Insurance Bad Faith
Sell v. Country Life
Country Life Insurance Company terminated its insured’s disability claim roughly one year after it was filed. The claimant, Brian Sell, sued Country Life for terminating his disability claim in bad faith. During the litigation, Country Life concealed communications that revealed the adjuster handling Sell’s disability claim had protested Country Life’s decision to terminate the claim. Country Life concealed these documents from Brian and his attorneys and, instead, gave them another document – one that had been partly-redacted to suggest the adjuster actually supported the termination. The adjuster endorsed this false narrative under oath during her deposition, the day after Country Life produced the document.
Brian’s attorneys successfully fought to obtain the documents that proved this narrative was entirely fabricated. They fought to obtain the withheld documents, and when Country Life eventually produced the documents with redactions to conceal their substance, Brian’s attorneys obtained a court order compelling Country Life to produce unredacted copies.
After piecing together the facts gleaned from the hard-won documents, it became clear that Country Life had attempted to conceal the truth and replace it with a fabricated narrative. Brian’s attorneys filed a motion for sanctions.
After significant briefing and a two-day evidentiary hearing, the federal district court judge concluded that Country Life “and [its] counsel sought to prevent plaintiff and the Court from learning the truth about the circumstances surrounding the termination of Plaintiff’s disability claim.” In her 28-page opinion detailing the misconduct, the judge described “an organized effort among multiple participants” in which Country Life, among other things, “misrepresented the facts of the case” and “presented false deposition and hearing testimony to align with their fabricated account of what occurred.”
As a sanction, the judge struck Country Life’s Answer and entered default against it—a severe sanction reserved for only the most egregious litigation misconduct. Consequently, Country Life could not contest liability for bad faith. This meant that at trial, the jury would be instructed that Country Life had been found liable for bad faith, and the jury would merely need to decide the amount of damages to award Brian. The case settled before making it to trial.
Sell v. Country Life set a strong precedent with a stiff warning to insurers and their attorneys who seek to conceal the truth or engage in litigation misconduct.