Fillenwarth Dennerline appeals jury verdict

August 21, 2008

The Indianapolis law firm socked by an $18 million jury verdict two years ago over the collapse of a health insurance trust has appealed to the state's highest court.

If Fillenwarth Dennerline Grothe & Towe can escape the verdict, the firm might be relieved of an agreement it struck with the Indiana Department of Insurance this summer to stop pursuing a potentially lucrative bad-faith claim against its malpractice insurer.

The state in June filed a federal civil suit against Alabama-based ProAssurance and its parent, ProNational Insurance Co., accusing the company of refusing to settle the case and alleging bad faith and breach of contract.

In addition to transferring the bad-faith claim against ProNational to the insurance department, Fillenwarth Dennerline agreed to pay a $50,000 fine to the department.

The basis for the legal tussle is the 2002 collapse of the Indiana Construction Industry Trust, which provided health coverage to non-union construction workers. The jury found that Fillenwarth Dennerline partner Frederick Dennerline III, who served as outside counsel for the trust, didn't inform trustees of looming financial problems.

The verdict was based on unpaid claims due 8,200 Indiana workers after the trust went broke.

Fillenwarth Dennerline urges the justices to consider whether the trust's liability claim is pre-empted by the Employee Retirement Income Security Act and whether the insurance department settlement exceeded damages that could be proved without statutory authorization.

The petition also asks the court whether the firm's due process rights were violated by the use of a liquidation order given to determine the amount of the damages.

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