August 23, 2003 - Nationwide Pays $5 Million in Class Action Lawsuit
Approximately 28,000 Delaware residents who filed auto insurance claims with Nationwide Mutual Insurance Co. have been mailed $100 checks as part of a $5 million class action settlement with the insurer.
Attorneys in the class action lawsuit of Crowhorn v. Nationwide agreed to settle in February, ending more than three years of complex litigation.
Kent County Superior Court Judge William L. Witham Jr. tentatively approved the settlement June 23, but won't issue a final ruling until after an Oct. 3 public hearing for claimants. The hearing will be held at 2 p.m. at the Kent County Courthouse in Dover, and comments must be submitted in writing.
Under settlement terms, Nationwide sent checks to policyholders who filed personal injury protection claims between June 1997 and May 2003. The majority of those receiving checks had been denied timely or full payment of benefits after filing a claim. People who receive the $100 check but aren't owed money can still cash the check, said plaintiff's attorney John S. Spadaro of Murphy Spadaro & Landon in Wilmington.
The $100 checks were sent out Aug. 4.
Attorneys agreed upon the $100 figure after Nationwide reviewed about 2,000 personal injury protection claim files. The company determined the average amount owed to claimants was $42, according to Witham's preliminary order.
Personal injury protection is part of auto insurance coverage. It allows the insured to be reimbursed up to a certain amount for injuries, medical treatment or lost wages while driving or occupying a vehicle involved in an accident.
In agreeing to the settlement, Nationwide denied any wrongdoing.
Nationwide attorney Curtis P. Cheyney III, a partner in Swartz Campbell's Philadelphia office, did not return calls for comment. A separate confidentiality agreement limits what attorneys involved in the case will discuss publicly.
Class members can cash the check and accept the terms of the settlement, or they can choose to have their claim arbitrated. In arbitration, Spadaro's firm will represent the claimants at no cost, according to the settlement.
Class members can also opt out of the settlement and handle the matter themselves.
The lawsuit, filed in June 2000, asserted claims of breach of contract, bad faith and fraud based on allegations that Nationwide improperly processed claims for personal injury protection benefits. The main charge was that Nationwide violated a 1993 state law that requires insurance companies to either pay or provide a written explanation for denial within 30 days of a claim being filed.
James M. Crowhorn, of Clayton, filed a personal injury protection claim with Nationwide in March 1999 after he injured his lower back in a rear-end collision. Spadaro said his client was denied payment of some benefits with no explanation. The payments he did receive were issued beyond the time allowed under state law, according to the lawsuit.
With the settlement, Crowhorn, the class representative, was awarded approximately $24,000, including money for lost wages and medical expenses.
Spadaro and Roger D. Landon were the lead attorneys. Their firm could ask for as much as $1.6 million in fees on the basis of a prior agreement between Nationwide and the law firm. Spadaro said more than 2,500 attorney and paralegal hours have been devoted to the case.
In tentatively approving the settlement, Witham was required by Superior Court civil rules and prior case law to find that the agreement is fair to all parties and is based on the legal and factual circumstances of the case, and that the class representative is representative of the entire class affected. He must also use his own business judgment to determine that the settlement is reasonable.
Spadaro said that as of Aug. 20, about 50 people opted out of the settlement and another 50 chose arbitration.
In arbitration, the claimant's award is limited by the maximum amount their personal injury protection insurance allows. Most policies allow for a minimum of $15,000, but some people pay a higher premium for more coverage, Spadaro said.
If all 28,000 class members cash the checks and the law firm receives the maximum in fees, it leaves an estimated $600,000 left for arbitration awards and other costs. Any money left over will be returned to Nationwide.