Tortious Liability - Assignment Example

Tortious Liability In the film “RainMaker”, the insurance company Great Benefit Life Insurance is sued for tortious liability for the failure to pay up on a claim for insurance. The victim is Donny Ray Black, a young boy who is dying of leukemia. He needs a bone marrow transplant, for which an almost identical genetic match can be ensured because he has a twin brother. But Great Benefit Life Insurance fails to pay up the claim, contending that his condition is the result of a pre existing condition, with bone marrow transplants not being included within the scope of coverage provided under the policy. The boy dies, due to the failure to provide the transplant in time. The protagonist, Rudy Bayler sets up a partnership with former insurance assessor Dick Shifflet to fight the case of insurance bad faith on behalf of Donny Ray Black. The tortious liability of the defendant is established, because Rudy is able discover that the insurance Company was running a scheme that unfailingly denied ever insurance claim submitted since the year 1991, irrespective of whether or not it had merit. The Company was relying on odds that only 1 in 4 claimants would take the trouble to consult a lawyer, and even then, any damages they had to pay would be compensated in the savings that could be achieved. In reality, the scheme had already generated an extra 40 million dollars for the Company. The trial ends with a verdict in favor of the Plaintiff and a compensatory award of damages in the amount of $50.2 million. The meaning of tortious liability is defined by Winfield as follows: “Tortious liability arises from the breach of a duty primarily fixed by law; this duty is towards persons generally and its breach is redressible by an action for unliquidated damages.”1 Based on this definition, there are thus three elements associated with tortuous liability : (a) a duty fixed by law – this is not necessarily established by statute but through case precedent (b) the duty must be owed generally and (c) the breach of duty must entitle the claimant to damages. In Donaghue v Stevenson,2 Lord Atkin stated that the law of tort is based upon “a general sentiment of moral wrongdoing for which the offender must pay.” In the case of Letang v Cooper3 the Court of Appeal held that intentional injury would give rise to a claim in tort (trespass in this particular case), while unintentional injury would give rise to a claim based in negligence. In establishing tortuous liability, Courts also require that the defendant should have willfully intended to commit the Act that caused the damage. In the case of Great Benefit Life Insurance, the Company had a duty to pay up on the claim, but willfully chose to deny the claim, thereby causing injury to the Plaintiff. Hence, the mens rea or mental intent for the tort or wrongdoing that caused injury is also established. This case raises the legal issue of bad faith on the part of the insurance Company, wherein a claimant can raise a claim against the insurance company for bad acts, since insurance Companies owe the persons they insure a duty of good faith. Examples of bad faith on the part of insurance Companies include refusal of reasonable settlement and making unreasonable interpretations of an insurance policy, both of which would apply in Donny Ray Black’s case. Bad faith in insurance in the U.S. has not recognized the right to recover bad faith damages. There is no provision for recovery under insurance of bad faith in the U.K. at present. As Castle points out, claims under English insurance law have been premised more on good faith, and the insurance of bad faith may not be applicable in the UK in the same way as the United States4. The reason why this has not been adopted is the fear that it would generate a spate of spurious claims. She suggests that a possible solution to enable victims to claim recoveries against insurers in bad faith could be the insertion of implied terms into the contract, as was hinted at in cases like Sprung v Royal Assurance.5 Hence if the same case against the insurance Company was raised in the U.K., the Courts would place a reliance on the duty of good faith that is due from both parties to the contract, hence the refusal of the Company to settle the claim, especially since it caused the death of the victim, would be liable under tort. It appears most likely that the principle of fault liability would be applicable in this case. A standard of behavior is imposed under tort and a defendant who fails to meet that standard, either by failing to be careful or by doing something that constitutes an infringement of the other party’s rights, is likely to be held liable.6 The purpose of insurance from is to ensure that there are resources from which any claims and damages can be recovered7 and this is even more so in the case of medical accidents, for which the British Medical Association even advocates a no-fault scheme in payment of tortuous claims8. The basic purpose of tort is to compensate a victim who may have suffered at the hands of the tortfeaser, and to deter persons and/or companies from behaving in a manner that is likely to infringe the rights of another person. A person who has suffered injury may also be entitled to such compensation that would, as far as possible, put the claimant in a position that existed before the injury occurred9. The award of damages is also intended to ensure that the injured party receives justice and a defendant who causes serious damage to a particular victim because of some personal characteristic of that victim that makes him or her more vulnerable may find that the award amount may be much greater than that allowed for less vulnerable victims10. Donny Black was such a vulnerable victim whose claim for coverage should have been accepted by the Company, hence the scope for damages was much higher. Another important issue that is raised is the question of exclusions from the policy. Great Benefit Life Insurance denied Donny Black’s claim on the grounds that (a) he is too old to receive coverage (b) his leukemia is the result of a pre-existing condition and (c) bone marrow transplants are excluded from his policy.11 Exclusion clauses in a contract protect the party claiming them from damages accruing as a result of those exclusions by limiting and excluding liability for certain actions.12 Normally, a person who signs a contract is legally bound by its terms, including its exclusion clauses even if the contract has not been fully read before signing13. This is one of the issues that stand in favor of the insurance Company in this instance. But in the case of a tort, when there has been some wrong doing as a result of which injuries have been caused, this could be a reason for the Court to override the exclusion clauses and require performance of the contract, or in this instance, the payment of damages for the injuries caused to the plaintiff by the defendant’s wrongdoing. The Plaintiff would have remedy under the tort of injury and the case is likely to be assessed under the fault liability in the U.K., with the insurance Company being liable for its failure to pay the claim, which caused the death of the victim. There would however be no remedy asvailable under bad faith in insurance, rather the plaintiff would be obliged to prove that the wrongdoing of the defendant insurance Company caused the injury, i.e, death and will have to establish the direct link of causation. Earlier, such legal claims were resolved on the basis of common law principles and they still are, but the implementation of the Human Rights Act has added a new dimension. Since Section 3 of the Act requires that legislation within the UK must be compatible with the human rights standards established by the European Convention of Human Rights, Donny Ray Black would have remedies available by filing suit for infringement of his fundamental human rights. Section 4 of the Act requires judges to make a declaration of incompatibility when a statute does not conform to human rights14 standards, this would also allow the judges the power to provide a judgment in favor of the Plaintiff despite any existing exclusion clauses or other contractual principles that may limit recoveries. There is a very strong case for Danny to recover damages for violation and infringement of his basic right to life, which has been caused solely by the wrong doing of the Plaintiff. While the main purpose of the Human Rights Act of 1998 is to provide scope for individuals to resist arbitrary actions by State authorities, and to ensure that their fundamental rights are protected, the Act can also function in contracts between private individuals and enable a finding to be made in favor of the plaintiff on human rights principles, even if a remedy is limited or excluded under other common law principles. Bibliography Castle, Jacquetta, 2005. “I.S. bad faith damages in the U.K.?” http://www.cr-law.co.uk/articles/viewarticle.asp?articleid=1031; Mulcahy, Linda and Tillotson, John, 2004. “Contract law in perspective”, Routledge Cavendish Pringle, Mary Beth, 1997. “John Grisham”, Greenwood Publishing Group at pp 113 Rogers, W.V.H., 2002. “Winfield and Jolowicz on tort (16th edn), Sweet and Maxwell. Turner, Chris, Hodge, Sue and Martin, Jacqueline, 2005. “Unlocking torts”, Hodder Arnold Cases Cited: Donoghue v Stevenson (1932) AC 562 Letang v Cooper (1965) 1 QB 232 L’Estrange v F Graucob Ltd (1934) 2 KB 394 Sprung v Royal Assurance (1999) 1 Lloyds Reporter, I.R. 111 Read More