The insurance company for a Massachusetts adult entertainment club failed to investigate an accident that severely injured an employee, a federal judge has found. The employee filed a civil case against the company for insurance bad faith.
The judge found the insurance company’s actions “willful, knowing and in bad faith” when it ignored the facts of the accident and denied the employee’s insurance claim. The maximum the company had to pay under the policy was $300,000 but the judge ordered the to pay $5.4 million.
Accident after being served at work
One night in 2010, according to the judge’s findings, the club served the employee, a 20-year-old dancer below legal drinking age, up to 15 shots of vodka. One of the club’s bouncers held onto her keys, opened her car door and helped her sit up in the driver’s seat before giving her keys back and watching her drive away, the judge found.
Moments later, the employee had just begun moving after stopping at a stop sign when her car was hit by a car driven by an off-duty police officer going 22 mph over the speed limit. The injured officer was not tested for impairment. The employee’s injuries left her with diminished mental capacity and facial injuries requiring more than 12 surgeries.
Insurance company denies claim with little investigation
The insurance company initially spent less than $600 questioning bartenders and other employees, including another off-duty police officer with a “profitable” security gig. All denied the club had served the woman drinks. The company then denied any settlement for the woman’s claims.
As the federal judge’s opinion later put it, “the employees who were interviewed had vested interests in not revealing their conduct, a fact that was obvious to anyone who understood their potential liability for serving an underage person who got into a serious car accident after leaving the club.”
“Quite simply,” the judge wrote, the company’s “conduct in handling this claim was exactly the type of conduct” the law forbids.