The Supreme Court of Appeals of West Virginia in West Virginia Mutual Insurance v. Covelli recently held that (1) insurers in West Virginia will not be liable for an insured’s damages in a Shamblin action where the insured has no personal exposure for an excess judgment and (2) insured plaintiffs do not have standing to sue an insurer under sections 33-11-4(9)(b)-(d) and (f) of the Unfair Trade Practices Act (UTPA).
The Court granted West Virginia Mutual Insurance’s (Mutual) petition for a writ of prohibition from the Circuit Court of Kanawha County’s order denying summary judgment as to Dr. Covelli’s claim for common law bad faith under Shamblin v. Nationwide Mutual Insurance Company and claims under the UTPA for unfair claim settlement practices. The Court granted Mutual’s petition for a writ of prohibition and directed the circuit court to enter judgment for Mutual on the two counts.
Prior to the immediate action, Dr. Covelli was sued for medical malpractice by a former patient. Mutual provided medical malpractice insurance to Dr. Covelli, with a policy limit of up to $2 million for each claim. When Mutual and the former patient were unable to settle, the case went to trial. The jury returned a verdict of almost $5.8 million against Dr. Covelli. Ultimately, Mutual settled the case for $950,000 before the circuit court entered the judgment order. However, during such time the Charleston Gazette and West Virginia Record reported the verdict amount. As a result of the...
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