USI Mid Atlantic Found Liable for Fraud by Jury in Philadelphia

Bucks County Police Officers Sue Insurance Broker for Fraud

A Philadelphia Court of Common Pleas jury has found the insurance broker, USI Mid Atlantic, liable for fraud in seeking to deprive insurance benefits owed to two Bristol Township, Bucks County policemen seriously injured while investigating a traffic accident.

On March 7, 2011, a jury rendered its verdict against USI, a subsidiary of USI Holdings, Inc., a member of Goldman Sachs Capital Partners. Following eight days of testimony, the 12-member jury found USI liable to the injured police officers for fraud, breach of the duty of good faith and fair dealing, and intentional interference with contract. The Honorable Gregory E. Smith presided.

On August 27, 2005, the two policemen, Michael Egan and Mark Buzby, were investigating an accident on Route 13 in Bristol Township, when they were hit by a drunken and uninsured driver traveling at a high rate of speed. The two policemen were crushed against their own patrol car. Egan had his leg amputated and Buzby suffered permanent injuries to his legs.

In their lawsuit, the policemen alleged that, prior to their accident, the USI defendants failed to obtain a written statutory waiver of uninsured motorist coverage as required by the Pennsylvania Motor Vehicle Financial Responsibility Law. The legal effect of this failure, the plaintiffs asserted, was to create an entitlement to benefits by operation of law.

The plaintiffs contended that the USI defendants, realizing their mistake, embarked on a year-long fraudulent scheme to obtain backdated waiver forms from Bristol Township and to use the backdated forms as a basis to deny insurance coverage to the officers. When this conduct was ultimately discovered by Bristol Township’s insurer — more than a year after plaintiffs’ accident — the insurer quickly settled the police officers’ uninsured motorist claims.

The officers proceeded to trial against the USI defendants, seeking damages for loss of the use of insurance funds in the aftermath of the accident, and for the emotional distress caused them as they struggled to recover from their horrific injuries, uncertain as to their future ability to provide for their families.

Following a trial that stretched nearly three weeks, a Philadelphia jury sided with the plaintiffs, finding that USI and two of the firm’s employees — claims manager Robert Brown and assistant vice president Freda Batipps — engaged in fraudulent conduct and intentional interference with contract. The jury also found these defendants, together with USI claims analyst Linda Magovern, liable for the breach of the duty of good faith and fair dealing owed by an insurance broker to an insured.

Although these two officers had already received more than $8 million in recoveries and benefits, the jury found that USI employees committed fraud by producing a backdated waiver form, claiming that the form was valid and enforceable and served to reject uninsured motorist coverage under Pennsylvania law. The jury awarded $500,000 to two Bristol Township police officers, $250,000 to each officer for the emotional distress and other damages caused by the defendants’ misconduct. A motion to permit an additional award for punitive damages has been filed.

Officer Michael Egan was represented by Mark W. Tanner and Peter M. Newman of Feldman Shepherd Wohlgelernter Tanner Weinstock & Dodig, a personal injury law firm in Philadelphia. Officer Mark Buzby was represented by Gerald A. McHugh, Jr. and Daniel Bencivenga of Raynes McCarty, also in Philadelphia.

About Feldman Shepherd — Feldman Shepherd Wohlgelernter Tanner Weinstock Dodig LLP has handled cases producing some of the largest verdicts and settlements in Pennsylvania. The firm represents plaintiffs in significant personal injury, class action, and other complex civil litigation. Clients include victims of medical malpractice, defective products, unsafe workplaces, motor vehicle accidents, legal malpractice and insurer misconduct.