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Prime Insurance avoids bad-faith ruling after tendering full policy limit
The Tenth Circuit affirmed summary judgment for Prime despite an underlying $60 million judgment tied to a fatal liposuction surgery claim.
An insurer cannot be found liable for bad faith when it tenders its entire policy limit, even if a related case ends with a much larger judgment, a federal appeals court ruled.
On July 21, 2026, the US Court of Appeals for the Tenth Circuit affirmed summary judgment for Prime Insurance Company in a years-long dispute involving a fatal surgery claim, which began after a patient went into arrest during liposuction and died the same day.
Prime’s coverage for each occurrence was capped at $50,000, and defense costs reduced the remaining amount as the case progressed. The father of the deceased patient negotiated with the surgery center’s insurer and sued the surgery center, CLJ Healthcare, LLC, but Prime offered the full limit; the father declined.
After learning that CLJ had a separate $2 million policy with Owners Insurance Company, the father demanded coverage from Owners under an arrangement that Prime would tender $100,000. When Owners denied coverage, CLJ assigned the father its right to sue Prime for bad faith and agreed not to defend a malpractice case, leading to an uncontested $60 million judgment; the court still rejected the bad-faith claims against Prime, saying Prime had explained the clear policy terms and offered its limit without imposing impossible conditions.