Yourlawyer.com (Bad Faith Insurance News) http://www.yourlawyer.com/topics/overview/bad_faith_insurance Sat, 21 Nov 2009 05:46:22 -0800 pixel-app en Insurers Report Hurricane Gustav Claims http://www.yourlawyer.com/articles/read/15103 Tue, 09 Sep 2008 00:00:00 -0700 http://www.yourlawyer.com/articles/read/15103 Hurricane Gustav insurance claims could reach $10 billion.

Hurricane Gustav came ashore the Louisiana Gulf Coast on Monday. Unlike Katrina, levees in New Orleans and some surrounding communities held - although in some case just barely - sparing the area the catastrophic flooding that was seen in 2005.  

Forecasters had feared that Gustav could come ashore as a catastrophic Category 4 storm, but the storm weakened to a Category 2 storm by the time it reached land. Damage from the storm’s winds and storm surge spanned from the Gulf Coast of Mississippi to Texas. Even after it weakened to a tropical storm, heavy rains and possible tornadoes spawned by Gustav’s heavy rains caused additional damage.

As of September 7, State Farm said had contacted around 75% of its customers in the hurricane zone, and had received 32,707 property claims relating to Hurricane Gustav.  Around 1,500 of those claims have been classified as uninhabitable. State Farm said it had also taken more than 4,150 automobile claims.

Farmers Insurance Group said that as of midday Sept. 8, more than 9,930 total claims have come in.  

The state-run insurer of last resort, Louisiana Citizens Property Insurance Corp., had received 6,000 claims as of last Friday afternoon. However, that number was expected to grow as evacuated residents return home.

National Security Group Inc.  said in a statement that its subsidiaries, National Security Fire and Casualty Co. and Omega One Insurance Co., incurred insured losses estimated to be in the range of $3.3 million to $6.7 million.

Hopefully, victims of Hurricane Gustav will have an easier time with their insurance claims than was experienced following Katrina. Faced with staggering losses, insurers used many tactics to avoid paying Katrina damage claims. The fact that so much flooding occurred during Katrina aided the companies in their efforts. One of the major tactics that insurance companies used in Katrina was to find that property damage was caused by flooding, and not by wind. Conventional property insurance does not cover flood damage.

]]> Allstate Loses Bad Faith Insurance Lawsuit Appeal, $16 Million Verdict Still Stands http://www.yourlawyer.com/articles/read/14857 Thu, 31 Jul 2008 00:00:00 -0700 http://www.yourlawyer.com/articles/read/14857 An appeals court has upheld a bad faith insurance lawsuit verdict against the Allstate Insurance Co., leaving in place a $16 million verdict against the company.  Like the Missouri jury that originally found against Allstate, a three-judge appeals panel did not believe the insurance company's assertion that its failure to settle the claims of two car accident victims in a timely manner was not intentional.

The Allstate lawsuit stemmed from a car accident that occurred in March of 2000, when a pickup truck driven by an intoxicated Wayne Davis Jr.  collided with the subcompact car carrying Edward Johnson and his wife, Virginia.  Both the Johnson's survived, but their medical bills came to at least $320,000.

The Johnson's initially agreed to settle for Davis’ minimal insurance policy limits of $50,000, but Allstate did not respond until six months later. That was after the statutory 60-day limit for accepting had expired.

The Johnson's were forced to sue Davis, and he agreed to a judgment in excess of $5 million.   However, the Johnson's also agreed not to collect on that judgment in return for Davis assigning to them of most of his claim against Allstate for its refusal to settle. The couple and Davis then sued Allstate in Jackson County Circuit Court, alleging the insurer had acted in bad faith when it did not respond in a timely fashion to the Johnsons’ initial settlement offer.

Allstate defended itself by claiming that it lost the letter proposing the offer and responded late because it did not receive the Johnsons’ medical records.  Allstate also had the audacity to argue  that it was unsure the crash had caused the Johnsons’ injuries, despite the fact that they had to be cut out of the wreckage, were flown by helicopter to the hospital and received intensive care.

But the jury in the case did not accept Allstate's defense, and in November 2006, it found that Allstate had acted in bad faith.  The jury unanimously awarded compensatory damages of $5.8 million plus 9 percent interest since the date of the judgment to the Johnsons. By a vote of 10-2, it also hit Allstate with $10.5 million in punitive damages.

Allstate appealed, but on Tuesday a three-judge panel of the Missouri Court of Appeals held that the jury's verdict was justified.  

"Allstate’s failure to recognize the severity of the Johnsons’ injuries and the probability that the claim would far exceed Davis’s policy limits; its failure to investigate the claim and respond to the demand in accordance with insurance industry standards and its own good faith claim handling manual; and its failure to advise Davis of the demand, his likely exposure for an excess judgment, and his right to retain counsel, are all circumstances supporting a reasonable inference that Allstate’s refusal to settle was in bad faith,” Judge Paul Spinden wrote in the panel's decision.

Allstate has not yet decided if it would continue to appeal the case further.

 

]]> Consumers Who Buy Health Insurance Vulnerable to Abuse http://www.yourlawyer.com/articles/read/14580 Fri, 13 Jun 2008 00:00:00 -0700 http://www.yourlawyer.com/articles/read/14580 health insurance have very little protection if companies want to deny coverage or raise their premiums when they get sick. A new report published by the consumer advocacy group Families USA says states should do more to protect consumers from insurance companies that will stop at nothing to avoid paying claims.

About 14.5 million Americans bought their own insurance on the individual market in 2006.  The Families USA survey of insurance commissioners across the country showed that all but five states allow insurance companies to deny coverage to sick or older patients. All but 15 states have no limits on how much companies can raise premiums if individual policy holders.

For those states that do offer some safeguards against insurance company abuses, the kinds of protections varied greatly.  Some states -- such as Maryland, Illinois, and Idaho -- let patients appeal when their individual coverage is revoked; other states -- such as Ohio, Kansas, and Arizona -- don't allow appeals. Most states guarantee that customers can review when companies deny individual claims. But in only a handful of states are those reviews free and conducted by an independent third party, the report says.

Overall, New York, Connecticut, New Hampshire, and California had among the most protections. States including Alaska, Arkansas, and Wisconsin had relatively few, according to the report.

Recently, some states have taken aggressive action against health insurance companies that abandoned policyholders when they became critically ill.  In April, the Los Angeles City Attorney sued Anthem Blue Cross for illegally dropping patients when they became sick.  The lawsuit claims Anthem maintained secret units in the company that looked for ways to drop the policies of sick patients.

Prior to the Anthem Blue Cross lawsuit, the Los Angeles City Attorney sued Health Net for the same type of abuse. That complaint alleges that the company illegally paid bonuses to employees for meeting policy cancellation targets. The incentive program led to the illegal cancellations.  For its part, Health Net has admitted that such a bonus policy was in effect at the company in 2002.

It may be more important than ever that states take greater steps to protect consumers from such abuse, as more and more people are forced to buy private health insurance.  In fact, the number of people buying their own individual policies could explode if Sen. John McCain (R-Arizona) is elected to the White House.  Health insurance reform touted by the Senator would replace existing tax breaks for employer-sponsored coverage with tax credits individuals could use to buy coverage on the individual market. The change would likely shift millions of workers onto individual coverage, where they would be vulnerable to insurance companies' cost-saving tactics.

]]> Anthem Blue Cross Faces Lawsuit Over Illegal Cancellations http://www.yourlawyer.com/articles/read/14234 Thu, 17 Apr 2008 00:00:00 -0700 http://www.yourlawyer.com/articles/read/14234 illegally canceled policies.  The Los Angeles City Attorney is charging Anthem Blue Cross with deceptive practices and is seeking $1billion in restitution and penalties from the company.  

Los Angeles City Attorney Rocky Delgadillo said Anthem, formerly Blue Cross of California, canceled policies and illegally denied claims when policy holders became ill.  In February, Delgadillo's office filed a similar suit against Health Net Inc. for illegally canceling health insurance coverage for 1,600 customers.

Delgadillo's lawsuit, filed in California Superior Court, accuses Anthem Blue Cross of violating laws prohibiting unfair competition and false advertising.  He accused the company of canceling 6000 policies - many belonging to elderly people - when the holders became sick.  In some case, he said the insurer denied patients with health costs that topped $100,000. “Blue Cross hides from consumers the fact that if the consumer requires an expensive medical procedure, there is a significant likelihood that Blue Cross will cancel their insurance policy,” Delgaldillo said.

One of alleged violations cited in Delgaldillo's complaint involves the use of secret units within the company that targeted consumers who became ill. He said Anthem Blue Cross internally identifies those secret units as the “medical investigation unit” and the “retroaction review unit.” Delgaldillo also accused Anthem of tricking 500,000 consumers into buying worthless insurance policies through the use of false advertising.

When Delgaldillo sued Health Net earlier this year, he claimed that company illegally paid bonuses to employees for meeting policy cancellation targets. The incentive program led to the illegal cancellations.  For its part, Health Net has admitted that such a bonus policy was in effect at the company in 2002.

The Health Net lawsuit was filed the same day a California arbitration judge ordered Health Net to pay $129,000 in claims it denied, while providing $8.4 million in punitive damages and $750,000 for emotional distress for illegally canceling a woman's policy after she was diagnosed with breast cancer.  

In the wake of that decision, Health Net said it would be implementing a freeze on policy cancellations that would last until the company sets up a third-party review panel to scrutinize cases. Health Net also said it would review its practices and the way its brokers and agents are trained.

]]> Health Net Ordered to Pay $9 Million for Illegally Canceling Breast Cancer Patient's Policy http://www.yourlawyer.com/articles/read/13931 Mon, 25 Feb 2008 00:00:00 -0800 http://www.yourlawyer.com/articles/read/13931 Health Net Inc. has been ordered to pay $9 million to a California woman for illegally canceling her health insurance coverage after it learned she had been diagnosed with breast cancer.   The Health Net fine, levied by an arbitration judge, came one day after the Los Angeles city attorney's office announced it would be suing Health Net for illegally canceling health insurance coverage for 1,600 other customers

Patsy Bates, 52, a hairdresser from Lakewood, California, had been left with more than $129,000 in unpaid medical bills when Health Net Inc. canceled her policy in 2004. Bates had been insured with another company but was persuaded to switch over to a Health Net policy after an agent suggested she could save money. She said she had undergone surgery to remove a tumor and had received her first two chemotherapy treatments when doctors stopped treating her because her bills were going unpaid. Bates was able  complete her cancer treatment through a state-funded program.

On Friday, arbitration judge Sam Cianchetti ordered Health Net to repay that amount while providing $8.4 million in punitive damages and $750,000 for emotional distress.  "It's hard to imagine a situation more trying than the one Bates has had to endure," Cianchetti wrote in the decision. "The rug was pulled out from underneath, and that occurred at a time when she is diagnosed with breast cancer, one of the leading causes of death for women."

Los Angeles City Attorney Rocky Delgadillo has also sued Health Net, charging that the company illegally paid bonuses to employees for meeting policy cancellation targets. Delgadillo alleges that Health Net illegally cancelled at least 1,600 policies due to the incentive program.  For its part, Health Net has admitted that such a bonus policy was in effect at the company in 2002.

In the wake of the Bates decision, Health Net said it would be implementing a freeze on policy cancellations that would last until the company sets up a third-party review panel to scrutinize cases. Health Net also said it would review its practices and the way its brokers and agents are trained. "Obviously we regret the way that this has turned out, but we are intent on fixing the processes to maintain the public trust," a Health Net spokesperson told the Associated Press. 

Bates' attorney told Reuters that he hoped that multimillion-dollar punitive damages award, the first in a such case, will send a message to other large health insurers who face lawsuits over the similar practices. "Let's see if these other big health carriers will change their practices, then we will have done something," he said.  "Until this punitive damages award came down, nobody was doing anything."

]]> Health Insurance Companies Defrauding Consumers Critics Charge http://www.yourlawyer.com/articles/read/13899 Mon, 18 Feb 2008 00:00:00 -0800 http://www.yourlawyer.com/articles/read/13899 underpaying customers for a decade and that UnitedHealthGroup, in particular, manipulated data to cheat consumers.

The way insurers determine prevailing market rates for medical services has long been a subject of controversy; even the American Medical Association has a pending eight-year-old lawsuit.  The practice “is primarily unfair to consumers,” said Dr. Nancy H. Nielsen, president-elect of the medical association.  Cuomo said, “We believe there was an industry-wide scheme perpetuated by some of the nation’s largest health insurers to deceive and defraud consumers.”  Cuomo’s investigation comes when the industry is reporting huge profits while the rising cost of medical insurance has left about 47 million uninsured in the US.  “The larger issue is health plans make an awful lot of money,” said Sheryl R. Skolnick, a health care analyst for CRT Capital.  If insurers are found to have underpaid, they could end up having to make big restitutions to consumers.  

Cuomo’s investigation focuses on how insurers determine what is reimbursed when a patient receives out-of-network care.  Those using out-of-network providers must pay around 20 percent of what the insurer deems “reasonable and customary,” a calculation meant to reflect prevailing market rates by geographic area for medical services.  Cuomo contends the industry has consistently underestimated prevailing market rates, forcing insured patients to pay more of their own medical bills than their policies are supposed to require.

Cuomo said he planned to sue UnitedHealth and some of its subsidiaries, accusing them of deceptive practices and consumer fraud.  United Health owns Ingenix, the company used by the industry to calculate reasonable and customary rates.  “We believe Ingenix systemically reduced the amount of money consumers should have been reimbursed,” Cuomo said.  Cuomo also issued subpoenas to 16 insurers, including Aetna, Cigna, and Empire Blue Cross and Blue Shield who all conduct business in New York State.   Cuomo’s office compared the rate for a routine doctor’s visit with what Ingenix calculated as reasonable and customary.  Doctors in the metropolitan New York City area typically charged $200 per visit; Ingenix calculated the rate at $77.  Under a typical plan, the insurer would pay 8o percent—$62—leaving the patient responsible for $138.

Cuomo contends Ingenix and others manipulate information to arrive at artificially low rates, adding that insurers had an inherent conflict because it was in their interest to understate the true rates.  “There is no disclosure; there’s no transparency; there’s no accountability,” said Cuomo.  He also said patients who belonged to a UnitedHealth plan were also not told that the company generating the rate data was a unit of the insurer.  Mr. Nathan, the UnitedHealth spokesman, said, “We don’t think there is a conflict of interest,” because the data is supplied to Ingenix by various insurers.

]]> State Farm Latest Insurer to Bail on Long Island Homeowners http://www.yourlawyer.com/articles/read/13889 Fri, 15 Feb 2008 00:00:00 -0800 http://www.yourlawyer.com/articles/read/13889 State Farm is canceling homeowner policies on Long Island, forcing customers to look for new—and often costlier—insurance options.  Senator Charles Schumer (D-NY) said that State Farm has become the latest giant insurance company to notify customers on Long Island that their homeowner's policies will be terminated. In a press release, Schumer, said his office had "received several calls in the last six months from Long Island residents who received word from State Farm that their policies would be terminated and they would be forced to find new, more costly insurance."


State Farm isn’t the only insurer to be taking these measures.  Last year Allstate, MetLife, Nationwide, and several other insurers said they would be sharply cutting the number of homes they would be covering on Long Island, in New York City, and in Westchester County.  The insurers site the reason for these cuts as because of the fear of intense storms and huge damage claims.  The result is of this insurance chaos is higher premiums for Long Island homeowners.  For instance, when Wading River resident Walter Buhner was dropped by State Farm, two insurance brokers worked for a month looking for another carrier before one found Narragansett Bay Insurance Co., in Pawtucket, R.I., to insure Buhner’s house.  The yearly price for the insurance policy came in at $2,048 a year for premiums, 75 percent more than his $1,172 policy with State Farm Insurance.

Buhner, 57, is a law enforcement officer who was also was insured with State Farm for his car but switched to Travelers following the notice of cancellation on his homeowner’s policy. "I'm not going to give my business to State Farm if they don't want to take care of my home."

Buhner said his home is a tenth of a mile from the Long Island Sound but 300 feet above sea level.

Schumer said that some Long Island homeowners might be forced to take out so-called "extreme insurance," usually reserved for fireworks stores, which he said can carry very high premiums that are more than double the cost of other policies.  In his announcement, Schumer said his office had receive calls from homeowners in both Nassau and Suffolk counties "reporting that their State Farm policies had been suddenly terminated."

Schumer said he sent a letter of protest to Edward Rust Jr., State Farm Insurance’s chief executive officer urging "the arbitrary and capricious decisions to cancel existing policies should be stopped immediately."

Schumer said he will propose two new bills.  In one bill he will look to increase coverage limits in high-cost areas, such as Long Island.  He said he will also propose a Commission on National Risk Management and Insurance to study "the growing crises of insurers abandoning communities with perceived risks, like Long Island."

]]> UnitedHealthGroup Cheated Customers, NY Attorney General Claims http://www.yourlawyer.com/articles/read/13879 Thu, 14 Feb 2008 00:00:00 -0800 http://www.yourlawyer.com/articles/read/13879 UnitedHealthGroup  manipulated data to cheat consumers, and he believes some insurance companies have been underpaying customers for a decade,  An investigation revealed two UnitedHealthGroup subsidiaries—United HealthCare Insurance Co. of New York Inc. and United Healthcare of New York Inc.—manipulated data to severely under-reimburse customers, to the tune of millions.  Cuomo has not yet filed charges, but said investigators found UnitedHealthGroup and its subsidiaries lied about data and manipulated numbers.

Cuomo said he would file a civil lawsuit to include three other subsidiaries of UnitedHealthGroup.  He  has subpoenaed 16 insurers, including Aetna, CIGNA, and Empire BlueCross BlueShield requesting they provide documents on how they computed reimbursements; copies of member complaints and appeals; and communications between members, Ingenix, and insurers. 

Cuomo's office said they found Ingenix’s reimbursement database—owned by UnitedHealthGroup and used by most major insurers—used data resulting in smaller payouts.

Linda Lacewell, head of Cuomo's health care industry taskforce, said, "United has a track record that stretches from Monterey to Montauk."  The potentially affected insured were those with "out-of-network" insurance allowing them treatment from doctors of their choice.  About 28,000 Long Islanders have such policies with United, a Cuomo spokesman said.  "When insurers like United receive convoluted and dishonest systems for determining the rate or reimbursement, real people get stuck with excessive bills and are less likely to seek the care they need," Cuomo said.

United said it is talking with Cuomo, "The reference data is rigorously developed, geographically specific, comprehensive, and organized using a transparent methodology that is very common in the healthcare industry."

Empire president Mark Wagar said they would continue to work with Cuomo to determine whether information used was inaccurate, "If that is found to be the case, Empire would consider any and all remedies available to protect the interests of our members, their families, our group customers, and providers in the New York marketplace and to maintain our company's historic commitment to fair and reasonable coverage."

Reimbursement is based on "reasonable and customary" geographic pricing; however, Cuomo said that while the United companies that used the database knew customary charges for a doctor's visit might average $200, reimbursement was based on a $77 rate; therefore, customers receiving 80 percent reimbursements would get about $61. 

"Based on the findings in this investigation," Consumers Union program director Chuck Bell said, "it appears that United Health failed to fulfill the promises it made to cover a fair portion of medical expenses and consumers were stuck with the bill."

Dr. Nancy Nielsen, president-elect of the American Medical Association said, "The investigation launched today by New York Attorney General Andrew Cuomo calls into question the validity of a system that health insurers have used for years to reimburse physicians and their enrolled members."

Dr. Robert Goldberg, president of the Medical Society of the State of New York, supported Cuomo’s investigation, saying there will be "long-term benefits to health care in New York" as a result of cracking down on reimbursement pricing.

]]> Cigna Decision Not to Cover Liver Transplant Blamed for Death of Teenage Girl http://www.yourlawyer.com/articles/read/13567 Wed, 26 Dec 2007 00:00:00 -0800 http://www.yourlawyer.com/articles/read/13567 The decision of Cigna Corporation to deny coverage for a teenage girl’s liver transplant likely killed her.   The family of Nataline Sarkisyan, a 17-year old leukemia patient, blamed Cigna on Friday for her death, saying the health insurance company’s initial refusal to pay for a liver transplant contributed to her death.  "They took my daughter away from me," said Nataline's father, Krikor, at a news conference at his lawyer's office.  Apparently, the Philadelphia-based insurer had initially refused to pay for the procedure, saying it was experimental; however, the company reversed its decision on Thursday when approximately 150 nurses and community members rallied outside of its office in Los Angeles’s suburban Glendale.  Cigna’s change of decision came too late and Nataline died hours later.

According to family attorney Marl Geagos, Cigna "maliciously killed" Nataline because it did not want to bear the expense of her transplant and aftercare.  Geagos did not say when or in what court he would file the civil lawsuit, but said he would ask the district attorney's office to press murder or manslaughter charges against Cigna, an allegation that one legal expert described as difficult to prove and "a little bit of grandstanding." 

A district attorney's office spokeswoman declined to comment, saying it would be inappropriate to do so until Geragos submits evidence supporting his request.  The family's "loss is immeasurable, and our thoughts and prayers are with them," Cigna said in a news release Friday.  "We deeply hope that the outpouring of concern, care, and love that are being expressed for Nataline's family help them at this time."

Nataline was diagnosed with leukemia at age 14 and received a bone marrow transplant from her brother the day before Thanksgiving.  She later developed a complication that caused her liver to fail and fell into a vegetative state for some time, her mother Hilda said.  Nataline was taken off life support at the University of California, Los Angeles Medical Center on Thursday and died within the hour.

In a December 11th letter to Cigna, four doctors had appealed to the insurer to reconsider saying that patients in similar situations who undergo transplants have a six-month survival rate of about 65%.  The case raised the question among at least one medical expert over whether a liver transplant is a viable option for a leukemia patient because of the immune-system-suppressing medication patients must take to prevent organ rejection.  The conflict with the medications is that while they preserve the transplanted liver, they could worsen the cancer.  Also, transplantation is not an option for leukemia patients because the immunosuppressant drugs the patient is required to take following organ transplant "tend to increase the risk and growth of any tumors," said Dr. Stuart Knechtle.  Knechtle heads the liver transplant program at the University of Wisconsin at Madison and was not commenting specifically on Nataline's case.  The procedure "would be futile," he said.

Geragos' attempt to get the district attorney to press murder and manslaughter charges against Cigna would be difficult to prove unless the defense can show that the company somehow intentionally caused Nataline's death, said Rebecca Lonergan, a law professor at the University of Southern California.

]]> Louisiana Court Says Insurer Acted in Bad Faith, Orders Company to Pay for Hurricane Katrina Damage http://www.yourlawyer.com/articles/read/13357 Tue, 20 Nov 2007 00:00:00 -0800 http://www.yourlawyer.com/articles/read/13357 bad faith when they denied claims.

Lafayette had appealed an earlier  state court decision that said the insurance company had to pay for damage to an apartment building owned by an Orleans Parish man that was caused by flooding brought on by levy failure following Hurricane Katrina.  In addition to being a source of income, the building also served as the man’s home.  Lafayette paid the policyholder about $2,700 for wind damage, but he estimates his home sustained a total of $223,488 in damage that should be covered.  Lafayette maintained that because that damage was caused by flooding, it did not have to cover the loss.

In March, a jury awarded the policyholder  $369,077 for property damage and lost rent, plus $184,538 in penalties. The judge presiding over the case also ordered Lafayette to pay $258,728 in attorney fees.  Lafayette appealed the ruling to the 4th Circuit.   The appeals court agreed with the original ruling that Lafayette Insurance Co.'s policy failed to exclude all forms of flooding because its language was ambiguous.  Because of that, Lafayette is required to pay for flooding from the destroyed levies, the court ruled.  However the appeals court did reverse the ruling on attorney fees.

In writing  its majority opinion, the court wrote that "Lafayette failed to specifically exclude all floods because of the ambiguity contained within the water exclusion."  The Louisiana appeals court’s ruling contradicts one made by the US 5th Circuit, which found that insurance companies did not have to cover damage caused by failed levies.

The policyholder’s attorney praised the 4th Circuit’s decision, saying it would go a long way towards rebuilding New Orleans.   But the homeowner will likely have to face down Lafayette once more, as it is expected the insurance company will appeal to the Louisiana State Supreme Court.

Thousands of homes were reduced to rubble by wind and the massive storm surge created by Hurricane Katrina in 2005.  Many Gulf Coast homeowners have accused their insurance companies of using bad faith tactics to try to avoid paying claims.  Some insurance companies initially made offers to settle Hurricane Katrina claims for only pennies on the dollar, sparking thousands of lawsuits along the Gulf Coast.

Hurricane Katrina caused more than $80 billion in damage along the Gulf Coast, making it the single most expensive natural disaster in US history. The tactics used by insurance companies have also led to more insurance lawsuits than any other disaster.

]]> Hurricane Katrina Appeal Could Affect Thousands of Insurance Claims http://www.yourlawyer.com/articles/read/12979 Tue, 07 Aug 2007 00:00:00 -0700 http://www.yourlawyer.com/articles/read/12979 Hurricane Katrina damage.

The Nationwide appeal centers around a provision in homeowners’ policies called “anticoncurrent causation.”  Basically these clauses enable insurers to deny claims if damage is caused by both wind and water.  Most homeowners’ insurance policies do not cover flood damage.  Critics of these policies say they are vague, and are interpreted by insurance companies to deny claims that they really should pay.

Paul and Julie Leonard’s home was damaged by Hurricane Katrina in 2005.  The couple estimated the total damage to their home at $130,253.  But Nationwide only paid the Leonard’s $1,661.00, saying that most of the damage to the home was the result of storm surge.  In 2006, the Leonards took Nationwide to court.  Their case was heard by U.S. District Judge L.T. Senter Jr, and was held without a jury.  Senter ruled that Nationwide was not responsible to pay for damage from Katrina’s storm surge, however, he did order the insurer to pay the couple an additional $1,228 for wind damage.   Senter had ruled that the  anticoncurrent causation provision in the Leonard’s policy  was “ambiguous” and could not be enforced.  Though the case was a victory for Nationwide, the ruling on anticoncurrent causation could force it and other insurance companies to pay out more in damage claims to hurricane victims.

The Leonard’s dropped their appeal of Senter’s ruling in July.  But Nationwide is appealing his finding on the anticoncurrent causation provision.  On Monday, Nationwide’s lawyer argued before a three-judge panel that Senter’s ruling gave “enormous leverage” to policyholders, and that his ruling was impractical because in many cases, it cannot be determined if damage was caused by wind or water.  However the court decides the case, it will have an enormous effect on other Katrina claims.

This is not the first Katrina case the 5th Circuit has heard, and it has a record of ruling in favor of insurance companies.  On Monday, the court upheld the dismissal of lawsuits filed by another group of Katrina homeowners who said that Louisiana law required insurers to pay for the full value of wind damaged homes, even if a flooding was responsible for the home’s destruction.  The 5th Circuit said that Louisiana’s Value Policy Law does not apply when a covered peril like wind is not solely responsible for a home’s destruction.  

And last week, the court ruled that insurance companies do not have to pay for damage that resulted when floodwater from broken levees destroyed homes and businesses in New Orleans.  That decision overturned a ruling by a U. S. District Court Judge that found in favor of the homeowners. In that case, the judge had ruled that the flooding caused by the levee failure was a manmade disaster that insurers were obligated to cover.  The 5th Circuit court said that insurers do not have to pay for flood damage, even if it was not the result of an “act of God.”

]]> Allstate, State Farm, Other Bad Faith Insurance Companies Rack up Record Profits by Cheating Customers http://www.yourlawyer.com/articles/read/12964 Fri, 03 Aug 2007 00:00:00 -0700 http://www.yourlawyer.com/articles/read/12964 bad faith insurance companies.

Once upon a time, insurance companies were committed to getting homeowners back on their feet when disaster struck.  Families who had paid insurance premiums could be confident that their claims would be paid in timely manner.  But that has all changed, and now insurance companies are more interested in raising their stock price than in taking care of their customers, thus their new nickname “Bad Faith Insurance Companies”.  According to the Bloomberg article, the insurance industry started to change in 1989, after Hurricane Hugo.  That storm cost the insurance industry $4.2 billion in claims.  It was shortly after Hugo that the insurers started to look for ways to limit their financial responsibilities to homeowners.

In 1992, the well know insurance company Allstate hired McKinsey & Co., a consulting firm, to overhaul the way it handled home damage claims.  McKinsey developed several strategies for Allstate.  For instance, it recommended that Allstate initially make low offers to settle claims.  If the insured accepted the offer, Allstate would live up to its “Good Hands” slogan, and assist the homeowner as much as possible.  However, if the homeowner balked at accepting the first offer, McKinsey said that Allstate should trade in its “Good Hands” for “boxing gloves”, and make life as difficult for the customer as possible.

Another tactic McKinsey recommended to Allstate was known as the “alligator”.  McKinsey recommended that the insurer “wait like an alligator” – delay paying claims as long as possible.  Not only would desperate homeowners be more likely to accept a much-delayed lowball settlement offer, but Allstate could continue to collect interest on the insurance payment while the money was still in the company’s possession.

Other tactics highlighted in the Bloomberg article included the use of computer programs to manipulate payout formulas in a way that lowered settlements.  There are even examples of insurance companies leaning on adjusters to lie to customers about the meaning of policy clauses and damage estimates.  In the end, these tactics often mean that insurance companies only pay 30-60 percent of the cost of repairing or rebuilding a home.

Nowhere were these practices more apparent than in the case of Hurricane Katrina claims.  In order to avoid paying claims, both Allstate and State Form used all of these tactics.  One engineer who examined damaged Gulf Coast homes for insurance companies told Bloomberg that some of his reports were altered by the companies to say that homes were damaged by flood, and not by wind.  Normal insurance policies do not cover flood damage, so by altering these reports, the insurance companies saved tens of thousands of dollars.  In response to this despicable behavior, more than 1000 Katrina homeowners have sued their insurance companies over claims, the largest number of lawsuits ever to follow a natural disaster in the US.

Insurance companies use these tactics for one reason – they work.  Last year, the insurance industry reported profits of $73 billion dollars, up nearly 50 percent from 2005.  While that’s great for insurance company shareholders, it’s a raw deal for the 60 million US homeowners who pay out $50 million in insurance premiums each year.

]]> Bad Faith Insurance Disability Claim Denial Attorney http://www.yourlawyer.com/topics/overview/bad_faith_insurance Fri, 03 Aug 2007 00:00:00 -0700 http://www.yourlawyer.com/topics/overview/bad_faith_insurance Bad Faith Insurance Bad faith insurance is any matter concerning an insurance claim by an insured individual that is wrongfully denied by the insurance company. An insurance policy is considered a contract between you and your insurance carrier. This contract requires that your insurance company acts in good faith toward you. When an insurance company unfairly denies the benefits of the policy from its insured policy holders, it is considered to be in bad faith.

There are numerous examples of how an insurance company can commit bad faith, they include: failing to promptly and methodically examine a claim; unjustly delaying payment; unreasonably refusing benefits to a claim; using unreasonable interpretations in translating policy language; and refusing to settle the case or refund you for the entirety of your loss. Insurance Bad faith constitutes not only breach of your insurance policy contract with your policy holder but also includes injuries personally sustained outside of the insurance contract.

If such a violation exceeds that of being unreasonable and is established to be false, misleading or fraudulent, a judgment can be attained and punitive damages honored exceeding damages for the loss under the policy as punishment for bad faith.

Bad faith insurance practices are also found in the HMOs & Managed Care Organizations; Homeowners Insurance and Disability Insurance arenas.

If your insurance company has denied your claim, please fill out the form at the right for a free case evaluation by a qualified insurance claim denial attorney.]]>