On February 11, 2015, a jury returned a record verdict in Pottawattamie County District Court in Council Bluffs, Iowa for Toby Thornton and against American Interstate Insurance Company.  The verdict totaled nearly $300,000.00 in compensatory damages and $25 million in punitive damages based upon the bad faith conduct of American Interstate Insurance Company in its denial of portions of Toby's workers’ compensation claim.  Evidence heard by the jury during the course of the trial included the following.


On June 25, 2009, Toby was injured in a catastrophic semi-truck accident that left him a quadriplegic.  At the time of the accident he was a truck driver by trade and was operating a tractor-trailer for Clayton County Recycling.  When the load shifted in the trailer, the semi jackknifed and rolled off the road, crushing Toby inside the cab.  Toby knew immediately that he had been paralyzed by the accident.  Emergency responders had to remove Toby from the cab of the truck using the “jaws of life.”  He was then life-flighted to the University of Iowa hospital, where he had numerous surgical procedures and a lengthy stay in the Intensive Care Unit.  Once released from the ICU, Toby underwent months of rehabilitation in an effort to help him acclimate to a new normal.  

Toby is a father of two and, prior to his accident, he provided the sole source of income for his family.  Because Toby’s accident occurred in the course and scope of his employment, he was entitled to certain workers’ compensation benefits under Iowa law, including lifetime medical benefits and replacement of his lost income going forward.  American Interstate Insurance, which insured Toby's employer, commenced medical and indemnity benefits after the accident and provided Toby's medical care, at least initially.  Soon after realizing that Toby would be permanently totally disabled, American Interstate set its reserves accordingly and reported to the Iowa Industrial Commission that they were paying permanent total disability benefits.  At the same time, the insurance company failed to notify Toby that his benefits had changed, despite requirements to the contrary.  The carrier also had refused to provide Toby wage information they were legally obligated to disclose in order to confirm that his benefits were accurately being paid.  Based upon the foregoing, the jury in the bad faith action eventually determined that American Interstate Insurance Company had no justification for its position and had engaged in a pattern of bad faith that began around this point in time.


While the workers’ compensation carrier was paying some benefits owed following the accident, Toby knew that the weekly fixed payments would not be enough to support him and his family without some other arrangement.  Moreover, he felt that he could not afford to keep the lawyer his wife had originally retained at a contingency rate of 25% of his benefits.  For these reasons, Toby tried to go it alone in dealing with American Interstate Insurance Company, hoping for some reasonable resolution to his claim that would allow him to move on with his life and achieve some degree of normalcy.

While Toby struggled to recover mentally and physically, his injuries were taking a toll on his personal life. Toby's wife legally separated from him and Toby was forced to move out of his in-laws' home, where he first relocated once released from the hospital.  Toby's mother passed away soon thereafter and he went into a deep depression.  His mental condition was so bad that he intentionally overdosed on his pain medication.  Toby later testified that this was "one of the best decisions I ever made because it showed me what I had to live for."  Since that time, Toby has devoted his life to being a father to his two young children, Aliyah, 10, and Garrett, 7.

As Toby underwent counseling, he was still in a very fragile mental state.  It was around this time that the insurance company approached him to settle his claim.  The settlement options they extended were engineered to close out his medical claim and to offer indemnity payments at a level much lower than he was actually owed.  Toby rejected these offers and sought advice from attorneys that his brother had previously worked with at Erickson | Sederstrom.

With Toby's financial concerns in mind, his attorneys developed a strategy in trying to work with the insurance company, while proposing a creative billing arrangement for Toby that would provide the help he needed at the lowest possible cost. Even after his new attorneys became involved, however, American Interstate Insurance expressly threatened to drive up Toby's costs, to delay all proceedings and to exert the maximum pressure possible in an effort to close his case on terms favorable only to them.  The carrier then denied that Toby was permanently totally disabled and claimed that any arrangement other than the fixed weekly payments was not in Toby's best interests.  American Interstate Insurance also disregarded treatment Toby needed, including a replacement wheelchair, opting instead for inexpensive "repairs" that left Toby exposed to further injuries and another hospitalization.


True to their threats, American Interstate Insurance fought Toby's claim at every turn.  Because the carrier steadfastly denied that Toby was permanently totally disabled, he was forced to file his first lawsuit before the Iowa Workers' Compensation Court.  American Interstate Insurance eventually forced the case to trial, even though the carrier's attorney recommended against it, telling his client that there was no chance of prevailing.  The carrier went further still in making overt misrepresentations to the Workers' Compensation Court during trial that they were offering Toby vocational rehabilitation services.  In truth, Toby's doctor had specifically told American Interstate’s attorney that he would not clear Toby for such services.  So as not to create a "paper trail," the carrier's attorney decided not to ask for a written report from the doctor.  As a result, this information was never provided to Toby or the Workers' Compensation Court, either before or during that trial.

The first trial resulted in a decision from the Iowa Workers’ Compensation Court, concluding that it was "clear and obvious" that Toby was permanently totally disabled.  Nevertheless, American Interstate’s claims manager instructed the adjuster to slow the process by any means available.  Accordingly, the carrier tried to stall proceedings further by asking the court to reconsider its decision.  The compensation court generally denied this request, again finding that Toby was clearly permanently totally disabled.

After prevailing in the first trial, Toby then requested that his benefits be paid in the form of one lump sum instead of the weekly payments.  Although Iowa law mandates such an arrangement where it is in the claimant’s best interest, American Interstate Insurance again refused, forcing yet another trial before the Iowa Workers' Compensation Court.  

During the second lawsuit, American Interstate Insurance Company represented to the court that payment of Toby’s benefits in a lump sum was not in his best interest.  This position was contrary to their own expert, who testified that the only solution to Toby's financial predicament was payment of his benefits in a lump sum because the weekly payments would lose value over time and because Toby would eventually be unable to meet his monthly budget at his current level of income.  Still, the carrier suggested that Toby may overspend on his children in the event that a lump sum was awarded.  The carrier further argued that Toby had previously demonstrated financial irresponsibility by spending a small inheritance he received after his mother's passing to contribute to her headstone.  The Iowa Workers’ Compensation Court rejected these arguments stating “[i]t would be hard to imagine a clearer scenario where a partial commutation should be granted….”  The court concluded that “[t]he arguments of the defendants are weak at best and appear mostly designed to delay the inevitable commutation of benefits.”  By this time, Toby had filed suit against American Interstate on his bad faith claim.


Leading up to the bad faith trial, a number of depositions were taken by both parties, including the deposition of the original American Interstate claims representative assigned to handle Toby's claim.  Among other things, she testified that she knew early on that Toby was permanently totally disabled and that payment of Toby's benefits in a lump sum was in Toby's best interest.  For these reasons, she indicated that no additional investigation into Toby's claim was required on these issues.  Accordingly, even before any litigation ensued, she assigned defense counsel, acknowledging that "we have voluntarily accepted Toby's case as permanent total disability exposure."

Yet another witness deposed was the vocational counselor hired by the carrier in an effort to argue in the underlying workers' compensation claim that Toby was not permanently totally disabled.  According to his testimony, he was not asked to provide an opinion on this subject during the underlying compensation claim.  If he had been asked, he stated, he would have told American Interstate that Toby was clearly totally disabled.  As such, he was surprised and disappointed that his opinions were being used to argue this point by the carrier.  Finally, he testified that contrary to American Interstate’s assertion at trial in the underlying workers' compensation claim, he did not provide vocational services.

Beyond these witnesses was Dr. Michael Rogge, who was hand-picked by American Interstate to provide care for Toby.  Dr. Rogge testified that Toby would never work again and that he felt deceived by efforts from the carrier's attorney in trying to get him to conclude anything to the contrary.  Dr. Rogge also noted that the carrier's failure to provide Toby with a new wheelchair when needed lead to further injuries and another hospital stay.


During the one week trial, the jury heard evidence from the witnesses above and from the carrier's claims manager.  This witness testified that American Interstate Insurance is a billion dollar company that could absorb a judgment of $20 million.  The carrier's conduct leading up to the bad faith trial and throughout seemed to indicate that a verdict even at that level would not change the company's conduct where Toby Thornton was concerned.  

Throughout the bad faith trial, virtually all of the carrier's witnesses testified that they disagreed with the lower courts' decisions.  They likewise testified that they disagreed with the District Court when it had granted partial summary judgment in Toby's favor before the trial even began.   Furthermore, the carrier twice tried to appeal the District Court’s decisions to the Iowa Supreme Court immediately before trial commenced.  Both appeals were denied.

Upon deliberations, the jury held American Interstate Insurance Company accountable for its bad faith conduct and its wanton and willful disregard of Toby's rights.  The jurors determined that the insurance company knew it had no reasonable bases for its repeated denials of Toby's claim, spanning over a period of five years.  Based upon the evidence and the need to discourage such conduct in the future the jury awarded $284,000 in compensatory damages and $25 million in punitive damages.  According to interviews with jurors after the trial, some of them had considered awarding between $50 to $100 million in punitive damages.  Universally, they also expressed a genuine interest in Toby's well-being into the future.

In addition to a request for a new trial and a request to reduce the jury's verdict, American Interstate has already indicated that it plans to appeal once again.  Hearings on post-trial motions are being scheduled presently.