Cancellation of policy after loss
Roesler v. TIG; 251 Fed.Appx. 489, (10th Cir. Okla. 2007)
Roesler was a nurse anesthetist. He purchased liability insurance from TIG in May 2002. In August 2002, Roesler was sued for his involvement in the June 1998 cesarian section birth of a severely brain-damaged infant. Roesler notified TIG, and TIG rescinded Roesler’s policy because he failed to include information about the incident on his application. Roesler sued for bad faith and breach of contract. A jury awarded him $60,072 for breach of contract, $2.31 million in compensatory damages for TIG's bad faith, and $2.3 million in punitive damages. The Tenth Circuit found that the introduction of certain post - litigation conduct was improper, but it also found that the trial court properly denied TIG’s motion for directed verdict. The Tenth Circuit reversed, the judgment, however, because of improper jury instructions. The trial judge had instructed the jury (over TIG’s objection) that if the jury found that TIG’s coverage position was wrong, they would have to find that TIG acted in bad faith. (Jody R. Nathan made this argument to the trial court). The appellate court agreed. The case was remanded for a new trial.
This is another cancellation bad faith case that shows that Oklahoma juries do not like it when insurance companies cancel policies after a loss. The jury instructions were clearly wrong. If they had set forth the proper standard, it is doubtful the case would have been reversed and remanded. The case settled before re-trial.
