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Erickson | Sederstrom Record Award Follows Nine Year Odyssey 2/28/18  02/28/18 1:53:16 PM Printer Friendly VersionPrinter Friendly Version

Keeler & Siems
Erickson | Sederstrom
Record Award Follows Nine Year Odyssey

By Lorraine Boyd
The Daily Record

We’ve all read about motor vehicle accidents that have resulted in serious injuries to those involved. We’re grateful that no one died and that those injured will survive. But we seldom see the long-range consequences of such an accident.
Take the case of then 31-year-old Toby Thornton, an Iowa farm boy who suffered a catastrophic work-related injury on June 25, 2009, when the tractor trailer he was driving for his employer, Clayton County Recycling (CCR), jackknifed and rolled, pinning him in the cab. Freed by the “jaws of life,” Thornton was life-flighted to the University of Iowa Hospital where he endured numerous surgeries and a lengthy stay in the Intensive Care Unit, followed by months of rehabilitation. Despite that, he remains paralyzed, a quadriplegic with only limited use of his right hand.
Doctors soon declared that Thornton, a husband and father of two, would be “permanently totally disabled” (PTD). Living in the small town of Monona, Iowa, with only a high school education, Thornton knew there would be few job opportunities for him. He would be dependent on whatever insurance money he could collect.
Thus begins the saga of the “record bad faith verdict.”
After a weeklong trial, on February 11, 2015, a jury returned a record verdict in Pottawattamie County District Court in Council Bluffs, Iowa, in favor of Toby Thornton and against American Interstate Insurance Company, the workers’ compensation insurer for CCR who specializes in insuring high-risk employers.
(Iowa law allows flexibility in choosing what jurisdiction in which to file for workers compensation benefits.)  The verdict totaled nearly $300,000 in compensatory damages and $25 million in punitive damages based upon the bad faith conduct of American Interstate. More on that in a moment. First, let’s back up a few years.
A Plaintiff Case
Tiernan Siems is a shareholder at the Omaha law firm of Erickson | Sederstrom P.C., L.L.O. His clients are usually businesses, including insurance companies.
In 2009, he found himself venturing out of his comfort zone.
“I’m primarily a defense attorney,” he said. “I don’t usually have plaintiff cases, but when I met this guy and saw how [Toby Thornton] was getting the runaround from the insurance company, I had to help him.” He said his previous experience on the other side of the aisle “gave me the insight to see what they were doing that was wrong. … Apparently, their game plan was to wait him out.”
They started paying medical and indemnity benefits after the accident, “at least initially,” Siems said.
But “soon after realizing that Toby would be permanently totally disabled, American Interstate set its reserves accordingly  [at $762,644] and reported to the Iowa Industrial Commission that they were paying permanent total disability benefits.” Siems added that they failed to notify Thornton that his benefits had changed and also refused to provide wage information they were legally obligated to disclose.
The first legal challenge was to compel American Interstate Insurance to do the right thing and acknowledge that Thornton’s disability was total and permanent. This was the basis of the first trial in the Iowa Workers’ Compensation Court, which resulted in a decision concluding that it was “clear and obvious” that Toby was permanently totally disabled.
Siems said the insurance company commenced stall tactics, asking the court to reconsider. The court declined. Thornton then requested that his benefits be paid in one lump sum. American Interstate refused, forcing another trial before the Iowa Workers’ Compensation Court. Ultimately, 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.”  It was at around this time that Siems, acting for Thornton, filed a bad faith suit against American Interstate Insurance.
Siems and Karen Keeler, an associate attorney also of Erickson | Sederstrom, tried the case before a jury in Pottawattamie County District Court in February 2015, with the assistance of their law clerk (now associate) MaKenna Dopheide Stoakes.
 “The jury held American Interstate Insurance Company accountable for its bad faith conduct and its ‘wanton and willful disregard’ of Toby’s rights,” Siems said. “The jurors determined that the insurance company knew it had no reasonable basis for its repeated denials of Toby’s claim, spanning over a period of five years.”
Record Verdict
The jury’s $25 million verdict was the largest the firm has had to date, Siems said.
In a report titled “Anatomy of a Record Bad Faith Verdict,” written by Siems and Keeler after the first trial, they asserted, “While the workers’ compensation carrier, American Interstate Insurance Company, 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.”
In his modest fashion, Siems gives much of the credit for their success in court to Karen Keeler.
“It was apparent when we met Toby that the insurance company was not doing things the right way,” Keeler said.  “We needed to help Toby. The social worker in me came out as we got to know him.”
Court records reveal the plain-tiff’s struggles. As time progressed, more misfortune followed Thornton. He had moved into his in-laws’ home after his release from rehabilitation. But when he and his wife separated, he had to find another place to live. His mother moved back to Monona to help him, but she died not long afterward. All this contributed to his severe depression that became so bad he intentionally overdosed on his pain medication.
Thornton made a decision to begin receiving therapy.  He 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, he has devoted his life to being a good father to his two young children, Aliyah, 10, and Garrett, 7.
“The insurance company’s ‘MO’ was apparently to establish trust with Toby, then try to settle on the cheap. They were trying to cram a bad settlement down his throat,” Siems said. “The jury agreed. American Interstate appealed.”
In June of 2015, a Pottawattamie County District Court denied post trial motions filed by American Interstate and ordered the company to pay interest on the awards – about $566,339 per year. The company appealed to the Iowa Supreme Court.
The Iowa Supreme Court heard the insurance company’s appeal and rendered their opinion in May, 2017.
The decision said, “We hold the district court erred by denying American Interstate’s motion for directed verdict on the commutation claim and erred by instructing the jury that American Interstate acted in bad faith opposing Thornton’s commutation. That error requires a new trial on liability and damages.
“We affirm the partial summary judgment that American Interstate contested Thornton’s PTD status in bad faith. We reverse the district court’s partial summary judgment that the insurer acted in bad faith for disputing Thornton’s petition for commutation. We reverse the judgments for actual and punitive damages and remand the case for a new trial on the remaining claims for bad faith opposing commutation and for a new trial on the remaining bad-faith claims,” the Court concluded.
Another Trial
“The second trial was slightly different in complexion,” Siems said.
Three things were of primary concern during the first trial. First, the insurance company denied that he was PTD. They indicated they could find him work.
Second, they fought the lump sum payment requested.  And third, they did not provide him with a new wheelchair after five years in a timely fashion. The first and third issues were still in play after the remand from the Iowa Supreme Court.
Siems described Thornton as a “healthy farm boy,” around 6-feet-four and nearly 280 pounds. The old wheelchair had caused his arms to develop bursitis and cellulitis for which he had to be hospitalized. He described the pain to Siems as worse than any previous pain he had suffered. It took five months to get his new wheelchair.
A New Verdict
That brings us to February 2018, almost three years to the day after the conclusion of the first trial. Thornton has just turned 40. He got a nice birthday present.
The jury once again found for Thornton, this time awarding $382,000 in compensatory damages and $6,750,000 in punitive damages.
While the earlier $25 million verdict was the largest the firm had had, Siems said, “The most recent verdict, of $6,750,000, albeit smaller, is still one of the largest verdicts for our firm.”
“Of course, since we are usually representing the other side, we try to keep the verdict amounts down,” he said wryly.
 “These are not common awards. Fortunately, we don’t have clients who behave this way. They don’t usually need any reminders on what to do,” Siems said.
“Two trials is enough,” Keeler said. “It has been a lot of litigation. Two separate juries gave us awards in the millions. I think the jury said to Toby: ‘Yes, you were wronged.’ It feels good to know the jury was listening.
“Hopefully they won’t appeal again. They had had four different law firms during all this. We were in it from the beginning. We got so much support from our firm. It has been a good experience,” Keeler said.
Note:  This, of course, is one side of the story, backed by two jury verdicts in favor of the plaintiff. To read arguments from American Interstate Insurance Company, visit https://www.iowaappeals.com/wp-content/uploads/.../Thornton-Appellant-Brief.pdf.
For the full text of “Anatomy of a Record Bad Faith Verdict” by Siems and Keeler, visit  https://www.lexology.com/library/detail.aspx?g=b6ff1ada-4615-414e-8931-7efa94dfb960.

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