Another Installment In The Washington Urine Sample Videographer Case

Normally I wouldn’t write about a case in which the court denied summary judgment, but the continuing litigation surrounding John Moeller, a urinalysis lab director alleged to have secretly videotaped people in the act of providing urine samples, always has some fascinating new twist.
In the latest chapter, Specialty Surplus Ins. Co. v. Second Chance, Inc., 2006 WL 223806 (W.D. Wash. January 30, 2006) a U.S. District court considered a summary judment motion over whether the insurer had committed bad faith by failing to pay policy limits to claimants against Moeller. The claimants then reached agreement with Moeller in which he stipulated to a $4.9 million judgment (about $100,000 per claimant) and an assignment of his rights against Specialty Surplus and the Washington Insurance Guarantee Fund, in return for a covenant not to execute against his personal assets.
Notes from the claims file appeared to show the insurance company was planning to offer only about $700 per claimant, and that the insurer claimed the policy limit was only $1 million, not $3 million. The court plainly was skeptical of the insurer’s argument that it demonstrated a greater concern for the interests of its insured, Moeller, as for its own interests, especially in light of the fact the insurer failed to disclose the policy limits demand to Moeller. At the end of a very long opinion, the court held there were disputed issues of material fact and denied the claimants’ motion for summary judgment against the insurer on the bad faith issue.

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