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Companies may not be too happy about the latest in mega-judgments levied against an insurer. A Los Angeles Superior Court handed down a $42 million award to Perry Hanstad, a former San Bernadino area contractor. The case stemmed from accusations of fraud against Hanstad in 1993 and the refusal of Truck Insurance (an affiliate of Farmers), his carrier, to pay the claim in which Hanstad allegedly committed the fraud. The resulting fall-out forced Hanstad into bankruptcy. In his lawsuit, Hanstad claimed he had coverage for the acts he was accused of committing and Truck should have paid. Their refusal to pay, he said, constituted bad faith. The jury sided with the ex-contractor, giving him an estimated $2 million in compensatory and $40 million in punitive. Ouch!
© 2000 John Cooke Fraud Report