By Gina Passarella

The excess liability carrier for self-insured Camden County filed suit seeking to be released from having to pay its $10 million policy toward a $31 million verdict against the county.

State National Insurance Co. filed a declaratory judgment action in the U.S. District Court for the District of New Jersey Oct. 20, a day after a jury returned a verdict against Camden County for failure to properly maintain a guardrail. In that case, Anderson v. County of Camden, plaintiffs counsel argued successfully that the improper maintenance of a road and guardrail led to Nicholas M. Anderson's severe injuries in a car crash, including an amputated leg and nearly an amputated arm.

In the declaratory judgment action, State National Insurance Co. v. County of Camden , State National argues the county didn't tell the excess carrier about the lawsuit for a year and a half. By the time notice was provided, according to the complaint, the deadline to submit defense expert reports had expired, discovery was finished and the trial was scheduled.

"As State National began to receive information about the case, it was clear that serious errors plagued Camden's defense of the case," State National said in the complaint. "Nonetheless, Camden repeatedly represented that the value of the Anderson lawsuit was within Camden's $300,000 self-insured retention, and did not even forward its entire file on the case to State National."

Four days into trial, the county expressed concern that the verdict could exceed the $300,000 potentially by millions of dollars, the complaint alleged. State National said in the complaint it had about a day to make a decision regarding settlement and was unable to properly evaluate the case, which ultimately went to the jury.

"State National does not owe coverage for the Anderson lawsuit because Camden breached the excess liability insurance contract by failing to timely notify State National of the Anderson lawsuit and by failing to mount an adequate investigation and defense of the lawsuit," the complaint stated.

John Dodig of Feldman Shepherd Wohlgelernter Tanner Weinstock & Dodig, who represents Anderson, said State National "wrongly filed" this suit the day after the verdict.

He said State National is the county's insurance company and has a fiduciary duty to indemnify the county. Dodig said he repeatedly told the insurer it should be present at settlement conferences and at trial.

"The excess carrier took a very cavalier attitude or approach with me," he said.

Peter E. Mueller, a partner with Harwood Lloyd in Hackensack, N.J., represents State National in its case against the county. He did not return a call for comment by press time.

An attorney for the county said actions like those taken by State National are common in these types of cases.

"The matter is in litigation so there are few details I can provide except to say that when a large verdict is returned, as there was here, it is not at all unusual for there to be legal challenges related to insurance coverage issues," Camden County Assistant County Counsel Howard Goldberg said in a statement. "We are confident, however, that this judgment will not adversely impact the county taxpayers."

Dodig said the county is planning to file a bad faith action through a counterclaim against State National. He said the county asked his firm to handle the case, but a conflict existed because Camden County is appealing the $31 million jury verdict.

Goldberg said in an interview that the county has yet to file an answer to the complaint. While he said these actions typically have a bad faith component, no decisions have been made on what will be included in the county's answer. According to the docket in the case, an answer is due Nov. 12.

Camden County's policy with State National required the county to inform the insurer by written notice "as soon as practicable" after becoming aware of a lawsuit against the county. Anderson's accident happened Dec. 23, 2004, and Camden County notified the insurance company June 14, 2005, that it received a claim notice. The county was later told to notify the insurer if a lawsuit was indeed filed, according to the complaint.

The lawsuit was filed Jan. 23, 2007, and Camden County notified State National of the suit Aug. 4, 2008, past the time for expert reports and discovery, according to the complaint.

In its complaint, State National then goes on to question the manner in which the trial was handled, pointing out that the county chose to use its own attorneys instead of hiring outside counsel. The insurer also alleged the county missed the deadlines for filing expert reports and was unable to put on any experts at trial, according to the complaint.

State National alleged it was repeatedly told by the county that the case was "very weak" for Anderson.

"County counsel went on to say, 'Frankly, any jury will most likely see this case for what it is — a young man who was either speeding or simply lost control of the car on a turn and was severely injured,'" the complaint said.

State National said in its complaint that the county asked whether the insurer would contribute to a settlement. When the county said it wouldn't put in its policy limits of $300,000, according to the complaint, State National said it could not provide the excess coverage if the county didn't exhaust its policy limits.

The case went to trial Oct. 8, 2008, and the county did not present expert testimony to rebut Anderson's experts on highway safety, accident reconstruction, medical issues or lifetime care costs, according to the complaint.

Four days into trial, the county informed State National that the evaluation of the trial had changed "substantially," the insurer alleged in the complaint.

"Suddenly, after months of repeated representations that State National's excess coverage was not implicated by the Anderson lawsuit, Camden's evaluation of the settlement value of the Anderson lawsuit went from $50,000 to several million dollars," the complaint said. "This wholly unanticipated reversal of position left State National scrambling to perform any semblance of a meaningful coverage evaluation before the case went to the jury."

An eight-member jury awarded Anderson $15 million in future medical costs, $15 million in past and future pain and suffering, disability and loss of enjoyment of life and $1.29 million in past medical costs, finding the Camden County government liable, attorneys for Anderson said at the time of the verdict.

Anderson, 18 at the time of the accident, was driving on Raritan Avenue near the intersection of Third Street in Atco, Camden County. His four-door Subaru went onto the roadway's shoulder, where there was a drop-off between the asphalt part of the shoulder and the adjacent dirt and gravel, the complaint in Anderson said.

Dodig said at the time of the verdict that he argued the county knew for 20 years about the faulty guardrail and road surface. He said they called county witnesses and cross-examined county witnesses to illuminate the Camden County policy of not fixing guardrails until they are upgraded during safety projects or until hit during accidents. •