Antone Nelson v. Progressive Corporation, et al.

Insurance Misrepresentation – Compensatory Damages – In July 1993 Antone Nelson's left Knee was injured when a vehicle driven by an intoxicated motorist collided with Nelson's vehicle at an Anchorage intersection. The other motorist was uninsured, but Nelson had uninsured motorist coverage of $100,000 and medical payments coverage of $10,000 with Progressive Insurance.

Adjuster Timothy Intfen was assigned to Nelson's claim. In order to investigate Nelson's claim, Intfen requested damage information from Nelson's present and past treating physicians, and his employer. During the investigation, Intfen learned that Nelson had torn his left anterior crucilate ligament (ACL) in a motorcross accident in 1984. He required reconstructive surgery for the injury.

Nelson was unable to work for three months following the accident. He had seen two physicians, and was in physical therapy. In November 1993, Progressive offered $10,000 to settle Nelson's uninsured motorists claim. He rejected the offer but did not make a counter offer. In February of 1994 Nelson's knee specialist to him that unless he had arthroscopic surgery, he would have to learn to live with pain. In March 1994 Nelson Nelson told Progressive what his physician had said, and made a settlement offer of $70,000. Progressive counter offered with a settlement of $18,000 which Nelson rejected. Little progress was made toward settlement after this point.

In May 1998 Progressive retained the services of Slealth Group for surveillance of Nelson's activities, and Comprehensive Medical Review for a review of Nelson's medical records. The Stealth Group documented Nelson's activities for three days in May, and then provided Progressive with a seven-page report and videotape. A doctor with the Medical Review company, Dr. Curran suggested that all the care that Nelson has received plus and future surgery should be attributed 100% to the previous problem with his ACL.

IN June 1994 Nelson offered to accept $119,377.50 to settle his claim. Progressive responded by giving Nelson the videotape made by Stealth, and Dr. Curran's medical report, and made their previous offer of $18,000. Nelson responded by saying that the non-examining physician's claims were not valid, and repeated his last settlement offer. The two had reached an impasse, and Progressive invoked the arbitration clause in the policy. The provided Nelson with a copy of what it stated was his complete file.

Both parties retained counsel for the arbitration. Progressive's counsel instructed the Stealth Group to prepare a condensed version of the surveillance tape for the arbitration hearing. After viewing the videotape eat the arbitration, Nelson and his attorney realized that the condensed videotape was incorrect because it did not contain certain scenes that Progressive had previously disclosed.

At arbitration, Nelson was awarded $195,000 plus prejudgment interest. Progressive subsequently paid Nelson's policy limits. Based on these events, Nelson filed a bad faith lawsuit against Progressive, seeking both compensatory and punitive damages.

A jury awarded compensatory damages $48,000 on Nelson's misrepresentation claim, but that amount was later reduced to $30,134.60 on an unopposed motion for remittitur. The jury found that Progressive did not act in bad faith, and that punitive damages were not warranted. The trial court held that Progressive was the prevailing party for the purpose of Civil Rule 82 attorney's fees. The court awarded Progressive a total judgment of $80,971.37, calculated by offsetting Nelson's judgment of $30,134.60, plus $3,796.04 in prejudgment interest from Progressive's costs of $44,902.01, and attorney' fees in the amount of $70,000.

The court awarded Progresive a total judgment of $80,971.37.

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The judgment was affirmed by the Supreme Court of Alaska. See: 976 P2d. 859 (Alaska 1999). The date above reflects the date of the appellate trial and not he original trial date. Reported by EMDH.