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Handling Multi-Party Insurance Negotiations

Bankruptcy Judge Freezes Insurance Payout to Bus Operator for Accident

A U.S. Bankruptcy Court judge in McAllen froze the insurance payouts of a charter bus company responsible for a deadly accident this May, according to The Brownsville Herald. The judge, Eduardo V. Rodriguez, granted a preliminary injunction freezing the funds. The accident in May, which occurred near Laredo, left 44 passengers injured and 8 dead. The Dallas Morning News reports that OGA had ignored orders from the Federal Motor Carrier Safety Administration to stop using the bus because of brake problems. Inspections also found problems with access to emergency exits from the bus. Judge Rodriguez’ order effectively prevents OGA Charter, the operator of the bus involved in the accident, from dispersing the $5 million in insurance payouts it received from its insurer for the accident.

Victims Will Share in $3.5 million of $5 million Insurance Settlement

The order came after lawyers for various clients who suffered injuries from the accident came to an agreement with the OGA’s insurance companies to pay out $3.5 million in damages to the passengers and their families. Next, attorneys representing the accident victims attempted to force OGA Charter into bankruptcy so as to prevent them from dispersing the insurance funds. Judge Rodriguez hopes that the lawyers for the opposing sides will come to an agreement about how to disburse the money to the various injured parties. If they cannot come to an agreement, the bankruptcy court may take control of the funds and make further decisions about how to disburse the money.

Numerous Parties to Negotiation Pose Unique Challenges for Insurers

A $3.5 million payout may not go far between 50 people, but it’s still a big cost for the insurer. When numerous parties come together to negotiate an insurance settlement, the insurer must be sure not to lose control of the situation. Unique problems can arise in multiparty negotiations over insurance settlements. One problem is that different parties to the negotiation may have varying opinions about the amount of liability and damages, the limits of the insurance, and what kind of resolution is realistic to expect. These differences in opinion can become a major obstacle to reaching an agreement. Negotiators for insurers must take active steps to prevent negotiations from stalling out. One approach is for the insurance company to ally themselves with one or more of the parties to the negotiation who have shared interests. Another approach is for the insurer to make separate agreements with parties who are more ready to settle. This simplifies the negotiation and puts additional pressure on the remaining parties to reach an agreement.

Better Negotiation Could Have Improved OGA Coach Outcome

In the case of OGA Coach, the sheer number of parties involved would have been a big challenge for the insurer. While the $3.5 million payout could certainly have been higher, it’s possible that the negotiators could have reached a more favorable outcome. Reports indicate that the accident victims were able to coordinate their negotiation as a bloc, since they will share the entire $3.5 million payout. If instead the insurer was able to make separate agreements among the different passengers and their families, the total payout may have been lower.

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If you are facing negotiation or litigation over a claim by an insured, you need legal assistance. Get in touch with an experienced insurance defense lawyer at Colvin, Chaney, Saenz & Rodriguez, L.L.P. in Brownsville today to get the representation your business needs.

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Brownsville
Office

1201 East Van Buren St.
Brownsville, TX 78522

Phone: 956-542-7441
Fax: 956-541-2170

Edinburg
Office

323 West Cano, Suite 100
Edinburg, TX 78539

Phone: 956-542-7441
Fax: 956-380-0254

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Colvin, Chaney, Saenz & Rodriguez, L.L.P., represents clients throughout South Texas and the Rio Grande Valley, including people living in Brownsville, Harlingen, McAllen, Edinburg, Laredo, Corpus Christi, San Diego, Alice, Kingsville, Rio Grande City and other communities in Hidalgo County, Duval County, Jim Wells County, Kleberg County, Starr County, Cameron County, Webb County and Nueces County. -Site Map-

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