How far will an insurance company go to deny a claim? A case that first began 16 years ago finally culminated this week in a win for the plaintiffs. Sherri Berg and her family received $18 million, as a result of Nationwide insurance getting punished with punitive damages. According to experts, this is the largest punitive damage award in Pennsylvania history that was the result of a “bad faith” insurer.
In 1996, a Chevrolet Suburban crashed into the Bergs’ new SUV. The damage to the vehicle was quite severe, and the car was brought to a local garage. The frame was bent beyond repair, and the mechanic recommended that the car be totaled and used for parts.
Without informing the Bergs of the recommendation to scrap the car, Nationwide decided to seek a second appraisal and had the vehicle repaired for $12,500 — half the cost of replacing it. The car was so badly bent that the engine could not fit in properly. The Bergs stuck with the car, not aware of the risk they were taking, though they agreed it didn’t seem the same as it had been before the accident.
Several months later, they received a phone call from one of the mechanics who had fixed their car. “I knew if it was in a major accident, it would come apart,” David Wert later testified, explaining why he had called the Bergs. The Bergs sued in 1998. Nationwide hired an expert to examine the car, and this expert found additional damage issues. Once again, Nationwide declined to inform the Bergs of these findings until many years later.
“Property damage claims are some of the toughest claims to negotiate because the insurance companies know you don’t have much leverage,” says Jason Charpentier of Growe Eisen Karlen. “If you disagree with their appraisal or what they value the total claim your only other recourse is to file suit and they know most of us can’t be without our car for too long so we take what we can get. It’s unfortunate but I see undervalued property damage claims far too often.”
The judge in this case, Jeffrey K. Sprecher, decided to award high punitive damages because of the extraordinary lengths Nationwide went to bury the case, citing that Nationwide was aware that the vast majority of defendants would not have fought the case for as long as the Bergs did. He agreed that Nationwide acted improperly in originally allowing the Bergs to drive the vehicle. “Nationwide was willing to risk the Bergs’ lives to save itself money on a collision claim,” Sprecher said.
By the time the lawsuit drew to a close, Nationwide had spent over $3 million defending itself to the Bergs. The Bergs’ lawyers went for years without a payment — lead lawyer Benjamin Mayerson said that “a visceral anger at what they were doing” to the Bergs helped to sustain him throughout the years. Although Daniel Berg is thankful they stuck with them, he has regret over how the case ended — that Sherri Berg never knew they won. She died of cancer seven weeks before the judge’s ruling.
Has the case finally drawn to a close? Not completely. Nationwide is now appealing, and asking Sprecher to reverse his decision.