At Bautista LeRoy LLC,  we have many clients whose loved ones have suffered injuries at nursing homes in Bentonville and the surrounding areas of northwest Arkansas. These injuries include falls, bed sores, failure to provide the right medication, physical and sexual abuse by the nursing home. Unfortunately once we start the discovery process in these cases,  we learn that these nursing homes have only obtained limited insurance to cover negligence claims. These insurance policies are known as Depleting Policies and affect the amount that our clients are able to recover for the injuries suffered by their loved ones at the nursing home. A lot of times these policies are only $150,000 to $200,000. To make matters worse these depleting policies, require that the defense legal fees are paid out of the policies. This reduces the amount of monies available to our clients and their loved ones.

Insurance Companies duties under a Depleting Policy

Fortunately, there are some laws in Arkansas that are helpful for individuals injured at a nursing home or family members who have a loved one that dies as a result of the negligence of a nursing home, when they are faced with a depleting policy. Arkansas law requires insurers have an increased obligation to consider settlement when the policy limits are being eroded by the defense costs, as continued litigation reduces both the coverage and the settlement leverage for the insured. Further the depleting nature of a policy creates a conflict of interest where the insurers defense costs directly reduce the insurers coverage requiring more consideration of settlement opportunities. Unfortunately Arkansas law does not impose different bad faith standards based on the policy structure or amount of coverage,  rather than insurers duty is only to provide an appropriate defense under the applicable provision based on the plain language of the policy, it doesn't matter whether or not there is still enough money to satisfy the claim.

That said since 1984 Arkansas courts have held that a rejection of a reasonable settlement in a depleting policy context may constitute type of bad faith claim and be considered oppressive conduct especially when the insurer knows that a continued defense will erode the available coverage. Despite this duty Arkansas law does require proof of fraud, bad faith or negligence beyond the mere poor judgment for failing to settle the claim within the policy limits. The insurer's duty is to protect the insurance interest which requires a reasonable evaluation of settlement opportunities particularly when depletion threatens to leave the insured exposed to an excess judgment, tends to lead to earlier resolution in claims where depleting policies apply.

The practical implications of these depleting policies cause the those who have been injured by the negligence of the nursing home to have limited options in recovery. In Arkansas, the assignment of a bad faith claim has strict limitations which means that third parties generally cannot directly pursue bad faith claims against insurers of nursing homes, despite the fact that there is a limited depleting policy which is worth less than the value of the injuries. This forces many families to accept a much lower settlement then they would normally receive if there have been and insurance policy that adequately covered their claims. The only benefit that the depleting policies provide to families that have injured loved ones is that settlement generally occurs quickly and within one year from the date of filing suit, rather than the usual two to three years of litigation.

Call Bautista LeRoy LLC In Bentonville, Arkansas to Help.

Having to deal with injuries caused by a nursing home to a loved one is stressful enough; when you add the fact that a lot of the nursing homes do not carry adequate insurance and families are forced to deal with depleting policies having the right attorneys advise becomes even more important. At Bautista LeRoy LLC we help our clients maximize the amount of money that the families are able to put in their pocket by quickly gaining an understanding of the insurance coverage and whether there is a depleting policy in play. The author, Andrew Leroy, is a partner at Bautista LeRoy LLC. Should you have any questions or wish to discuss the article, our attorneys can be reached at www.bautistaleroy-bentonville.com or 479-208-6614.