So I recently read about the “Aunt From Hell” case. I don’t know much about the insurance industry, but my understanding of the case is as follows:
A nephew met his aunt and gave her a hug. For whatever reason, they fell down and she broke her arm. She then proceeded to sue the child over the injury. Internet outrage ensues, as she is villified for suing an 8-year old child for the crime of loving her. When the real story comes out (as it usually does) we discover it is more complicated: The child’s family’s homeowners insurance offered her a $1 payment as compensation, and under Colorado law she was required to sue the child in order to get the insurance company to pay. The lawsuit, therefore, was an unwanted legal formality rather than a malicious money grab.
Okay, got it. My questions:
Why does Colorado require her to sue the child to get the claim paid? I assume that if there was some other way to appeal the insurance company’s decision, they would have done so. It seems like a bizarre system, and perhaps one deliberately engineered to discourage people from challenging the insurance industry.
The family’s homeowner’s insurance offered compensation in the form of $1. What’s the deal with this? It seems like a calculated insult. If they require a judgement against the defendant before they will pay the insurance, why bother giving her any money at all? Does this lady not have her own insurance?
I thought it was her wrist that was fractured, not her arm. Which may or may not be terribly relevant to your questions, I’m just aiming for accuracy here.
For #1 - it’s not so much discouraging “challenging” the insurance industry as discouraging people from filing claims. Unless you want to go through the time, expense, and hassle of a lawsuit you won’t get more than some small token amount. This was probably proposed as a way to discourage “frivolous” lawsuits or some such.
For #2 - yes, it is entirely possible that the aunt has no other insurance, no health insurance, and was facing financial ruin if she didn’t find some way to pay the bills to get her injury treated. There are still tens of millions uninsured Americans in this country.
The answer to the first question is that suing the insured, rather than the insurance company, is routine and normal in these types of cases. Let’s say you got into an automotive accident in which you sustain an injury and fault is disputed. If your insurance company and the other driver’s insurance company do not reach a settlement (and the cost of litigation is worth it), your insurance company will likely–on your behalf, with you as Plaintiff–sue the other driver in court, rather than sue the other driver’s insurance company. In reality, of course, everyone knows that the real party of interest (i.e., the party that will be paying out money) is the other party’s insurance company.
Granted, the facts in this case are somewhat different – but the underlying nature of civil lawsuits remain the same. You sue the person who was responsible, not the insurance company.
As to question number two, I don’t really have an answer. It does seem strange that the insurance company offered just $1 as a compensatory settlement, assuming it stipulated to fault (I mean, why offer any compensation if you’re disputing fault).
I just read what I wrote and I completely misstated who was the real party of interest in my hypothetical – it’s, of course, the other driver, not the insurance company. Not enough coffee this morning yet.
The point is that in civil lawsuits you typically bring the complaint against the party that you allege caused your injury. Did the insurance company or the child cause the injury in this case?
I think what got this case so much attention was the age of the defendant, the fact the defendant was the nephew, and the events that led to the injury (a hug). But swap out the facts for something more routine (let’s say the aunt tripped over a badly maintained walkway that belonged to an adult nephew), and this case likely would never have seen the light of the media day.
I always thought when a child was a minor the parents were the one that held
responsible for their child action . The insurance policy is in the parents names not the kids . It sounds like there could had been some bad feelings going before
the accident happen to even think of suing her family .
I don’t think you can make any such assumptions. If the only way to access the insurance money is to bring a lawsuit, and you’ve been injured and need money to pay for medical care, I don’t think you can assume prior bad feelings.
Getting back to the question in the OP, one possible reason for a law requiring the plaintiff sue the insurance company is because the defendant is a minor.
The legislature may be concerned about the possibility of collusion between adult guardians and the plaintiff to cook up an insurance scam, using a minor. It also protects the minor from getting an unwarranted or unjustly high liability award owing against the minor. The court would review the case, and if worried that the parents or guardians or insurance company are not truly looking out for the child’s best interest, could consider appointing a litigation guardian for the child.
That could also explain the token $1 offer from the insurance company: it is accepting liability, but accepts that the amount of the award will be determined by the court, which can ensure the child’s interests have been adequately protected.
I’ve heard of similar cases involving homeowner insurance. Someone trips over a toy and falls at their best friends home. They require hospital care. They end up having to sue their best friend to get the insurance to pay. A terrible situation that can destroy friendships and tear families apart. But that seems to be how it works.
The aunt case is a classic example. She had to sue her own nephew just to get insurance to pay. No question that the kid caused the injury. Surprisingly the case failed and she got nothing.
Another very standard scenario is this: (But I don’t know, in particular, if this applies to the current case in question)
The injured party makes a claim against her own medical or homeowner’s insurance. That insurer might fight the claim itself. Or, it may pay the claim (with or without litigation). But if it pays the claim, the injured party’s insurer then wants to recover whatever it can, if anything, from the other party. This might typically end up being paid by the other party’s insurer rather than the other party himself, but the injured party’s insurer doesn’t technically care about that.
Thus, your own insurer then makes a claim against the other party. Typically, this will be done directly from your insurer to the other party’s insurer. But if the other insurer balks (as is common), litigation is needed.
That litigation is often handled entirely between your insurer and the other insurer. Nevertheless, your insurer takes this action in your name (that is, you are the named Plaintiff), and the other party (not his insurer) is the named Defendant. If you read your policy closely (medical or homeowner’s, it doesn’t matter, they are standardly all like this), you will find buried in the small print that you agree to allow your insurer to do this.
It gets a lot easier, by the way, if your own insurance company is the same as the other party’s insurance company.
For example, if you get into a car wreck, and both parties are insured by the same auto insurance company, then that company may well handle the entire case internally. They may try to weasel as much as possible about just what is covered and what isn’t. But they won’t make too big a case over which party is responsible, since either way the same company is covering it. They might make some kind of case over who is responsible for the purpose of determining which party’s premiums to jack up the most.
My understanding is that the court found against her. Does this mean she won’t actually be getting any insurance compensation? So she is now, in fact, completely screwed? The linked article doesn’t really go into details here.
My understanding is that Auntie’s insurance company wouldn’t pay up unless she went through the formality of suing her nephew. They go out of business if they say “yes” too often.
I have a close friend who had to sue his mother under similar circumstances when he was a teenager, just because her insurance wouldn’t cover his injury if he didn’t. They weren’t particularly dysfunctional and Mom quite understood that it was nothing personal.
I think what needs to be understood here is that the insurance was not some form of medical or trauma insurance in favour of strangers to the family’s home. It was liability insurance that protected the homeowners against lawsuits by third parties (i.e. the auntie). The insurance was not for her benefit and right from the start you need to put from your mind the idea that it owed her anything.
The auntie alleged that her injuries were caused by the negligence of the nephew and that he should consequently pay for her medicals. The nephew ( via his insurer) did not accept this and consequently refused to pay out.
The auntie persisted in her allegation that the nephew was negligent and sued him. The insurance company did its job and protected the nephew by defending him against this allegation. The allegation was not upheld consequently her claim against the nephew failed. The court found he was not negligent.
In my view there is a degree of disingenuousness in the auntie’s statements about the case. She tries to make it sound like she suid the nephew only due to some form of quirk of Connecticut insurance law. The fact is, she made a choice to allege that her nephew was negligent and to sued him for $127,000.
The fact that the person she sued had insurance is incidental. The only relevance of that to the story is that if her action against her nephew had been successful, it is correct that the judgement would have been paid by the insurer and not the boy or his parents.
From a family relationships point of view though, she and everyone knew when the lawsuit was started, that the desired endpoint was “Insurance Company X pays my medical bills”, not “nephew pays $120k out of his pocket money” (or inheritance from his dead mum). If you think that she would have sued regardless of whether the insurance was there or not, and that she was only interested in getting the money from someone, then yes, the insurance becomes incidental. But we don’t have any evidence that that was the case, because the insurance was there, and she knew that when making the decision to sue.
I think that the fact that she waited four years to do this bears out her claim that she was reluctant to get into this in the first place.
Partially I agree but her statement when this all blew up in her face downplayed the fact that she had made a decision that her nephew was negligent. One also very easily gets from her team the mischievous implication that the insurer should have been nice to her and were instead being difficult or underhanded; actually the insurer were protecting their client (the nephew) and made a 100% accurate call that he was not negligent, as upheld by the court.
Did she wait four years or is that how long it took to get to trial? She wasn’t so reluctant that she decided not to accuse her 8 year old nephew of being negligent, I can’t help but notice.
Your answer surprises me. In common law jurisdictions with which I am familiar this is wrong. Her claim was a claim in tort against the nephew. He was not a mere pro forma party.
The insurance company had nothing to do with it except in the family relations sense that Aspidistra points out, and in the sense that the company would ultimately have paid out due to its insurance contract with the homeowner if the aunt had been successful. It was otherwise a complete stranger to the cause of action that was litigated.