Articles Posted in Insurance Law

As San Francisco insurance attorneys, we know that insurance companies stalling and not wanting to pay out benefits to customers is a Far too frequent occurrence. Sometimes the only option is to use the courts to seek redress and force insurance companies to do what they should have done in the first place.

Our insurance attorneys were very interested to see the resolution of Ciara Vollaro’s case last week. The judgment was issued on Wednesday May 16th in Los Angeles. Ms. Vollaro was involved in a car accident in 2007. She was a passenger in a car that was rear-ended by another car driven by Maureen Lipsi. Ms. Lipsi is insured by State Farm Insurance. But for five long years State Farm refused to resolve the matter. They caused a series of delays and then finally forced the trial to start by offering the plaintiff only $29,000, which was far too low for the serious injuries she suffered and the harm caused by the substantial delay in payment. State Farm continued to contest liability and question Ms. Vollaro’s injuries from the crash.

Thankfully, the jury at the Los Angeles Superior Court saw through State Farm’s unfair tactics. The jury found for Ms. Vollaro and awarded her more than $100,000 to compensate for her injuries. In addition, the jury thought State Farm’s actions had been particularly egregious, leading them to award her a further $500,000 for pain and suffering. It is believed to be the highest jury award of its kind in California. The lawyers involved in this case called it a victory against “Goliath” and called it a victory for the American justice system. They also hailed it as an important reminder to victims of this kind of insurance company abuse that they have legal rights to fight back. It sends a message that if a victim stands up for him or herself against an insurance company, they can get justice.

As San Francisco insurance attorneys we see how far greedy companies will go to try to squeeze more money out of their customers. And it is always gratifying to see people push back. As we tell our clients, often the only way to get these companies’ attention is through legal action. Otherwise insurance companies keep getting away with their strong arm tactics because they are so much more powerful and well funded than your average consumer.

A recent instance of this involves JP Morgan Chase and their mortgage lending policies. A class-action lawsuit was filed in the United States District Court for the Northern District of California, a federal court, earlier this month alleging nationwide abuse.

JP Morgan Chase makes its own determination as to whether borrowers need flood insurance-even if prior loan services on the same loan did not require it. If the company decides the homeowner needs flood insurance, it requests that the homeowner submit proof of insurance. If the homeowner does not provide such proof, JP Morgan Chase allegedly orders the insurance and charges it to the borrower’s escrow account.

As San Francisco and Oakland insurance attorneys we pay attention to all insurance-related headlines. For example, almost decade ago there was a big news story about a massive, and twisted, insurance fraud scheme that crossed state borders. Four key players in that horrendous scheme are finally going to trial this week in a southern California courtroom to be held accountable for their crimes, which border on gruesome.

The New Times in Phoenix broke the story, and has continued to report on it. The story starts with fake totally healthy “patients” being recruited in Phoenix. They were hired for $800 to travel to Los Angeles and undergo completely unnecessary, and potentially dangerous, medical procedures. Many were not told about the side effects of these procedures, including one man who was struggling with the loss of strength in his hands, making it difficult for him to work. These included sweat-gland and sinus surgeries, colonoscopies, endoscopies, and gynecological and testicular procedures. The clinics that performed these operations would then bill the insurance companies at extremely high rates, and in this case the insurance companies asked few questions of the submitting doctors and organizations and paying out tens of millions of dollars in this massive fraud scheme. California officials estimate that 2,481 healthy “patients” went to California to undergo treatment from just one of the fake groups, Unity Outpatient, that was recruiting them.

The plan was that the patients would receive these huge reimbursement checks from the insurance companies and would turn them over, as they had already been paid their $800 fee. But some greedy “patients” saw the checks and cashed them instead of handing them over. One of Unity’s lawyers, himself deeply wrapped up in this scheme, actually sued the employees to get the fraudulently collected checks back! The whole mess unraveled from there. Roy Dickerson, that attorney, even claimed that they were being defamed at one point. Mr. Dickerson is no longer allowed to practice law and is one of the four main players about to go on trial in California.

Our San Francisco insurance attorneys know that for our older citizens, Medicare is an absolutely crucial health care program. That is why when Medicare insurance fraud occurs all seniors (and all taxpayers) are affected.

This week, authorities charged two Orange County doctors and six others in the Los Angeles area for participating in a $14 million fraud scheme against Medicare, according to news reports. US Attorney General Eric Holder and Health and Human Services (HHS) Secretary Kathleen Sebelius said that these arrests were part of a larger investigation nationwide against an alleged $452 million in false claims made against Medicare. Across the country, 107 individuals were arrested in seven cities, including, Los Angeles, Baton Rouge, Houston, Detroit, and Tampa. Mr. Holder said, “We are determined to bring to justice those who violate our laws and defraud the Medicare program for personal gain.”

The two Orange County doctors are Dr. Augustus Ohemeng of Buena Park and Dr. George Tarryk of Seal Beach. The two of them are charged with racking up nearly $5.7 million in false claims to Medicare. They allegedly wrote fraudulent prescriptions and also received kickbacks for referring the prescriptions to a medical supplies company. Two others arrested, George Samuel Laing and Emmanuel Chidueme, were arresting with them in this scheme. The four were arrested Wednesday morning and were to appear in court that afternoon.

In another good news story, insurance giant MetLife, the largest life insurer in America, agreed to pay almost $500 million in a multi-state settlement deal after regulators reviewed whether companies were holding onto funds that should go to beneficiaries. This builds on a previous multi-state settlement with the US’s second biggest life insurer, Prudential, a few months ago (see blog post on that settlement here. Another settlement was reached with Toronto-based John Hancock.

With life insurance, the company is required to pay out the claim after receiving notification of the policyholder’s death and a valid death certificate. If there is no notification, then they are usually required to hold the funds until the policyholder would be 100 years old, plus an additional three to five years depending on the state, before turning the money over to the state as unclaimed property. The main allegation in these cases is that the insurance companies are not doing this, and are not taking the proper steps to track down beneficiaries, such as using Social Security databases to compare to their own records. MetLife maintains they pay more than 99 percent of life insurance claims and are working with regulators to ensure every claim gets paid.

An audit of MetLife launched in 2008 found that for two decades the company failed to pay benefits to beneficiaries or the state after a policyholder died. California Controller John Chiang said a joint investigative hearing with California Insurance Commissioner Dave Jones held last May revealed MetLife had information about the deaths of some of its life insurance policyholders but failed to pay what was owned. He went on to say, “These settlements make it clear that if the industry isn’t willing to make the payments legally required, we will take action, including lawsuits, to compel them to do right by their customers.”

In a blow to insurance companies across the country, a unanimous Montana jury at the US District Court in Billings recently awarded 90 year old Arlene Hull a $34.3 million judgment against Ability Insurance Company of Omaha, Nebraska. It is one of the largest jury awards in Montana’s history, and amounted to $250,000 for breach of contract, $2 million for violating Montana’s Unfair Trade Practices law, and $32 million in punitive damages, according to the Billings Gazette.

In a story that is all too common to those of us who work in insurance law, Mrs. Hull and her husband purchased long-term care insurance in 1997 from a company then called Mutual Protective Insurance. Mr. Hull died in 1998, but Mrs. Hull continued to pay premiums. The company changed names and shifted ownership over the following years. In 2007, Mrs. Hull was diagnosed with Alzheimer’s disease and it became more difficult for her to care for herself. A year later, she moved into St. John’s Lutheran Home in Billings, when she began receiving benefits from her long-term care insurance policy. Ability Insurance bought the company holding Mrs. Hull’s policy in 2007 and decided to review her policy in January 2010. Ability decided to cut off Mrs. Hull’s benefits, and when her daughter appealed the decision, it was denied. Ability told them that then 88 year old Arlene Hull, diagnosed with Alzheimer’s for three years, did not need “continual supervision due to severe cognitive impairment” and that she was only “moderately” not “severely” impaired. In September 2010, Mrs. Hull and her daughter brought this lawsuit against Ability in the US District Court. The insurance company then reversed course and reinstated her benefits in October 2011, but the company refused to pay for the period she was without benefits.

Unfortunately, Montana law caps punitive damages at $10 million, so Mrs. Hull’s $32 million in damages from the judgment will not likely stand in an appeal. Regardless, this is a significant victory for insurance victims like Mrs. Hull. Her attorney said, “Long-term-care policy holders are responsible people who don’t want to be a burden to others and should not be wrongfully denied benefits under these policies.” Insurance companies need to understand that they cannot get away with these kinds of shady business practices, harming their hardworking customers by denying them deserved benefits to save the company money.

As always, our San Francisco insurance attorneys have their eye on insurance news. We are aware that perhaps the insurance that causes the most stress and worry is health insurance. No one wants to face a serious illness with no insurance or not enough coverage. And health insurance is something that everyone will have to use at some point in their lives, no matter how careful a person is.

Another cause of significant stress is how to pay for health insurance, since it is so critically important. Health insurance companies do not make this easy for consumers, jacking up premiums at every opportunity. Even by industry standards, though, the recent premium hikes have been extreme. Consumer Watchdog, a non-profit advocacy group focused on insurance issues, claims that California’s largest insurance companies have increased premiums 20 percent since April 1, and are set to increase another 20 percent on May 1. These higher rates will affect more than one million Californians. Californians are already struggling with these costs. Premiums have increased 153.5% since 2002, more than five times the rate of inflation.

To combat this problem, Consumer Watchdog has proposed a new ballot initiative for the upcoming election stopping these rising premiums. Currently, insurance regulators do not have authority to modify or deny rate increases. Last week California’s Insurance Commissioner Dave Jones called insurance giant Aetna’s rate hikes, which were as high as 21% for some customers, “unreasonable.” He told the Los Angeles Times that he supports this ballot initiative to give him power to modify or deny these outrageous rate hikes. “Like the recent unsustainable rate increases imposed by other health insurers on Californians,” he said, “Aetna’s rate increase proves again that we need to close the loophole in California law which denies the insurance commissioner the authority to reject excessive health insurance rate hikes.” The Insurance Commissioner already has this power with regards to automobile, homeowners, and other types of property and casualty insurance.

As San Francisco insurance claim attorneys we know that even when you have insurance coverage, sometimes it is a struggle to get money from claims. Insurance companies are run for profit, and the more claims they can reject for whatever reason they can find, fair or unfair, the more money will go towards their profits. This blog has covered what can happen to property owners when insurance companies use their tricks over fires, wind, and floods. But Californians also have earthquakes to contend with, and like flood insurance, most general homeowner’s insurance policies do not cover earthquake damage. Although a serious earthquake has not occurred recently, a 7.4 earthquake last month in Mexico should have people thinking about protecting their property. News sources have been speculating for the past few years about when California is due for the next “Big One” and how much damage it could do.

A recent article in the Orange County Register stated that 88 percent of private homeowners and 90 percent of business owners in California do not have earthquake insurance. This saves between $400 and $1200 in premiums a year. Earthquake insurance has become more expensive in the last decades after the Loma Prieta earthquake in 1989 and the Northridge quake in 1994. The Northridge quake caused an estimated $19 billion to $29 billion in damages and caused premiums and deductibles to rise. Since the devastating Northridge earthquake 17 years ago, the average Orange County homeowner has saved about $8500 to $17000, but that money will pale in comparison to the costs of rebuilding if another serious earthquake strikes. At that point, your deductible is basically 100 percent if you have no insurance. Also, many people are not aware of the fact that mortgage holders are still responsible for paying their mortgage even if their house is completely destroyed.

Many Californians could be in the terrible position of paying to rebuild their house while still paying a full mortgage.

As the entire country watches to see what happens with the Affordable Care Act (Obamacare) at the US Supreme Court this week, Californians have their own ideas about the future of California health insurance law. The most controversial part of the federal law is the “individual mandate” requiring people buy insurance. The law was supposed to bring 32 million more Americans into the health care system-four million in California alone. Just as in the country at large, Californians have very mixed feeling about the bill-strong supporters and opponents have been voicing their opinion of the measure.

Republican Assemblyman Tim Donnelly recently introduced a bill that he said would nullify the Affordable Care Act in California. Mr. Donnelly said his bill would amend the California Constitution to prohibit federal, state, or local law from forcing a person or business to buy health insurance or impose penalties if the person or business does not do so. The Assemblyman is essentially making the conservative case against this bill, similar to the case being made against it this week in Washington. Mr. Donnelly said, “The underlying principle is that deciding who you want to provide your health care or where you want to buy insurance or pay as you go ought to be left up to the individual. That’s a personal decision.” The conservative justices on the Supreme Court seem to be agreeing with this line of reasoning, although no one will know for sure until the judgment is handed down sometime in June.

However, California was the first state to set up a health insurance exchange when it passed the Health Benefits Exchange, which was signed into law in 2010 and will be up and running in 2014. So even if the Affordable Care Act is struck down by the Supreme Court, Californians will still have access to affordable health insurance options. And health insurance costs will still be subsidized by the state government for low income consumers. Peter Lee, the executive director of the California insurance exchange, said that if the Affordable Care Act is struck down, California will lose federal subsidies for the exchange but that the state would press on regardless. Mr. Lee said, “We need to have resources to provide a way for consumers to make better choices and that support and interest will be there no matter what happens with the Supreme Court.”

This week, a California insurance agent, Glenn Neasham, was sentenced to 90 days in jail after being convicted of felony-theft by a jury for selling an annuity to an 83 year old woman with signs of dementia. As San Francisco insurance attorneys, we are always especially concerned about the vulnerable being preyed up on by unscrupulous insurance companies and agents. (see another post about the elderly here)

Hopefully this case sends a clear message that California will not tolerated this. When the insurance agent was arrested in 2010, then Insurance Commissioner Steve Poizner said agents “who steal from vulnerable seniors will not get away with their shameful tricks.” Mr. Neasham may be the first insurance agent ever put behind bars for selling an annuity. His bail was set at $20,000 and needs to be posted by April 18 to be allowed to remain free while his appeal is pending, but Mr. Neasham, once earning $500,000 a year, claims to be “financially ruined” from this case.

Mr. Neasham claims that the elderly woman, Fran Schuber, came to him in 2008 with her octogenarian boyfriend, Louis Jochim, who had bought a similar annuity from him years before. The annuity he sold Ms. Schuber was an “indexed” annuity, meaning that it pays interest based on the performance of stocks and bonds. The buyer is guaranteed not to lose the money they put into it-the principle-but they face very steep penalties for withdrawing the money early, sometimes being required to keep their money in the annuity for more than a decade. The annuity was to be through Allianz SE. Mr. Neasham denies that he noticed any signs of dementia in Ms. Schuber at the meeting.