Washington State

Office of the Attorney General

Attorney General

Bob Ferguson


Olympia Ð November 28, 2000 - The State of Washington today filed suit against six foreign insurance companies that have refused to reimburse the state for their share of the cost of settling the Linda David case.

The suit claims the companies breached a contract by refusing to pay the state $3.8 million in costs arising from the David settlement last August. The total settlement cost was $8.8 million.

Under an insurance policy issued by the companies, the state is obligated for the first $5 million in settlement costs, but the companies are required to cover any excess amount.

The state has already paid the full settlement amount and is now seeking reimbursement for the portion owed by the insurance companies.

Last December, David filed a $55 million lawsuit accusing the state of negligence for failing to properly oversee her care. David, who was receiving state assistance payments, was found injured and immobilized in a filthy sailboat in Everett in January 1997.

"The settlement was a fair resolution of a very tragic case," Attorney General Christine Gregoire said. "What isnÕt fair are these insurance companies which want to collect premiums but not pay claims."

"We expect these companies to live up to their promises and reimburse taxpayers who have been paying premiums for this coverage," Gregoire added.

The suit seeks a declaratory judgment that the companies must pay the state under terms

of the policy. In addition, it seeks $3.8 million in damages, plus interest and attorney fees.

The insurance companies, all based in London, are: Zurich Specialties London Ltd.; Gerling-Konzern General Insurance Co.; St. Paul Reinsurance Co. Ltd.; New Hampshire Insurance Co. d/b/a AIG Europe (UK) Ltd.; Lexington Insurance Co; CNA Reinsurance Co. Ltd.

In a separate action today, the state filed a motion in Pierce County Superior Court asking that a case brought by some of the same insurance companies be transferred to Thurston County.

In that case, the insurance companies want the courts to excuse them from paying their share of a judgment awarded to three developmentally disabled residents of an adult-family home in Bremerton. The residents won a $17.8 million jury verdict. The state paid the full amount plus interest but maintains that its policy requires the insurance companies to reimburse $13.8 million

"These are the kind of companies that give insurance carriers a bad name," Gregoire said. "They willingly take your premium payments and then try to find loopholes to avoid paying claims."

The state is seeking to have the case transferred from Pierce to Thurston County because most of the relevant events occurred there.

Plaintiffs in the case include Zurich Specialties, St. Paul Reinsurance., CNA International, New Hampshire Insurance., CGNU, and other underwriters.