Muddled verdicts nix employer's indemnity claim against carrier

In a bad faith claim, allowing the jury to decide an employee's underlying claim at the same time as the cross-claims of the employer and the carrier may result in muddled verdicts.

Case name: Gallagher Bassett Services, Inc. v. Malone and Nabors Drilling USA, Inc., No. 2007-CA-00585-SCT (Miss. 01/07/10).

Ruling: The Mississippi Supreme Court vacated and remanded two judgments, finding that the jury's inconsistent verdicts were the result of confusion in applying the legal theories presented by both parties.

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What it means: In a bad faith claim, allowing the jury to decide an employee's underlying claim at the same time as the cross-claims of the employer and the carrier may result in muddled verdicts.

Summary: An oil worker had his leg amputated. He sued his employer and its workers' compensation carrier, alleging their bad-faith failure to investigate delayed the surgery, resulting in the amputation. Cross-claims were filed by the carrier and employer. The jury found the employer and carrier were each 42.5 percent at fault for the worker's damages. In its second verdict on a breach of contract/indemnity theory, the jury found for the employer. The Mississippi Supreme Court held the verdicts could not be reconciled. The jury was told that to find for the employer, it had to find "that nothing [the employer] did contributed to the damages, if any, suffered by [the worker]." The jury's finding that the employer was as much at fault as the carrier was in direct conflict with its finding that the employer did nothing to contribute to the worker's damages. The court reversed the judgments and remanded the case for a new trial.

The Supreme Court acknowledged that the three parties had strategic reasons for bringing their claims together. However, the case presented multiple legal theories, which resulted in a completely confused jury. Although Mississippi's rules permit a trial court broad discretion in deciding whether to try the claims and cross-claims of the parties together, the Supreme Court recommended on remand that the trial court separate the claims to avoid further undue confusion. It strongly urged the trial court to consider severing the cross-claims from the employee's claims. The dissent argued that a new trial was not warranted, as there was insufficient evidence to support either of the verdicts.

The dissent pointed out that the employer and worker entered a settlement agreement before trial because the employer feared bad faith would be imputed to it because of the carrier's conduct. However, in its view there was insufficient evidence to find any bad-faith conduct committed by the carrier and therefore, insufficient evidence to impute bad faith to the employer.

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February 25, 2010

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