Sunday, May 26, 2024

Lawsuit claims insurance company deliberately stalling in Libby asbestos cases

by DARRELL EHRLICK Daily Montanan
| January 24, 2023 12:00 AM

Just weeks after a Cascade County judge agreed with a jury that the insurance company that represented a Libby asbestos mine should pay a former miner there $36.5 million, attorneys for that miner filed a complaint in federal court, claiming that Zurich American Insurance Company systematically stalled and dragged out court proceedings in an attempt to force him into settling the lawsuit before other asbestos cases are tried.

Ralph V. Hutt won a jury trial that found that Zurich, which bought Maryland Casualty Company, had a duty to warn miners and those working at the Libby, Montana, plant about the dangers of asbestos, produced or “popped” from the mineral vermiculite, which was mined there.

The jury awarded Hutt $6.5 million for damages, including healthcare he’ll need. He is currently homebound, suffering the effects of lung diseases likely produced by the asbestos fibers that scar lungs and can cause cancer.

The jury also added an additional $30 million for the insurance company conspiring with W.R. Grace and Company, the Libby mining company, to conceal the danger and damages that happened as a result of being exposed to the mineral.

In the lawsuit, filed in U.S. District Court in Great Falls, Hutt’s attorneys, Clifford, Christopher and John Edwards of Edwards and Culver in Billings, outline the actions Zurich took to ignore Hutt’s claim in an attempt to delay payments or force him to settle for a much lesser amount.

In the suit, Hutt claims that Zurich is making more money on profits and interest than what it will end up paying to Hutt and any other Libby residents who follow. The concept is called “opportunistic breach” meaning that the “profit Zurich makes on withheld settlement payments to Hutt and other Libby Asbestos Claimants exceeds what it will pay on these insurance claims.”

“It is profitable for Zurich to breach its claim settlement duties and thereby increase the time over which it can generate income on money owed to them,” the suit alleges.

The strategy, outlined in court filings, said that Zurich appeared to want to continue litigating Hutt’s case nearly indefinitely because he was the first, or bellwether case. Because his case was so convincing, the attorney Clifford Edwards argues that Zurich had the desire to make sure justice – and payments – were delayed, in part to discourage other claims.

“Specifically Zurich used leveraging designed to exploit Hutt’s vulnerable position through withheld medical expense and low-ball offers,” the suit said.

Representatives from Zurich declined comment on the case for this story.

The lawsuit claims Zurich had plenty of reason to delay a settlement or drag out court proceedings: If Hutt’s case was successful, it would establish a precedent for similar cases, and a court record replete with facts and documents.

While Hutt went through several years of litigation, Zurich denied claims, including support for basic healthcare service, for example, supplemental oxygen.

Part of the case is buttressed by a decision by the Montana State Supreme Court last year when the state’s highest court determined that Maryland Casualty had breached its duty in a scathing rebuke from Chief Justice Mike McGrath:

“Maryland Casualty Company was not merely negligent in its failure to act; rather, in strategically recognizing the latency period for asbestosis to develop, MCC engaged in affirmative actions to conceal the asbestos exposure risk and worker injuries to avoid liability, effectively increasing the risk of additional harm to mill workers from further asbestos exposure.”

The suit claimed by playing a sort of legal hardball with Hutt, that Zurich could be lessening liability. Because Hutt’s case was the first of its type, if Hutt had settled, it would have likely left Zurich in a better bargaining position for other cases. This created a high-stakes game in court while Hutt struggled to get out of the house because of his advanced lung disease likely caused by asbestos exposure, court documents said.

“At an average annual rate of return in excess of 11%, Zurich has earned hundreds of millions of dollars on the Libby asbestos claim reserves for fully accrued clear liability claims over the past 20 years of litigation,” the suit said. “Even if Zurich were to pay the claims of Hutt and all other Libby Asbestos Claimants in the amount of their verdicts and judgments, the delay nets Zurich more in profit than it will pay.”

Clifford Edwards argues in the court documents that the delay isn’t just a matter of not paying those injured or a legal controversy.

“Because Hutt and similarly situated Libby Asbestos Claimants require the settlement money to pay for medical expenses, to otherwise address the harm arising from their asbestos injuries, and to secure a just resolution within their lifetimes, Zurich’s commodity profit scheme literally makes profit a function of human suffering.”

Darrell Ehrlick is the editor-in-chief of the Daily Montanan, a nonprofit newsroom.