Insurance Bad Faith - Articles

Lawsuit: Blue Cross Decision Denies Coverage to HIV-Positive Patients

February 26, 2014

An HIV-positive man in Louisiana has filed a lawsuit against Blue Cross-Blue Shield, claiming that the insurance company's decision to change its rules regarding patient coverage effectively denies coverage to low-income HIV-positive patients.

The lawsuit, filed by John East against Blue Cross-Blue Shield and two other insurance companies, alleges that a decision made by the companies just before provisions of the Affordable Care Act prohibiting denial of coverage based on pre-existing conditions became effective was intended to turn away low-income patients that have tested positive for HIV.

Blue Cross claims that it made the decision to not accept premium payments from the Ryan White HIV/AIDS Program, which is a federal fund set up to help pay health insurance premiums for low-income HIV patients, based on a recommendation by the U.S. Centers for Medicare and Medicaid advising against acceptance of premiums from outside organizations.

According to court documents, the Centers for Medicare and Medicaid has since issued an updated advisory recommending that insurers accept premium payments from the Ryan White fund.

East is seeking an injunction against the insurance companies, monetary damages for discrimination under the Affordable Care Act, and that the insurers be required to provide him coverage.


Nine Life Insurance Companies Issued Subpoenas by NY AG

July 05, 2011

The Attorney General of New York has issued subpoenas to nine life insurance companies to investigate whether the firms have sufficiently ensured payouts on the policies of deceased customers.

This is the latest of a wave of recent regulatory scrutiny measures aimed at ensuring that insurers have made adequate attempts to identify the beneficiaries of dead customers.

Subpoenas were issued to AXA SA, Genworth Financial Inc, Guardian Life Insurance Co of America, Manulife Financial Corp, Massachusetts Mutual Life Insurance Co, MetLife Inc, New York Life Insurance Co, Prudential Financial Inc, and TIAA-CREF, according to official reports.

It is unclear what legal action, if any, may be initiated if the AG's office determines that an insurer has been remiss in its duty to attempt to identify beneficiaries of deceased customers.


Alleged Arsonist Sues Insurance Company

February 16, 2011

A man accused of setting fire to his Connecticut home in a divorce dispute may move forward with a lawsuit against the home's insurer for emotional distress he suffered during the arson investigation, according to a court ruling this week.

Richard Shenkman, 62, allegedly burned down the East Lyme beach house he owned with his estranged wife, Nancy Tyler, on March 5, 2007, after a court ruled that the house would go to Tyler in the divorce.

The lawsuit claims that Shenkman, who is awaiting trial on the arson charge, suffered emotional distress because of the manner in which the insurer investigated the fire.

Shenkman alleges that Central Mutual Insurance Co. didn't conduct an official investigation after Tyler told police that he was the likely suspect, which led to his arrest for the crime on May 10, 2007.

The fact that the insurer believed Tyler's claim without an actual investigation into the arson constituted a negligent infliction of emotional distress on Shenkman, according to court documents.

Tyler has since received the insurance proceeds from the fire.


Insurance Lobby Concedes on Healthcare Language

March 30, 2010

U.S. health insurance companies said Monday they will comply with government regulations on covering children with pre-existing conditions.

America's Health Insurance Plans -- the main lobbying organization for health insurance interests -- issued the statement after Health and Human Services Secretary Kathleen Sebelius told insurers in a letter she was prepared to issue regulations "in the weeks ahead ensuring that the term 'pre-existing exclusion' applies to both a child's access to a plan and to his or her benefits once he or she is in the plan."

AHIP had said the law signed by President Barack Obama last week would only require insurers to cover children with pre-existing conditions who were already customers, The Wall Street Journal reported.

In her letter, Sebelius said the regulations she plans to issue will require that, beginning in September, "children with pre-existing conditions may not be denied access to their parents' health insurance plan" and insurance companies "will no longer be allowed to insure a child, but exclude treatments for that child's pre-existing condition."

"I urge you to share this information with your members and to help ensure they cease any attempt to deny coverage to some of the youngest and most vulnerable Americans," Sebelius said.

A lawyer for insurance companies and employers says there is some question about the clear meaning of some language in the law, The New York Times reported Sunday.

"The fine print differs from the larger political message," he said. "If a company sells insurance, it will have to cover pre-existing conditions for children covered by the policy. But it does not have to sell to somebody with a pre-existing condition. And the insurer could increase premiums to cover the additional cost."

Sen. John Rockefeller, D-W.Va., called the report "outrageous."

"The ink has not yet dried on the healthcare reform bill, and already some deplorable health insurance companies are trying to duck away from covering children with pre-existing conditions," he said.

Rep. Henry Waxman, D-Calif. -- chairman of the Energy and Commerce Committee and a leading supporter of the legislation -- said the statement by a lawyer for insurance companies "exemplifies why we fought for this reform."


Court Rules in Long-Running Insurance Feud

December 01, 2009

A California court has ruled in a long-fought legal battle between insurance companies and accident victims over who pays for medical care, and how much.

Under California law, injury victims can seek damages from those at fault without deducting their own insurance benefits. The long-running dispute is whether damages should be measured by their total medical bills, or by a lesser amount their insurer pays to resolve them, the San Francisco Chronicle reported Monday.

In San Diego County, an appeals court said the insurance company for a trucking firm at fault in a traffic accident must pay the full amount of the woman victim's medical bills, $190,000, the Chronicle said.

This overturned a trial judge's ruling that they only had to pay $60,000, the settlement amount the woman's insurance company reached with two hospitals for her care.

For years, judges had said that insurance companies for those at fault in accidents only had to pay the amount the victim's insurance settled with hospitals and doctors, typically considerably less than the actual bills.

Lawyers in the case said the battle is likely headed for the state Supreme Court.


Insurer Fined Over Discount for Religious

September 21, 2009

An insurance company discriminated by offering special benefits and discounts only to "churchgoers" and "persons of faith," the U.S. Justice Department said.

Under a settlement, awaiting court approval, GuideOne Mutual Insurance Company of Des Moines, Iowa, and two of its agents must pay about $10,000 to each of three victims of religious discrimination, the department said Friday. In addition, the companies must pay a $45,000 civil penalty to the federal government.

The companies also must stop offering the "FaithGuard" homeowners and renters benefits it advertised in 19 states.

"Discrimination on the basis of someone's religious faith is prohibited by the Fair Housing Act," Loretta King, acting assistant attorney general for the department's Civil Rights Division, said in a statement. "All individuals have the right to secure homeowners and renters insurance without regard to their religious beliefs, and the Civil Rights Division will continue to ensure those rights are protected."

A federal government lawsuit stemmed from complaints filed by an atheist, an agnostic and the Lexington (Ky.) Fair Housing Council.


Triumph Close to Settlement with Insurers

September 15, 2009

Triumph Foods and three insurance companies could complete a settlement between them within the next two weeks, attorneys told Buchanan County Circuit Judge Randall Jackson on Monday morning.

The lawsuit stemmed from Triumph's $12.25 million settlement following an accidental explosion in 2005 that killed or injured 20 workers during the pork plant's construction. Triumph and the three insurance companies named in the suit had a trial setting last Wednesday but didn't show up.

During Monday's subsequent status hearing, Triumph's local counsel Mark Stingley and attorneys from Hartford Casualty Insurance Co., and St. Paul Surplus Lines Insurance Co., told Mr. Jackson documents to complete the settlement were circulating and they hoped to have it finalized in 10 days.

Mr. Jackson gave the sides 45 days to dismiss the lawsuit. If it isn't settled by then, he advised those involved to be prepared to go to trial. The parties have been working on a settlement since a July mediation.

"The settlement will take care of 90 percent of the insurance cases," Mr. Stingley estimated.

He wouldn't reveal the proposed terms of the settlement.

Triumph agreed to pay $1.25 million of the original settlement. Triumph's lawsuit claims Hartford refused to pay Triumph's portion of the settlement. Triumph says it paid $500,000 to settle the case after Hartford refused to participate in settlement talks.

The suit also names Liberty Mutual Insurance Co., which did not have a representative at Monday's hearing, as refusing to pay any amount. The suit says St. Paul paid $750,000 but wouldn't fully cover its policy and reimburse Triumph for the $500,000.

In another case, Triumph will go before a jury on Nov. 2 in its lawsuit against general contractor Epstein and Sons, Travelers Property Casualty Company of America, D&D Masonry, Employers Mutual Casualty, Midland Steel, Midwestern Indemnity, gas utility Missouri Gas Energy and the Zurich American Insurance.

All those entities were contractors, subcontractors or insurers of contractors during the construction of the pork plant. Triumph's lawsuit claims those companies were required to defend and compensate Triumph for its losses.


Court Awards Largest Katrina Damages

August 13, 2009

A U.S. appellate court upheld the largest insurance verdict stemming from damage caused by Hurricane Katrina in 2005 in New Orleans, court records showed.

The 5th U.S. Circuit Court of Appeals confirmed a 2008 jury trial decision awarding $21.6 million to Robert Fresh Market, a grocery in New Orleans.

The court further ordered United Fire and Casualty Insurance Co. to pay bad faith damages of an additional $1 million for failing to pay Robert Fresh Market's expenses in repairing hurricane damage to five supermarkets.


Effron Sued Over Car Crash

August 12, 2009

Teen hunk Zac Efron has been hit by a lawsuit three years after allegedly causing a three-vehicle pile up in Los Angeles.

Katie Porter claims she was rear ended by a taxi, which was hit by the vehicle the High School Musical star was driving back in 2006.

The plaintiff states she has spent the past three years fighting for damages with the insurance companies, and she's had enough.

Porter's mom tells TMZ.com the firms representing each of the drivers is claiming the other is responsible for repair costs.

The alleged crash victim wants $1,200 for repairs and $400 for a rental car. Her father, who lives in Oklahoma, is also suing for plane and motel costs.


AIG Ex-Chief to Pay Millions in Fraud Investigation

August 07, 2009

Two top former executives of troubled insurance giant American International Group (AIG) agreed Thursday to pay fines to settle charges by US regulators that they misled investors by inflating the firm's results.

Former long-time chief executive officer Maurice "Hank" Greenberg and former chief financial officer Howard Smith were involved in transactions that inflated results from 2000-05 and violated anti- fraud laws, the Securities and Exchange Commission said.

The executives were "responsible for material misstatements that enabled AIG to create the false impression that the company consistently met or exceeded key earnings and growth targets," the SEC said. The allegations follow a separate 800-million-dollar settlement with the insurer in 2006 for securities fraud and improper accounting.

Greenberg has agreed to pay a 15-million-dollar fine and Smith a 1.5-million-dollar fine to settle the charges, without admitting any wrongdoing.

Greenberg was at AIG's helm for 38 years before stepping down amid investigations into the firm's accounting practices.

AIG was brought to the brink of collapse last September and has since received government bailouts totalling more than 180 billion dollars. The bailouts became a major headache for President Barack Obama after it emerged in March that the company paid out about 165 million dollars in bonuses to its executives after receiving government funds.


Insurance Co. Pays $10 million to Ledger's Estate, Avoids Lawsuit

January 30, 2009

The company holding Heath Ledger's life-insurance policy will pay the $10 million death benefit and avoid a costly lawsuit, according to court records.

ReliaStar Life Insurance Co. had initially refused to fork over the money, claiming it had to investigate Ledger's death last year as a possible suicide.

The actor's estate filed a lawsuit in Los Angeles Superior Court, but both sides agreed to the $10 million settlement in court papers, which just needs a judge's approval at a routine hearing next month.

The lawsuit asked for damages beyond the $10 million death benefit, so ReliaStar dodged that potential penalty by paying up now.

Documents showed that the court will need to appoint a guardian to represent Ledger's 3-year-old daughter, Matilda Rose who is the policy's beneficiary.

"A confidential settlement has been reached," a lawyer for Matilda's trust, told The Australian Associated Press.

"The parties are pleased we have been able to settle it amicably."

The New York Medical Examiner's Office ruled that Ledger died of an accidental overdose, after he consumed a lethal cocktail of prescription painkillers and sleeping pills.

The deadly pills included OxyContin, Vicodin and Xanax.

Ledger, 28, could win an Oscar next month for his final movie, "The Dark Knight."


Bear Stearns Pays $27 Million to Settle Lawsuit

November 13, 2008

Bear Stearns, the former Wall Street brokerage giant, has paid $27 million to settle a lawsuit concerning a now-defunct Orlando company involved in one of the biggest insurance fraud cases in Florida history, lawyers said Wednesday.

Bear Stearns recently settled allegations that it gave deceptive and misleading investment advice to National Heritage Life Insurance Co., which went bankrupt nearly 15 years ago amid losses of $400 million, lawyers for the bankruptcy trustee said.

The longtime Wall Street pillar, now part of JPMorgan Chase, denied any wrongdoing. Lawyers said the firm was simply a broker -- not a financial adviser -- to National Heritage. They insisted all advice was accurate and full disclosures were made about the risks of the securities.

But lawyers for the bankruptcy trustee said Bear Stearns played a role in the downfall of National Heritage, which had thousands of life-insurance and annuity customers in Florida.

"Bear Stearns engaged in conduct that resulted in significant losses for National Heritage," said an Orlando lawyer for the trustee's legal team. "And that added to the downward spiral and eventual collapse of the company."

The settlement ends more than a decade of litigation by trustees who accused Bear Stearns of lying about the potential value of mortgage-backed securities -- long before problems with such investments became the focus of the nation's current financial crisis.

Using false projections of lucrative returns, Bear Stearns lured National Heritage to buy a huge stake in mortgage-related securities to boost its profits, according to the lawsuit. Instead, the securities generated big losses, the suit said.

National Heritage became insolvent in the mid-1990s, plagued by malfeasance by corporate officials who looted it for about $400 million. Many were convicted of charges ranging from fraud to money laundering.

Trustees eventually were able to restore the value of National Heritage's insurance policies and annuities for its 25,000 customers. They did it by negotiating deals with insurance guaranty associations in each state where the company did business, according to the trustee lawyer.

With the Bear Stearns settlement, the trustee has now recovered nearly $250 million, all of which goes to compensate the state guaranty organizations, he said.

Bear Stearns itself folded this year amid the subprime mortgage meltdown that has now morphed into a global economic crisis. The firm was acquired by JPMorgan Chase for $1.4 billion, or about $10 a share. It had traded as high as $171 a share in 2007.

Experts said Bear Stearns fell victim to its own aggressive investment sales culture and misguided bets on flawed securities tied to higher-interest mortgages.

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