Press Release

Roda & Nast Announce Record Punitive Damage Judgement Against Auto Insurer

10/29/96

Record $5.5 Million Punitive Damage Verdict Handed Down Against
Insurance Company

LANCASTER, Pa., Oct. 25 -- On Friday, October 25, 1996, a
federal jury in Lancaster, Pennsylvania handed down a $5.5 million
award in punitive damages against the Cincinnati Insurance Company for
bad faith in the handling of a claim for underinsured motorist
benefits. The award is believed to be the largest jury verdict for
insurance bad faith ever returned in Pennsylvania under a law that
went into effect in July, l990 that allows the recovery of punitive
damages for insurance bad faith.

The case arose from the death of a 28-year-old man, Edward Leab, in an
accident on I-83 in York County on March 6, l993. Leab was driving a
tractor cab for his employer, Eastern Consolidation Distribution
Services, Inc., when it was hit in the rear by a car driven by Michael
Hileman of Camp Hill. Leab was married at the time and the father of
two children, ages 8 and 3.

Hileman's car was covered by only $50,000 in insurance.  Because the
damages to Mr. Leab's estate and his family far exceeded that amount,
Mrs. Leab, on behalf of the estate, made a claim under the
underinsured motorist (UIM) coverage of the vehicle that her husband
was riding in at the time of the accident, since her husband, as a
person occupying the vehicle, qualified as an "insured" under that
policy and was thus eligible for UIM benefits.

The insurance policy for the vehicle was with the Cincinnati Insurance
Company, which is based in Cincinnati, Ohio. The policy had UIM
coverage of $35,000. Within two weeks of the accident, Cincinnati set
aside a reserve for the full amount of the coverage ($35,000) and
never disputed that the Leab estate was entitled to that
amount. Cincinnati refused, however, to make any payment to Mrs. Leab
unless she would sign a release giving up any potential claim to a
higher amount of UIM coverage.

The potential higher claim existed because of a question about whether
Cincinnati had obtained from the insured (the employer, ECDS) a
certain waiver required under Pennsylvania law. The insurance policy
had $1,000,000 in liability coverage, but only the $35,000 in UIM
coverage. Under Pennsylvania law, the UIM coverage may be lower than
the liability coverage only if the insured signs a waiver
affirmatively electing to take the lower coverage. When asked to
produce the waiver, Cincinnati was unable to do so for five months,
and when the waiver was produced, it was dated nine months after the
policy went into effect. when Mrs.  Leab's attorney then asked for a
certified copy of the policy, Cincinnati did not provide that for six
more months, and when it was provided, the waiver was blank. When
Mrs. Leab's attorneys then commenced a further investigation, a third
waiver was produced 14 months later, bearing a different date.

While they were conducting the investigation, Mrs.  Leab's attorneys
requested payment of the $35,000 that was not in dispute, but
Cincinnati refused, demanding a full release from Mrs. Leab before
they would pay. When Mrs. Leab's attorneys completed their
investigation, they told Cincinnati that they were not likely to press
the claim for higher coverage, but did not want Mrs. Leab to sign a
release, since the insurance policy did not require her to do so in
order to receive the UIM benefits, and since there was always the
possibility that new evidence would show up concerning the waiver.

Cincinnati maintained its refusal to pay the $35,000 without a
release, even though that amount of coverage was not in
dispute. Mrs. Leab finally signed the release under protest in
February, l996, at which point Cincinnati paid the $35,000, without
interest. By that time, Mrs. Leab's attorneys had filed a claim
against Cincinnati for bad faith. The release did not apply to that
claim.

The Leab Estate was represented by Attorney Joseph F.  Roda, of
Lancaster, Roda & Nast, P.C., 36 East King Street, Lancaster, PA
17602, 717-397-1700.