of interest.  One doctor had no liability, but the other was found liable for $2.5 Million by the jury, far in excess of his available insurance.  He assigned his bad faith claim to Jurinko, and the bad faith suit proceeded to trial in federal court.  The federal jury awarded $1.6 Million in compensatory damages and $6.25 Million in punitive damages.  The trial judge refused to grant the carrier’s post trial motions.  The Federal Judge found there was sufficient evidence for the jury to have found bad faith because of appointing a lawyer with a conflict of interest. Among other things, the carrier’s employee testified that the carrier was “fully aware that it was unethical [to assign one lawyer] and would create a conflict of interest, and that it did so to save money.” Plaintiffs were permitted to put on expert testimony relating to defense counsel’s malpractice.  The malpractice was not per se evidence of bad faith, but the point of the evidence was to establish there was an irreconcilable conflict and the carrier had a duty to provide separate counsel, knowing that it was unethical for counsel to represent both of its insureds.  The expert “testified that this breach of [the carrier’s] duty to provide an adequate defense for its insureds was an act of bad faith,” which the court found central to the case.

Date of decision:  March 29, 2006

Jurinko v. Medical Protective Co., United States District Court for the Eastern District of PA, No. 03-CV-4053, 2006 U.S. Dist. LEXIS 13601 (E.D. Pa. Mar. 24, 2006) (Rufe, J.)