A Philadelphia jury has awarded $500,000 to two suburban police officers who argued that they were subject to an insurance fraud scheme aimed to deny them uninsured and underinsured motorist benefits.

Philadelphia Common Pleas Judge Gregory E. Smith presided over the trial in Egan v. USI Mid-Atlantic , which resulted in a verdict March 16.

Two Bristol Township, Bucks County, police officers alleged that the township's insurance broker and the township's former manager sought to defraud them of uninsured and underinsured motorist benefits by backdating a waiver of the UM/UIM coverage prior to an accident that left one of the officers with an amputated leg, according to court papers.

In contrast, the insurance broker said in court papers that its automotive insurance policy was issued without UM/UIM coverage and the township did not pay premiums for that coverage. The insurance broker also argued that it was the township manager alone who backdated the form to the date of the inception of the policy.

The two officers were injured in the line of duty when they were hit Aug. 27, 2005, by a drunken driver while investigating a separate automobile accident, according to plaintiffs Michael Egan Jr. and Jill Egan's pretrial memorandum. Officer Michael Egan Jr. was pinned against his patrol car, and his injury required the amputation of his left leg below his knee. Officer Mark Buzby also had significant leg injuries, which has necessitated a total knee replacement in one leg and the likelihood of a total knee replacement in another leg. Driver George Buschle was uninsured.

Bristol Township did not want UM/UIM motorist coverage with its policy with Zurich American Insurance Co., which was brokered by USI MidAtlantic Inc., according to court papers. But the deletion of the coverage required the execution of statutory waiver forms, and without following the waiver rules correctly, coverage still existed at the time of the accident because the township had not filled out the forms prior to the accident, the plaintiffs argued in court papers.

The jury found that USI Mid-Atlantic and USI's Robert Brown, Freda Batipps and Linda Magovern breached a covenant of good faith and fair dealing with the plaintiffs, and that the breach was a factual cause in bringing about harm to the plaintiffs, according to the verdict sheet.

The jury found that the USI defendants, except for Magovern, as well as Bristol Township's former manager, Suzanne Newsome, intentionally interfered with the plaintiffs' contractual insurance rights and that they committed fraud. The fraud required proof of clear and convincing evidence.

The Egans and Mark Buzby were respectively awarded $55,000 in economic damages and $195,000 in emotional distress damages, according to the verdict sheet.

After the revelation of the backdating on the UM/UIM waiver in depositions, Zurich tendered $1 million in UM/UIM benefits and $6.5 million for stacked UM/UIM benefits, the plaintiffs' pretrial memorandum said.

Despite that payment, the plaintiffs argued that, while the defendants couldn't be charged with loss of damages between when Zurich learned of the backdating and settled the plaintiffs' claims, the plaintiffs could recover emotional distress damages because of the defendants' denial of coverage, the Egans' pretrial memorandum said.

"Plaintiffs here seek recovery in connection with USI's deception — a deception perpetrated not only on the plaintiffs, but on the state and federal courts; on plaintiff Buzby's personal insurance carrier State Farm; on Zurich Insurance Co.; on Zurich's counsel; and on the defendants' own attorney," the Egans said in their pretrial memorandum.

Peter M. Newman, one of the Egans' attorneys, said that, as a matter of public policy, plaintiffs who have already received recovery for their underlying injuries should still be able to recover if their insurers have defrauded them.

The defense said that the plaintiffs did not have any actual damages because their workers' compensation lien was extinguished, they did not suffer lost wages and they received the UM/UIM benefits.

The defense said in court papers that "Newsome testified in no uncertain terms that it was her decision alone to date the form as of policy inception, and that USI was not involved in any manner with her decision."

The defense also argued that a criminal indictment against Batipps, Brown, Magovern and Newsome was dismissed because of evidence that Buzby's personal injury attorney had received telephone messages from Batipps indicating that Bristol Township had rejected the UM/UIM coverage but had never executed the rejection form.

The Egans were represented in their personal injury case by James McEldrew and Buzby was represented by William Goldman, the plaintiffs' papers said.

Newman said that the criminal case was decided at an earlier stage than the civil case was, and "we believe that if the judge had heard all of the evidence as presented in this trial he would have reached a different decision."

USI said in a press release that it will be fully exonerated during the appeals process. The plaintiffs are appealing Smith's ruling that they couldn't seek punitive damages, Newman said.

In a press release, USI said that "what has not been reported in press accounts is that our colleagues have repeatedly testified that they did not engage in wrongful conduct. Nor does USI MidAtlantic believe the lawyers for plaintiffs were ever misled, as they claim. USI MidAtlantic's client, Bristol Township, consciously chose not to purchase uninsured motorist coverage, and Bristol did not pay for the coverage. The actions of our colleagues confirmed this decision."

Mark W. Tanner and Newman, of Feldman Shepherd Wohlgelernter Tanner Weinstock & Dodig, represented the Egans in the insurance fraud case. Gerald A. McHugh Jr. and Daniel B. Bencivenga, of Raynes McCarty in Philadelphia, represented Buzby in the insurance fraud case.

USI was represented by Christopher P. Leise and Thomas M. Goutman of White & Williams in Philadelphia.

Newsome was represented by Wendi D. Barish of Weber Gallagher Simpson Stapleton Fires & Newby in Philadelphia.

Newsome did not appear during the trial, according to interviews. Newman said that Newsome's counsel advised the other parties that she would invoke her Fifth Amendment rights if she were to appear for trial. The plaintiffs have negotiated a confidential settlement with Newsome, Newman said.

Barish did not respond to a request for comment. Leise deferred comment to USI's press release.

There was no evidence that Zurich acted in bad faith, Newman said.

USI is self-insured for $750,000 per claim and has a $25 million policy with XL Insurance, which has reserved its rights in the action, USI's memorandum said.

USI also said in its release that the plaintiffs' demands have fallen from a high of $10 million. •