Articles Posted in Bad Faith

Back in 1975 Gov. Jerry Brown signed a law limiting pain and suffering damages in medical malpractice cases. Since then other laws have been enacted which have affected tort reform– in 1997 a period known as the “napkin deal” took effect, and lasted 5 years, whereby insurance companies received protection from lawsuits, doctors were able to keep their liability protections and allowed a higher standard of proof that a victim had to meet; in 1988 a ballot war over auto insurance took place; in 2000 a referendum backed by insurers to repeal a “bad faith” law sponsored by lawyers won, and in 2004 a battle took place at the ballot box that curbed unfair business practice suits against small businesses. For many years, personal injury lawyers have been involved in a battle with insurance companies and their business clients over the rules that decide who can sue and collect for injuries. Millions of dollars have been spent on campaign contributions, lobbying fees, public relations tactics and other political manuevering, all of which are nothing compared to the billions insurance companies shuffle out each year.

A case exemplifying this battle is http://www.courtinfo.ca.gov/opinions/documents/S179115.PDF, a case, up until yesterday, was waiting for a state Supreme Court case decision. It was argued in May, and since that time the legal community has been analyzing the comments of the justices hearing the case and debating how the case would play out. The main issue of the case is whether someone who suffers injuries in an auto collision or other incident is entitled to collect the full amount of the medical bills issued by doctors, hospitals and other care providers, or if they are limited to the amount actually paid by insurers for that treatment, which is often a fraction of the supposed bill. The case stems from a 2005 San Diego County collision in which a Hamilton Meat truck seriously injured Rebecca Howell. Howell’s medical bills approached $200,000 but medical insurance settled with the care providers for $60,000 and the trial judge reduced the medical part of her judgment to that amount. The full amount was restored by an appellate court, and whatever happens in Howell’s case will also settle several other cases hinging on the same issue.

Yesterday the state Supreme Court issued their ruling on behalf of the handed insurers and business groups a major legal victory and for personal injury lawyers big setback by imposing limits on medical damages in one of the era’s most closely watched civil cases. The issue in the case, Howell v. Hamilton Meats & Provisions, was whether an injured party could collect the full medical care costs billed by doctors and hospitals, or the lesser amount that the medical providers accepted from an insurance company. The majoritie’s decision was stated like this: “We hold no such recovery is allowed, for the simple reason that the injured plaintiff did not suffer any economic loss in that amount.” The majority also held that “unlike the law of other states, California’s damages statutes bar Howell from recovering as damages for medical expenses anything in excess of the amount her medical providers agreed to accept.” Insures said that if they had lost case, it would add as much as $3 million a year to their payouts in auto accidents and other personal injury cases, from which Plaintiffs’ attorneys would have been entitled to about a third.

Policyholders give insurance companies billions of dollars every year in the form of premiums to protect them from the risk of paying huge out of pocket expenses after an injury. But the sad fact is that many don’t receive anything when that risk becomes a reality. Insurance companies are notorious for denying, delaying and refusing to pay valid claims, solely to keep premiums and increase their bottom lines. Some of the biggest offenders are the larger insurance companies. Sadly, these companies have been known to deny valid claims in an attempt to boost profits, reward employees who successfully deny claims and engage in fraud to avoid paying claims. Long term care insurance companies are arguably the worst when it comes to bad faith tactics. It should be pointed out that, in some cases, insurance companies make money when they don’t pay claims and that they will do anything to avoid paying, because they know– if they wait long enough– the policyholders will eventually die.

The truth of the matter is that an insurance company has a duty to handle claims promptly, reasonably and in “good faith and fair dealing.” That basically means that your insurance company must adjust your claim by either paying it or denying it within a reasonably prompt time. Also, they must cooperate with you regarding the claim by responding to your letters and phone calls. And if they deny your claim, they must tell you in writing precisely why they are denying the claim specifying each contract term or provision upon which it relies. On top of that they must attempt to find a basis to pay the claim rather than find reasons to deny it. Lastly, they must, as stated in the title, “play fair”. That does not mean they have to pay your claim if they have a good reason to deny it. If they don’t play fair then you will have to prove that the insurer injured you by not paying your claim when it should have. If you feel you have been treated unfairly by an insurance company and would like to recover a bad faith claim, please contact our experienced bad faith insurance law attorney for a free consultation.

Insurance companies employ bad faith tactics in different ways. There is no doubt about it, though, that no matter the way, insurance denial can wear people down. The following is a common scenario involving disability benefits. First, an insured person files a claim involving an injury. Then the insurance company approves it, which is surprising, especially if someone has a previous condition that became worse over the years. One of the most used tactics is to deny a claim based on a pre-existing condition. However, an injury can become worse due to work, and can be the reason a claim is approved. After that the insured files for short term disability benefits (STD), and after a certain amount of time, say 20 weeks, long term benefits go into effect, automatically.
But things can go wrong while a person is receiving their STD’s– such as the insurance company deciding to scrutinize the claim within the first few weeks of issuing the STD. Once that happens, it can be nothing but headaches and pain for the person seeking benefits. At that point the insurer may begin to ask for the same information over and over or they may ask that the insured have XRAY’S or MRI’S taken to prove the severity of an injury. Even if doctors and surgeons review the documents and confirm the severity of the injury, anyone else, such as a nurse, on the insurer’s medical staff can disagree with and override the findings, which results in the insured being cut off from benefits. When that happens, the insurance company will usually send the insured an appeals packet. This is when it is time to hire an attorney, as the appeals process can be lengthy (sometimes insurances companies claim they did not receive an appeal and ask to resend it over and over to various departments) and frustrating.

If you are seeking a results-oriented law firm to assist you with an insurance-related concern, contact the Brod Law Firm today. Our firm has over 10 years experience representing policyholders in insurance-related disputes. We have helped many clients in a wide range of insurance-related issues. We stand up to the powerful insurance companies, with their vast resources and arsenal of lawyers. With our knowledge and expertise, we help protect the rights of all policyholders and fight to ensure they are treated fairly and in good faith.

Anyone who has insurance is vulnerable to insurance fraud. It does not matter what type of policy you hold, whether you have an individual plan or employer based insurance –you are not safe from insurer bad-faith practices. What is more, even people who have high paying jobs with great insurance plans don’t know they are at risk. Speaking of employer based insurance, most people don’t know about a little thing called ERISA preemption.

The Employee Retirement Income Security Act of 1974 is a federal law that was intended to protect the retirement benefits of employees against mergers, acquisitions, and other corporate activities that might otherwise have endangered such funds. Originally ERISA had nothing to with overruling state insurance regulations. It specifically approved of the use of state laws to regulate insurance practices. That was until the insurance companies went to the US Supreme Court and argued that they could lower insurance premiums on health insurance policies purchased in the workplace and, thereby, make insurance more affordable to people if the Supreme Court would agree to preempt state laws. And in the 1987 ruling written by Justice Sandra day O’Conner, in the case of Pilot Life v. Dedeaux, the court decided that a state law that does not directly regulate the business of insurance is preempted by ERISA for insured plans, essentially eliminating the legal rights –established over many years-that protect policy holders from fraudulent and bad-faith insurance practices.

Now, without federal laws making it illegal for an insurance company to defraud somebody or ensuring accountability for bad-faith practices, insured people in almost every state are having their rights taken away, because of ERISA preemption. Here at the Brod Law Firm, we know that the likely hood of ERISA reform is slim, considering that the insurance companies are the strongest lobby in Congress (FYI: ERISA is also our roadblock to health care reform). But you can help lobby Congress by calling and voicing your concerns to your local Congressional representative and your state’s U.S. Senators. If you feel that you are the victim of bad-faith practices and have questions about the state law and how it will (or will not) protect you, please contact us.

What is “Bad Faith”? Bad Faith refers to a claim an insured person has against an insurance company that won’t honor a policy or pay a legitimate claim. At this point in time, it should be no surprise that some insurance companies delay payments in order to keep your money. Some legal consultants are saying that, because of the current recession, insurers are using delay tactics in order to make their bottom lines look better than they actually are to please their stockholders. And, as we saw with the government-sponsored financial bailouts of corporations such as Citicorp and AIG, we know the bottom line is sometimes an illusion that eventually implodes. On top of that, the insurance industry is not federally regulated, and some bad faith cases have found in favor of the insurer, stating that it is not required to disregard the interests of its shareholders and other policyholders when evaluating claim and that insurers need not put insured ‘s interests ahead of its own. For example,the judgment in Austero v. National Cas. Co of Detroit, Mich.1978 states: “An insurer is not required to pay every claim presented to it. Besides the duty (of good faith, which is the opposite of bad faith) to deal fairly with the insured, the insurer also has a duty to its other policyholders and to the stock holders…not to dissipate its reserves through the payment of meritless claims.”

Contrary to that view, other cases have had the opposite judgment upheld, suggesting the insurer must place its insured’s interests above its own or its stockholders’ interests in maximizing profits, as in McCormick v. Sentinel Life Ins. Co. 1984 that found: “The duty (of good faith) does require an insurer to place the interests of its insured above its own or its stockholders’… We accordingly reject (the view that)…there is an equivalent duty…owed to an insurer’s stockholders which may be balanced against the duty owed to its insured.” Most people believe the latter when they buy insurance and feel overwhelmed and powerless when insurers don’t want to pay. And even though each state has their own insurance departments that enforce provisions of their state’s insurance regulations, it can still be difficult to recover money for a cheated policyholder. Because bad faith cases are complex and because most policyholders feel powerless going against insurance companies, most victims of bad faith find it useful to hire an experienced insurance attorney to fight for them.

Here at the Brod Law Firm we wonder what the future may hold for policyholders, considering the current political and economic climate and the instability of the stock market. Now, more than ever, large insurance companies, like any other large company, will fixate on the bottom line of making profits and providing returns to their stockholders. The more claims a company pays, the weaker its bottom line will appear. To avoid all that, insurance companies may withhold or refuse payment or use delay tactics to hang onto your claim payment as long as possible. Despite all of this, we have the experience and skills needed to fight and win any case involving insurance bad faith.