Policyholders win $40 million suit against Progressive

An Oklahoma woman won a $40 million lawsuit against Progressive for breaching its duty of good faith and fair dealing in its handling of her underinsured motorist claim.

In August 2022, Mary Paulding sought $25,000 in underinsured motorist benefits. Progressive argued that its investigation, evaluation, and offer were “reasonably delayed as plaintiff failed to remit documents necessary for evaluating the claim,” according to court documents.

Documents Progressive said it needed included additional medical records, a wage verification form from Paulding’s employer with a doctor’s note, and written verification that the tortfeasor’s carrier had tendered its liability limits to Paulding.

Paulding argued that the delay was “unavailing,” pointing to Progressive’s completion of the claim evaluation without the medical records or wage verification form it said it needed. Court documents note that Progressive’s adjuster performed the evaluation the day after Paulding received written confirmation of the payout from the tortfeasor’s liability carrier.

The jury’s verdict awarded $20 million in compensatory damages and $20 million in punitive damages.

“The evidence at trial showed that Progressive’s adjusters lacked a basic understanding of how to handle Oklahoma underinsured motorist claims and were incentivized through a company-wide profit share program to reduce loss payouts and claim costs,” states a press release from Smolen Law, which represented Paulding. “The jury heard overwhelming evidence that Progressive mishandled and delayed its investigation into the plaintiff’s injuries and failed to consider critical information in its evaluation.”

The court’s ruling notes that under Oklahoma law, insurers have an “implied-in-law duty to act in good faith and deal fairly with the insured to ensure that the policy benefits are received.”

“Where an insurer violates this duty, the insured may bring ‘an action in tort for which consequential and, in a proper case, punitive, damages may be sought,'” wrote U.S. Magistrate Judge Christine D. Little. “To succeed in such an action, the insured ‘must present evidence from which a reasonable jury could conclude that the insurer did not have a reasonable good faith belief for withholding payment of the insured’s claim.'”

She also states that case law shows an “insurer does not breach the duty of good faith by refusing to pay a claim or by litigating a dispute with its insured if there is a legitimate dispute as to coverage or amount of the claim.”

“In viewing the undisputed facts in the light most favorable to the nonmoving party, the court concludes that a reasonable jury could find that defendant reasonably withheld benefits owed under plaintiff’s policy,” the order states. “The undisputed facts show that defendant never ceased its attempts to communicate with plaintiff through her prelitigation counsel prior to this suit. A reasonable jury could conclude that defendant’s investigation was reasonably delayed by plaintiff’s counsel’s failure to timely respond to defendant’s requests for a recorded statement, medical records, and verification of plaintiff’s wages. Nor do the parties dispute that prior to filing suit, plaintiff never responded to defendant’s offer of benefits following its investigation.”

Little ruled that Progressive’s request for additional medical records was unnecessary as they had already been sent in full; the requested wage information wasn’t necessary to make an offer; and Progressive “had long since already possessed” confirmation of the tortfeasor’s payment of policy limits. Little ultimately denied Progressive’s motion for summary judgment.

“Given these well-supported factual contentions, a reasonable jury could find that some or none of these requests — nor plaintiff’s counsel’s failure to timely address them — gave defendant a justifiable reason to delay or withhold payment of benefits under plaintiff’s UIM policy,” Little wrote in the order.

In the press release, lead trial attorney, Donald E. Smolen, II, stated: “This verdict sends a clear message to Progressive and to every insurance company doing business in Oklahoma: policyholders are not simply a means to collect premiums and increase corporate profit – they are people you promised to protect. Our client trusted Progressive to honor its policy when it mattered most and instead faced a slow-walked investigation and an offer that didn’t come close to compensating her for the injuries she sustained. This jury saw through that conduct and held Progressive fully accountable.”

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