New lawsuit targets major insurers for bad faith, failing to honor coverage for horrendous child sex abuse
By Darrell Cochran Law
A group of victims who suffered horrendous sexual abuse at a Southwest Washington group boys home have filed an amended lawsuit against several major insurance companies for failing to honor their contracts and pay what they owe for the victims’ suffering.
The new filing by attorneys from the Pfau Cochran Vertetis Amala law firm in U.S. District Court for the Western District of Washington accuses the companies of bad faith practices, misconduct, and other violations of Washington state law. The plaintiffs, who are survivors of unfathomable sexual and physical abuse at the now-defunct Kiwanis Vocational Home (KVH) near Centralia, Washington, claim that the insurance companies breached their duties to defend and indemnify the defendants in underlying lawsuits related to the abuse.
VIDEO: DARRELL COCHRAN ON INSURANCE BAD FAITH IN KVH ABUSE CASES
The lawsuit targets United States Fidelity & Guaranty Company (USF&G), Granite State Insurance Company, Insurance Company of North America (INA), Federal Insurance Company, Transamerica Insurance Company, Westport Insurance Corporation, and Fireman’s Fund Insurance Company. These companies are accused of failing to honor coverage and refusing to settle claims within policy limits, thereby exposing their insureds to significant financial harm and withholding the compensation owed victims under the policies.
YEARS OF ABUSE
The plaintiffs in this case were placed at KVH as children, where they suffered years of physical and sexual abuse. The abuse was perpetrated by Charles McCarthy, the executive director of KVH, and Guy Cornwell, the assistant executive director. Both McCarthy and Cornwell were members of the Kiwanis Club and were entrusted with the care and safety of the children at KVH.
In a series of underlying lawsuits, the plaintiffs sought justice for the horrific abuse they endured. But the insurers failed to fulfill their obligations under the insurance policies that were supposed to protect McCarthy, Cornwell, and KVH. Despite being contractually obligated to defend and indemnify the insured parties, the insurers allegedly denied coverage, conducted unreasonable investigations, and refused to settle the claims, leaving the plaintiffs to suffer further harm. Their stonewalling has dragged on for more than a decade.
BAD FAITH AND MISCONDUCT
Darrell Cochran, the lead attorney representing the plaintiffs and a co-founding partner of PCVA, emphasized the severity of the insurers misconduct. “The insurance companies not only failed to uphold their end of the bargain, but they also placed their own financial interests above the wellbeing of the individuals they were supposed to protect,” Cochran stated. “Their refusal to settle these claims and provide the necessary defense constitutes a blatant disregard for their legal and ethical responsibilities.”
DECADES OF NEEDLESS DELAY
The consequences of the Insurers’ actions have been severe for the plaintiffs. After years of litigation and stress, McCarthy, who suffered from a serious cardio-pulmonary condition, died following a trial preservation deposition. Cochran noted that “the stress of the litigation, which could have been avoided if the insurers had acted in good faith, directly contributed to McCarthy’s deteriorating health and eventual death.”
Cornwell, now retired and living on a fixed income, also faced significant financial and emotional hardship due to the Insurers’ refusal to settle the claims. The complaint asserts that the litigation caused substantial stress and strain on Cornwell’s personal life, further exacerbating the harm inflicted by the Insurers’ conduct.
LEGAL CLAIMS AND RELIEF
The plaintiffs are seeking several forms of relief in this lawsuit, including:
– A declaration that the insurance policies provide coverage for the underlying claims.
– A declaration that the Insurers are estopped from denying coverage based on their unreasonable breaches of duty.
– Damages for breach of contract, negligence, and bad faith.
– Exemplary damages for violations of Washington’s Consumer Protection Act (CPA) and Insurance Fair Conduct Act (IFCA).
– Reimbursement of all attorney fees and costs incurred in prosecuting this action.
Cochran stressed the importance of holding the Insurers accountable for their actions. “This case is about more than just a breach of contract; it’s about the egregious bad faith conduct of these insurance companies and the need for justice for the victims who have suffered for far too long.”
The outcome of this case could have significant implications for the insurance industry, particularly in how companies handle claims related to abuse and misconduct. “The question is whether insurance companies can do whatever they want to violate the law, refuse to honor their contracts, and cause needless suffering just to continue padding their pockets,” Cochran stated. “We think not.”