Articles Posted in Bad Faith

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A person is injured in an automobile accident. The negligent driver does not have enough insurance to pay for all of the damages, including medical bills. The injured person turns the remaining bills into their own insurance company for payment under the Underinsured Motorist provision of their own policy for which they have been paying premiums and the insurance company says “Sorry, no coverage for that”.
Yes, it happens A LOT!

You may be right and the insurance company representative may be wrong in denying your claim. In a case handed down this week, the Missouri Court of Appeals, Western District, sided with the injured party and against the insurer, Progressive Northwestern Insurance Company. Fanning v. Progressive Northwestern Insurance Co., W.D. 75943.

Fanning was seriously injured while riding his motorcycle when he was involved in an accident with another vehicle. The other driver was negligent and caused the accident.
Fanning collected $50,000, the policy limits of the negligent driver and made a claim with his own insurance company for underinsured motorist coverage. The declarations page of Fanning’s Progressive policy indicated that he had purchased $50,000 of underinsured motorist coverage. It was not disputed that Fanning’s damages exceeded $100,000. However, the insurance company denied the claim. Progressive claimed that the other driver was not “underinsured” because the other driver’s limits were the same as the underinsured coverage limits on Fanning’s policy.

Fanning contended that since he incurred damages in excess of $50,000 paid by the negligent driver’s insurance, he should be able to collect up to the limits of $50,000 under the terms of his Progressive insurance policy. The court agreed with Fanning.
The Missouri Court of Appeals held that the Progressive insurance policy was ambiguously written and that the policy could be interpreted to provide $50,000 coverage for Fanning’s injuries. It is up to the insurance company to use clear language in their insurance policies and if the language is ambiguous, it will be construed in favor of the consumer.

If you think your insurance company may have wrongfully denied your insurance claim, you should contact a lawyer who is familiar with accident claims and insurance law as soon as possible. The lawyers at Tatlow, Gump, Faiella and Wheelan, LLC of Moberly have years of experience and will work diligently on your behalf to recover all of the benefits you are entitled to.

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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.

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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.

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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.

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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.

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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.

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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).

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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.

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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.