Company Wins Judgment Against Insurer's 'Bad Faith'

By: JAMES S. GRANELLI
TIMES STAFF WRITER



A Placentia company that makes medical devices won a default
judgment Tuesday in a bad-faith case against its insurance carrier, which
had failed to defend the company in a patent lawsuit.

Orange County Superior Court Judge C. Robert Jameson issued the
default judgment in favor of Surgin Surgical Instrumentation Inc. after
its carrier, Farmers Insurance Group, refused to comply with a court
order.

Jameson had previously ordered Farmers, as part of pretrial
proceedings, to turn over to Surgin its policy and procedure manuals on
handling insurance claims. Surgin alleged that Farmers didn't follow its
own procedures before denying coverage to it in the patent case.

After spending $270,000 in attorney fees, Surgin ran out of money for
its defense and settled the patent case, giving up a 5% share of the
market for a disposable device used in cataract surgery, Surgin's lawyers
said in the bad-faith case.

Surgin, which is privately held, will now seek more than $7 million in
compensatory damages and will ask for more than $62 million in punitive
damages to deter Farmers from acting in bad faith again, said Surgin's
attorneys, Daniel J. Callahan and Steven L. Dickinson of Irvine.
The lawyers said that punitive damages need to be more than $62
million because Farmers was not deterred by a $62-million jury verdict in
July, 1991, in another bad-faith case.
Farmers will appeal the decision, said Peter Lichtman, a lawyer for
the group.



Descriptors: SURGIN SURGICAL INSTRUMENTATION INC; FARMERS INSURANCE GROUP; INSURANCE INDUSTRY -- SUITS; BREACH OF CONTRACT

Copyright (c) 1993 Times Mirror Company