An insurance company says OpenAI’s ChatGPT helped trigger a costly legal mess after generating a fake case and encouraging a woman to reopen a settled dispute.
Nippon Life Insurance Company is suing OpenAI, claiming that ChatGPT produced questionable legal filings that forced the firm to spend hundreds of thousands of dollars defending itself in court, reports the New York Post.
The dispute centers on Graciela Dela Torre, an Illinois resident who had previously filed a disability claim against the insurer over carpal tunnel syndrome and tennis elbow she suffered on the job in 2019.
Court documents show Dela Torre originally won the claim, but it was dismissed after she lost disability status in 2021. She subsequently sued and reached a settlement with the company in January 2024, agreeing to drop any future claims.
The lawsuit says the situation changed when Dela Torre later turned to ChatGPT for advice after firing her attorney, who told her the case could not be reopened.
According to court filings, the chatbot generated legal paperwork encouraging her to challenge the settlement and file new motions against the insurer.
Says the lawsuit filed by Nippon earlier this week,
“ChatGPT is not an attorney. Although it was able to pass the Uniform Bar Examination with a combined score of 297, it has not been admitted to practice law in the State of Illinois or in any other jurisdiction within the United States.”
The complaint alleges that Dela Torre ultimately filed dozens of AI-generated documents in federal court, including at least 44 legal submissions and motions drafted with the help of the chatbot.
One filing reportedly cited a case called Carr v. Gateway, Inc., which the lawsuit claims does not exist.
“It only exists in Dela Torre’s papers and the ‘mind’ of ChatGPT.”
The judge overseeing the matter rejected the attempt to reopen the original case in February 2025. But Dela Torre continued filing additional motions and a new lawsuit against the insurer.
Nippon says the legal battle forced the company to spend roughly $300,000 responding to the filings. The firm is now seeking that amount in damages, along with $10 million in punitive damages from OpenAI.
A spokesperson for OpenAI told the New York Post that the complaint “lacks any merit whatsoever.”
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