I've seen a lot of scratches and gouges from dropped chains, but cannot recall ever seeing a chain get completely wrapped around the crankarm.
This reminds me of a Canadian lawsuit against a toothbrush manufacturer a few years ago - the plaintiff was brushing their teeth, the toothbrush allegedly snapped, and the plaintiff continued the brushy-brushy motion with the jagged broken stub of the toothbrush, resulting in mouth injuries for which they wanted compensation. The judge laughed the plaintiff out of court - you have some responsibility to not make a situation worse after a product fails... such as continuing to pedal after the chain is off. No, the chain should not have fallen off if the bike was properly adjusted, but it's on the buyer to get it fixed when a problem is noticed and not continue pedalling despite the chain being off.