Missouri Insurance Lawyer Blog

On August 12, 2006, James Reppy was seriously injured in a head on vehicle collision with the defendant Gary Winters. Attorneys for Reppy sent a letter to defendant's automobile insurance carrier, Farmers Insurance Group, demanding settlement and left the demand open for 90 days. The demand indicated that if it was not accepted, it would be withdrawn. The offered release would have completely immunized Winters from any further claims in exchange for the policy limits.

The reply of the insurer through counsel indicated that the policy limits offer was accepted, but imposed an additional condition that Reppy's counsel and Reppy would indemnify Winters and his insurance company and their attorney from liability for any type of medical lien.

Continue reading "INSURER'S DEMAND FOR INDEMNITY OF MEDICAL LIENS IS A COUNTER OFFER, NOT ACCEPTANCE OF SETTLEMENT DEMAND" »

All 50 states have been affected by a Tennessee based entity called the American Trade Association (ATA) plus other affiliated firms, which was selling fake health insurance. The program was supposed to work by the ATA taking out money directly from consumer's accounts. Consumer's thought they were saving hundreds of dollars each month on premiums until an issue with their health came up and they found out they were not insured.

Some consumer's have shared their stories through Smart Data Solutions where one person stated, "I tried to get prescriptions through my card and it is not covered. They say they are getting a new plan, but did not inform anyone. Their phone goes unanswered, or it is busy. Their website; http://www.myatabenefits.com doesn't work either. This is either an incredibly poor run organization, or a scam."

After investigations were held consumers found out that their money had actually been used to pay for personal items such as cars, real estate, and loan payments. Some claims were paid, but only the small ones to maintain the appearance of legitimacy.

The state of Maine actually ordered the American Trade Association to pay a $1.2 million penalty because of the unlicensed products sold to consumers, the unlicensed agents, and for not adequately paying for consumer's medical bills.

Kathleen Sebelius, secretary of the U.S. Department of Health and Human Services describes how this is just the beginning. There will be more scammers out there because they know people are seeking cheaper insurance coverage.

Consumers who want to research a company can check with their State Department of Insurance. If you are scammed by insurance company or a company that promises to provide insurance and does not, you have legal rights. In Missouri an insurance company that does not honor its promise can be sued for breach of contract and in some circumstances for bad faith. If a company poses as an insurance company but is a fake, you can sue for damages for breach of contract, misrepresentation and fraud. If you have been scammed you should also report the company responsible to law enforcement.

Continue reading "Health Insurance Scam Affects 26,000 People Across the U.S." »

In a 7-0 decision written by Judge Richard B. Teitelman, the Supreme Court of Missouri confirms that an insurance company must promptly investigate a claim and its failure to do so is unreasonable and vexatious. D.R. Sherry Construction, Ltd. V. American Family Mutual Insurance Company, Case No. SC90442.

Sherry, a general contractor engaged in the business of building homes, filed suit against his commercial general liability insurer, American Family Mutual Insurance Company after the insurance company refused to investigate and pay a claim. Sherry made a claim on his insurance policy after a house that he built and sold, incurred structural damages caused by continuous and repeated exposure of the foundation to poor soil conditions.

Subsequent to the sale of the home, the new homeowners contacted Sherry and notified him that the foundation and drywall were cracking. Mr. Sherry inspected the house and confirmed the existence of the cracks. The homeowners threatened a lawsuit against the contractor. Mr. Sherry submitted a claim to his insurer, but American Family advised Sherry that it would not undertake further investigation of the claim until the homeowners actually filed a lawsuit. At that time, Sherry entered into an agreement with the homeowners to repurchase the home.

Sherry then filed this lawsuit against American Family asserting claims of breach of contract and vexatious refusal to pay. American Family claimed that that policy had expired at the time of making the claim, and that they did not owe anything under the policy.

The court found (1) that the damage to the house began during the policy period and was progressive from that point forward, and therefore was covered by the policy at issue; (2) the interpretation of an insurance contract is a question of law to be determined by the judge and only becomes a jury question when the court determines that the contract is ambiguous and there exists a genuine factual issue to be decided by the jury; and (3) American Family's delay and then refusal to investigate the contractor's claim was sufficient basis for concluding that the insurance company unreasonably and vexatiously refused to pay a valid claim for property damage.

Continue reading "MISSOURI SUPREME COURT CONFIRMS THAT AN INSURANCE COMPANY'S REFUSAL TO PROMPTLY INVESTIGATE A CLAIM IS VEXATIOUS" »

At Tatlow, Gump, Faiella & Wheelan, LLC, we focus on protecting the rights of injured and insured persons by aggressively prosecuting insurance claim denials and insurance bad faith cases.

People buy insurance because they want to protect their family, property, possessions, businesses and well being. Unfortunately, insurance companies often have different interests. Insurance companies want to limit the payments they make on claims so profits remain high. When an insurance company improperly limits claim payments, fails to take proper steps to timely settle claims against its insured, wrongfully denies payment, or generally acts in its own best interest rather than its insured, it has violated the intent of the insurance contract.

Continue reading "Insurance Disputes and Bad Faith Lawyers" »

Knowing how much life insurance to get is critical to protecting your family. This article from the New York Times provides valuable information.

Your Money - How Much Is Enough in Insuring a Life? - NYTimes.com.

If you are a claimant under a life insurance policy and the insurance company has refused to pay you need a lawyer experienced in fighting insurance claims denials. Chris Faiella, with the law firm of Tatlow, Gump, Faiella & Wheelan, LLC, may be able to help. Contact him at www.tgfwlaw.com or call at 1-800-264-3455.

A long-term disability (LTD) policyholder's breach of contract and bad faith claims against his insurer were preempted by the Employment Retirement Income Security Act of 1974 (ERISA) and the statute of limitations, a panel of the 11th Circuit U.S. Court of Appeals ruled Dec. 30, upholding a trial court's grant of summary judgment to the insurer (Stuart S. Johnson v. Unum Provident, et al., No. 09-13687, 11th Cir.; 2009 U.S. App. LEXIS 28697).

Every contract has an implied covenant or promise of good faith and fair dealing. Insurance policies are merely contracts between the insurance company and the person who purchased the insurance and people who qualify for insurance benefits under the terms of the contract. Thus, every insurance policy in the United States has a promise imposed by law upon an insurance company to act fairly towards its policy holder and the beneficiaries in the performance of the contract. This is true whether or not such a clause is specifically include in the policy, because courts will read such covenant into the policy as a matter of contract law.
Insurance carriers must therefore meet the objective reasonable expectations of the policy holders and insurers must give equal consideration to the financial interest of its insurer as it does its own interest. Thus, when an insurance company does not have to put its interests behind that of its insured, it cannot protect itself while abandoning its policy holder.

In cases, commonly referred to as bad faith cases, the essential question is whether or not the insurance carrier met its duty of good faith and fair dealing in the situation presented by the performance of its contract obligations. Examples of bad faith include delaying payments, paying less than what is owned, denying benefits or coverage, or failing to settle claims within the policy limits. The insurance companies also have obligations imposed upon them including the duty to promptly investigate all claims, and where appropriate to defend their insured under the terms of the policy. Bad faith action insurance companies policies, practices, and customs will be at issue to show how the insurance company acted, to show its motive, intent, plan and knowledge concerning the particular facts of the case. It is not necessary to show that a insurer acted intentionally to cause harm. Bad faith is a state of mind and may be evidenced by both acts and circumstances on the part of the insurer, but amounts to more than a mistake.
Specific facts that may indicate bad faith on the part of the insurer include demand that the insurer contribute to the settlement, ignoring settlement advice, not disclosing policy limits to a claimant, failing to foresee probable excess verdicts, taking and employing hard line settlement tactics, and properly investigating a claim and properly evaluation a claim, failing to litigate a claim, failing to provide a proper defense, failing to consider settlement, ignoring setting advice, failing to communicate with the insured about the case, or failing to advice the insured about the potential of excess judgments, failing to advise the insured about the policy coverage, failing to advise the insured about existence of settlement offers, acting on behalf of one insured to the detriment of another insured.

It is clear that when people buy an insurance policy that they are seeking protection from the risks insured. If the insurer fails to satisfy their obligations to the policy holder, the policy holder will face the financial risks for which they had purchased protection, as well as the emotional distress as a result of the breach of the policy agreement. Policy holders and beneficiaries are obviously in a vulnerable position when they must rely on their insurance carrier to protect their interest, particularly if the insurance company does not share information, or take appropriate actions to protect the insured's interests, because an insurance company generally has superior knowledge concerning the facts and law, and in all cases where the insured is the wrongdoer, the insurance company is in control of the defense. Therefore, bad faith lawsuits promote not only compensation by injured policy holders and beneficiaries, but provide deterrence from insurance companies acting oppressively towards their customers.

Despite the hundreds of millions of dollars insurance companies spend on advertising to make us believe that insurance comapnies will do the right thing, their actions speak louder than words. So I will be posting stories and verdicts of insurance company fraud, insurance company bad faith, unfair claims denials so that personal injury victims, and consumers can check the fact from the fiction.
For a start read about Allstate's Bad Faith, or about HMO claims denials.

HMO claims-rejection rates trigger state investigation -- latimes.com.

Here is an interesting story from the LA times. That means 20% of all claims made are denied, despite a diagnosis and a doctor's orders.

Given all the attention of the media and public on insurance related matters, I think this story is worthy of revisiting. A Missouri Appellate Court did not believe Allstate Insurance company's assertion that its failure to settle the claims of two car accident victims in a timely manner was not bad faith. Despite its slick commercials and claims of customer service Allstate's conduct spoke volumes about the way it handles claims. Allstate has long been viewed by Missouri personal injury lawyers as one of the worst when it comes to timely and fair claims payment.

The Allstate lawsuit stemmed from a car accident that occurred in March of 2000, when a 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, in like so many companies making insurance denials asserted that it was unsure the crash had caused the Johnsons' injuries, even though the couple had to be cut out of the wreckage, were life flighted by helicopter to the hospital and received care in an intensive care unit (ICU).

At the circuit court level, the jury 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.

The South Florida Business Journal (8/27) reported, "Florida's insurance commissioner on Wednesday issued a final cease and desist order to three companies found to be engaged in the unauthorized sale of insurance products." The companies, Peck & Peck, Depawix Health Resources, and Green Cross Managed Health Systems, were found to have marketed "group and individual health insurance plans to small businesses and individuals, both directly and through licensed and unlicensed insurance agents, under the guise of selling an employment opportunity with Depawix." The cease and desist order said, "Green Cross calls itself a managed health system that purportedly provides health insurance to Florida consumers by placing them in part-time jobs with Depawix as a tester of the Green Cross process of medical care." The order also stated that employees were "paid a certain amount of money each month, much of which is kept by Depawix to pay for insurance coverage."
As reported in recent blogs here on the Injury and Insurance Blog, Missouri and Illinois have also recently taken pro policyholder positions by preventing an insurance company who did not follow fair claims practices. While this is good, there is still much work to do, and Insurance Commissions must do a better job of stopping unfair insurance company practices involving sales and claims.

When your premium is due insurance companies expect you to timely pay your premium.  If you don't they will stop providing coverage.  What happens then when they owe you money for a claim?  A common experience among claimants is that insurance company's drag their feet when it comes to claim payments.  If this has happened to you there are some useful things you should know about.
In Missouri, if you are making a claim on your own policy, the insurance company has to comply with regulations that require a timely response, a decision on your claim and an explanation of your claim. If the insurance company says it needs more time to gather facts they must regularly update you with the status of their investigation. To learn more go the Missouri Department of Insurance web site.

Missouri recently passed a new law which purports to provide better access and more protection to life insurance purchasers.  House Bill 577, which will become law this August makes several changes to the insurance law, but in reality offers little for consumers of life insurance.  The only protection is that an insurance company may not deny an applicant for past or future lawful foreign travel unless based upon sound actual or reasonable experience. 

The strongest protection from abusive life insurance denials in Missouri continues to be common law actions, and first party actions for Vexatious Refusal. Unfortunately these remedies while successful in obtaining payment lack the punch to stop abusive practices in the first place.

People purchase life insurance policies as a way to help their loved ones after they pass away.  A life insurance policy can provide surviving beneficiaries with financial stability after a family member dies.  In the process of selling the policy, Life insurance companies consider a variety of factors including medical history, height and weight, whether you use tobacco or drink and if your job presents particular occupational hazards.  These factors are used to determine insurability and premium (price) on the life insurance policy for a particular person.

People believe that if life insurance is obtained and the premiums paid, that upon death, collecting the life insurance will be easy.  Unfortunately, that is not always what happens. 

Life insurance companies review each claim carefully before paying the benefits.  Insurance companies will want the certified death certificate, and a claim form as part of the claims process.  One of the most common reasons for denial is that there was a "material misrepresentation" on the life insurance application.  Of course the applicant is now dead, so any proof they could offer is gone.  The insurance company may claim that the misrepresentation occurred in the original application for insurance or in a later amendment to the application.  In almost every such case the insurance company will obtain medical records of the deceased and may have the application, records and other facts reviewed by medical specialists.

In such situations the beneficiaries will find that instead of financial security they have a fight on their hands with an insurance company that is motivated to keep its dollars.  While a family can sue for breach of contract, this only recovers the benefits and not expenses and attorneys fees.  Missouri's Vexatious Refusal Statutes Section 375.296 and 375.420 provide for attorneys fees, but have laughable penalties that provide no financial incentive for Missouri insurance companies to not try their luck at the denial game.  Missouri needs true first party bad faith so that insurance companies that unfairly and purposefully deny claims can be held accountable for their actions.  Only when poor treatment of Missouri insurance policyholders is more expensive than fair treatment will abusive practices stop.

Universal Casualty Company has been fined by the Illinois Department of Insurance. The Insurance Networking News reports that the fines were related to Universal Casualty's failing to adopt procedures for the efficient, and prompt investigation and settlement of consumers' claims.  The full story, Illinois Dept. of Insurance Fines Universal CasualtyUniversale notes that the insurer does business in Missouri as well as other States.  The Missouri Department of Insurance took action against the insurer in June by banning the writing of all new business. 

According to the Missouri Insurance Director's order, the company violated Missouri insurance laws by:

• Failing to respond to or properly investigate claims filed by policyholders within a timely manner;


• Failing to respond to inquiries from the Department of Insurance, which is investigating consumer complaints;


• Improperly denying claims; and


• Offering unreasonably low dollar amounts for claims.

It's good to see that the Missouri Department of Insurance and other regulators are taking insurance consumer protection seriously.  Consumer's shortcomings are what bad faith conduct is all about.  Responsible insurance companies treat their policyholders fairly and don't use these tactics to hurt their customers.

American Family Mutual Insurance Company has lost its appeal to the 8th Circuit in a bad faith and breach of contract case after accusing its insured of burning down his own home.  Arson is a felony and the accusations resulted in not only economic loss but serious emotional and physical distress of the insured.  The Court of Appeals upheld the district court verdict which resulted in a compensatory damage award of $49,564.96 and $1,150,000.00 in punitive damages. 

The court upheld a jury instruction that allowed the jury to consider violations of Prohibited Practices in Insurance Business Act as evidence of bad faith.  The court also upheld the punitive damages award based upon American Family's "tortious conduct" of labeling their insured an arsonist based on insufficient grounds. The court found that that conduct "evinced an indifference to or disregard of" the insured's financial, emotional and physical well-being.  Notably the insured presented evidence that American Family, without first conducting an adequate investigation, sent documents to the State Insurance Commissioner and the Property Loss Insurance Register that the insured's claim was denied for arson and fraud.  The evidence presented was that such a report would have a devastating effect on the insured's ability to obtain other insurance and thereby hurt his family business.  

Insurance companies cannot deny claims without a valid basis, or without conducting a prompt, fair and full investigation.  In Missouri, the tort of bad faith known as vexatious refusal to pay can be brought to obtain the benefits the insured is owed and to recover punitive damages and attorneys' fees.