Decision shows employers and excess carriers are on same footing in TPA claims mishandling
RPNA won a significant claims mishandling case on behalf of Swiss Re, one of the world’s leading providers of reinsurance. After a three week trial, the superior court ruled that Sedgwick TPA Specialty Risk Services (SRS) committed seven distinct acts of negligence in handling a workers’ compensation claim that caused damages of nearly $6.8 million. Combined with prejudgment interest, the verdict totals in excess of $9.1 million.
“We litigated tenaciously for years,” explains RPNA partner Michael Adreani, who co-tried the case with RPNA senior partner Drew Pomerance. “It’s probably the most contentious litigation I’ve ever handled.”
The case began in 2010 with a dispute between Westport Insurance Corp, a subsidiary of Swiss Re, and El Pollo Loco (EPL), the employer of a worker who was injured on the job and was obtaining workers’ compensation benefits. Westport was the excess carrier, covering the losses on the claim above EPL’s $500,000 retention. However, Westport began to question EPL when claims costs began skyrocketing. After some investigation, both Westport and EPL determined it was SRS who mishandled the claim, incurring high costs for 24/7 nursing care, which was clearly unwarranted. Westport paid the claim, and El Pollo Loco agreed to assign its rights against SRS to Westport to seek recovery.
After several years of litigation, the case proceeded to trial in the LA Superior Court before Judge William McLaughlin. Following the closing arguments, the court issued its decision, finding that substantial evidence of SRS’ negligence and claims mishandling caused Westport to pay $6.8 million more on the claim than it should have paid. He awarded another $2.3 million in prejudgment interest for a total verdict of $9.1 million.
Pomerance said: “We were thrilled to achieve this tremendous result for our client after a hard fought 3-week trial.” Adreani adds: “What this case demonstrates is that excess carriers and employers are on the same footing when dealing with TPA mishandling of claims. Employers can and should enforce their rights to pursue remedies against their TPAs when there is negligence in handling their workers’ compensation claims, mistakes that can cost them millions of dollars.”
For more information about the superior decision in Specialty Risk Services, LLC v. El Pollo Loco, et al (LA Superior Court No. BC 465085) or questions regarding claims mishandling, please contact Michael Adreani or Drew Pomerance at (818) 992-9999.
Roxborough, Pomerance, Nye & Adreani, LLP (RPNA) is a Los Angeles-based law firm providing expert legal counsel and representation to the California business community. Established in 1995, the firm offers a broad range of legal services in all facets of civil litigation, with its primary focus on litigation, legislation and policymaking issues involving insurance and business related concerns.