A federal judge threw out a $10 million bad faith claim an injured accident victim filed against an insurer, ruling that the woman's demand for the at-fault driver's policy limit contained unreasonable restrictions.

In a handwritten letter, plaintiff Amy Kemper said the insurer must not contact her or her friends, and she also argued that Equity Insurance's demand that she place the $25,000 policy limit in an escrow account to cover any potential liens constituted a counteroffer, which she declined.

The “undisputed evidence shows the parties were unable to resolve Ms. Kemper's claim because of her (and her lawyer's) unreasonable refusal to assure the satisfaction of any outstanding hospital liens or even to allow [the claims adjuster] or Equity to contact her about the liens,” wrote Northern District Judge Michael Brown, ruling for the insurer on summary judgment.  

An attorney for Kemper said his team was surprised by the ruling and will challenge it.

“We are disappointed in the court's decision,” said Slappey & Sadd partner Richard Dolder.

“If summary judgment were to be granted, we would have thought it would have been granted in our favor. We will appeal,” said Dolder, who represents Kemper with partner Jay Sadd and Kemper's original lawyer, Michael Werner of Werner Wetherington. 

Equity Insurance is represented by Richard Jones with Jones & Haley, Gregory Brack of Marietta's Brack & Westee and Peter Schmidt II with Taylor Odachowski Schmidt & Crossland on St. Simons Island. They did not respond to a request for comment Monday. 

According to the order Brown issued last week and other documents, the case began in March, 2012 when Kemper was riding her motorcycle in Coweta County.

A Chevy Blazer driven by Christopher Brown crossed the center line and hit Kemper head-on. Brown fled the scene, but his vehicle broke down and he was caught; he had alcohol and methadone in his system, and subsequently pled guilty to charges including driving under the influence, hit and run, driving on the wrong side of the road, reckless driving and causing serious injury by vehicle.

Kemper was airlifted to the hospital with myriad serious injuries including fractures and lacerations, a broken arm, pelvis and leg, internal injuries and nerve damage, racking up more than $1 million in medical bills.

The month after the accident Equity's claims adjuster got a bill for more than $24,000 for Kemper's air ambulance trip, and other bills and statements began rolling in. 

Brown had a minimum coverage policy worth $25,000, and the claims adjuster notified Equity that its limits would be greatly exceeded.  

In April the representative for the claims adjuster, Statewide Claims Service, sent Kemper a letter requesting her medical bills, records and any lost wage claims. 

Werner helped Kemper draft a letter in reply, in which she offered to sign a limited release in exchange for the policy's limits, and said the release “must not have any language about her paying Mr. Brown's or Equity's 'incurred costs' and that Equity must deliver the check to her before June 8, 2012,” the order said.

“Ms. Kemper also wrote 'Please Do Not contact me, or my Friends as this demand is very simple.'”

“Statewide knew Ms. Kemper's medical bills were extensive and, not knowing whether she had adequate medical coverage, feared medical providers would file liens on her claims against Mr. Brown,” Brown's order said. 

Statewide sent Kemper a check for $25,000 within the time limit but included what it termed a “demand” saying: “In concluding the settlement, we are entrusting that you place money in an escrow account in regards to any and all liens.” 

Werner rejected the demand as an unacceptable counteroffer and returned the check. 

Kemper later sued Brown in Heard County Superior Court. Equity provided his defense and asked the court to declare that there was a binding settlement for $25,000 between the parties. 

Superior Court Judge Jack Kirby agreed with Equity, but in 2014 the Georgia Court of Appeals reversed him, ruling that “by using the term 'demand,' Statewide clearly expressed a condition that Kemper was required to satisfy for Statewide's acceptance to be effective.”

The case was preparing to go to trial when Brown agreed to sign a $10  million consent judgment assigning his good faith failure to settle claim to Kemper.

She then sued Equity in DeKalb County State Court, and Equity had the case removed to the U.S. District Court for the Northern District of Georgia, where both sides moved for summary judgment.

In ruling for Equity, Brown wrote that, ordinarily, “a jury must decide whether the insurer acted negligently or in bad faith in failing to settle a claim.”

“Georgia courts, however, have provided some guidance about what constitutes an insurance company's bad faith failure to settle,” Brown said. “For example, the Georgia Supreme Court has held that '[a]n insurance company does not act in bad faith solely because it fails to accept a settlement offer within the deadline set by the injured person's attorney,'” he said, citing the seminal 1992 case governing time-limited demand letters, Southern General Insurance v. Holt, 262 Ga. 267.

But the adjuster “also worried about Equity's potential liability from liens. Under Georgia law, hospitals and physicians who provide medical care to injured people are entitled to a lien for their fees and expenses on any causes of action their patients may have against someone else for those injuries.”

Kemper's letter presented a “dilemma, he said. “On the one hand, [Statewide] knew the Georgia Supreme Court's decision in Holt required its client, Equity, to respond to that demand. It also feared Equity might face a bad faith failure to settle claim if it did not pay Ms. Kemper the full policy amount. At the very least, Equity would have faced a jury question on bad faith.”

On the other hand, he said, “Equity had an obligation to look out for any claims or liens hospitals, physicians, or other medical service providers may have filed upon Ms. Kemper's claims against Mr. Brown.” 

“If a lien had been filed before Statewide settled Ms. Kemper's claim, both Mr. Brown and Equity could have been liable for the amount of the lien and the lien holder's attorneys' fees,” he said. 

Considering the potential expense that might accrue to Equity or its insured if liens were not satisfied, “it was unreasonable for Ms. Kemper to refuse to provide that assurance while also demanding that Equity not contact her.”