Insurance Law ensures that insurance companies pay claims with good faith—willingly, promptly and properly. It is illegal to practice bad faith insurance and insurance fraud by willingly discounting, delaying or denying payment of claims. In the US, insurance companies are bound by a “covenant of good faith and fair dealing” in treating their policyholders, which means that the insurance company is under an obligation to pay a legitimate claim. If an insurer breaches this covenant, it is acting in bad faith.
State statutes require that an insurance company responds to a claim within certain time limits. Insurance companies that breach their duty of good faith and fair dealing may also be liable under certain state deceptive trade practices acts.
If your insurance company has wrongfully delayed or denied your disability claim, it may constitute insurance fraud. Unscrupulous insurers deny valid disability insurance claims to make more money from their policy holders. Claims are denied for a number of reasons, including the following:
The insurer’s medical examiner overruling your doctor’s opinion/diagnosis
Wearing you down with unnecessary paperwork
Reclassifying your injury as an illness rather than an injury
Retroactively canceling your insurance policy
If your employer paid health insurance premiums—short term and/or long term disability, you have legal rights to receive benefits. An insurance lawyer can help litigate a potential insurance bad faith lawsuit under the Employee Retirement Income Security Act (ERISA), which is heard by a judge, not a jury. Fortunately, judges generally rule in favor of the insured person and make the insurance company pay the claim and sometimes related costs.
An insurance lawyer can help you make an insurance claim for actual and consequential damages as well as punitive damages.
Bad Faith Insurance
You buy an insurance policy and assume that you will be compensated by the insurance company if you suffer a loss. Your policy is a contract signed between you and an insurance company that sets out terms and conditions specifying the amount of coverage or compensation payable to you should you claim a loss or injury. Depending upon your contract, it may cover you against a personal injury or damage to your vehicle or a catastrophic event.
Sounds straightforward—you buy insurance and assume that you will be compensated by the insurance company if you suffer a loss. Unfortunately, this is not always the case. Some insurers will deny your legitimate claim even if they don’t have a valid reason to do so. When an insurance company breaches your trust, you feel betrayed. The company is then acting in bad faith. Generally, these insurers employ tactics that will try to wear you down; they count on you not having any recourse. An insurer may attempt to refuse to pay all or part of your medical bills or delay investigation of your claim for no reason except to hope that you will go away.
Other bad faith insurance tactics include the following:
A 24-month limitation on benefits for mental and nervous conditions
Knowingly applying the wrong legal definition of disability when denying claims
Purposely targeting high-cost claims for denials
Misuse of claimants’ medical records
It is hard to believe that bad faith insurers can practice bad faith–until it happens to you. Insurance complaints have increased drastically over the last several years but there is also a positive side to this: public attention has demanded that insurance companies are now held accountable. Thanks in part to the Freedom of Information Act, the Internet and expert insurance lawyers, insurance companies can no longer get away with bad faith insurance practices. More lawsuits against crooked insurers are being fought and won today than ever before.
What You Can Do
Write to your State Department of Insurance. In the US, each state regulates insurance companies and every state has its own Department of Insurance website. Once you know the website of your state regulatory agency Department of Insurance, find the right representative and submit a complaint in writing to make sure that your claim is on record.
Keep a record of everything that transpires between you and your insurer, including phone calls. Keep a paper trail. And request copies of your medical records – it is your right.
You can go to small claims court but each state has its own limit – find out first. If your claim is too high for small claims court, you may want to seek an insurance lawyer.
Insurance Bad Faith Lawyer
If you have experienced bad faith insurance, you will need the help of a qualified insurance bad faith lawyer. It is important that you find an experienced insurance bad faith lawyer to handle your case. Lawyers and Settlements make it easy for you to find the right bad faith insurance attorney. We work with attorneys throughout the US and Canada who practice in this specialized area.
As well, LawyersandSettlements.com provides comprehensive bad faith insurance news coverage that aims to keep the public informed. We provide an online legal news source that includes interviews with Insurance Bad Faith Lawyers.
Stark & Stark represents clients in a wide range of matters involving insurance coverage and liability issues. The attorneys of the Insurance Coverage and Liability Group offer multi-faceted services in insurance matters ranging from the simple to the complex. Our attorneys have successfully represented policyholders in claims against their insurance companies where coverage has been denied or is in issue in both first party or third party claims.
First party claims involve a suit directly against an insurance company for refusing to pay benefits.
Third party claims arise when an insurance company fails to defend a suit brought against its insured or fails to pay a claim, on behalf of its insured, asserted against the insured policyholder.
Additionally, the Insurance Coverage and Liability Group regularly:
handles cases involving commercial liability, directors and officers, errors and omissions, life, disability, fire and other related insurance coverage
monitor the defense of personal injury actions where an insured requires the assistance of counsel to coordinate the defense of their claim with counsel provided by an insurance company under its ordinary defense obligation
provide assistance determining the appropriate types and levels of coverage to maintain in order to properly insure against commonly encountered risks
coordinate with members of the firm’s Corporate Investigations and White Collar Group to defend actions brought by the Department of Banking and Insurance against licensees, including persons accused of insurance fraud in both civil and criminal actions
represent clients in claims involving the construction industry (both builders and property owners), environmental coverage, real estate (and real estate professionals), complex litigation and mass torts
analyze and interpret insurance policies
Insurance policies are often difficult to understand even for sophisticated and experienced business people. The Insurance Coverage and Liability Group works with its clients to level the playing field and offer benefits and protection to the insured. We bring value by ensuring that you thoroughly understand the coverage you are entitled to and for which you have paid.
Insurance Defense Team
The Insurance Coverage and Liability Issues Group is headed by Thomas J. Pryor, Esq., a Certified Civil Attorney with over 25 years of experience as a trial lawyer. The primary focus of Tom’s practice is insurance coverage issues. He lectures extensively and is the author of many articles addressing legal issues pertaining to insurance coverage.
Tom is joined by Kevin M. Hart, Scott I. Unger and Tara A. Speer. Ms. Speer has been a licensed insurance producer in New Jersey since 2002 and having worked in that capacity for several years, she is able to provide a unique perspective to clients involved in legal disputes which involve insurance matters. The group draws upon over 50 years collective experience in complex insurance coverage issues in virtually all areas.
Recovery of full benefits to a parent, under an accidental death policy, arising from the tragic death of her disabled son. His life-sustaining feeding tube became dislodged during a routine procedure. The insurance company was forced to reverse its claim denial as a consequence of our filing suit and establishing its position was wrongful and contrary to the express terms of the policy.
Monitoring the defense of a commercial client named in a products liability action resulting in significant burns sustained by a young boy. We assisted in coordinating the defense, resulting in a confidential settlement, whereby the young plaintiff received compensation and our client’s rights were protected vis-à-vis the other named defendants, and our clients insurance carrier accepted its responsibility for defense and indemnity, as a result of our efforts.
Successful recovery, prior to trial, of $150,000 in damages in a first party claim arising from a casualty loss within several million dollar residential property, by establishing the insurance carrier’s basis for denial was wrongful and unsustainable.
Full recovery to a homeowner, arising from an insurance carrier’s wrongful denial of coverage following extensive contamination to a valuable residential property, following complete destruction of an adjoining property.
The insurance company reversed its initial denial of coverage after we established the property was rendered uninhabitable by exposure to harmful contaminants which became airborne during the fire at the neighboring property.
Representation of homeowners displaced from their primary residence for over two years, as a consequence of alleged negligence by a contractor. We addressed various first and third-party insurance issues arising from the loss.
Successfully represented a policyholder in an accidental death and dismemberment claim arising from injuries sustained in connection with the World Trade Center attack. A six figure settlement was achieved after brief, focused negotiations pointing out the weaknesses in the carrier’s position. Client received full payment under the policy within approximately 90 days of our involvement.
Negotiated pre-trial settlements in numerous long term disability claims resulting in cumulative lump sum settlements of approximately $1 million based upon a recognition that the insurance carriers’ claim denials were unsustainable under the “own occupation” definition of disability.
Negotiated settlement in favor of a policyholder in a third party liability exposure arising from a claim denial following a catastrophic automobile accident. We convinced the carrier that its claim denial was wrongful and a settlement was achieved, in order to avoid a trial on the issue of bad faith, where the insurance carrier could not establish that its policy cancellation was sustainable under the statutory “notice” framework.
Serving as personal counsel, we achieved a settlement under a CGL policy in favor of a builder defendant, by overcoming the insurance carrier’s reservation of rights claim denial. The insurance carrier paid a significant portion of the underlying damages.
Settlement achieved, prior to filing suit, in favor of a surviving spouse, within a few weeks of our initial involvement, by establishing that the insurance carrier had wrongfully denied coverage under a life insurance policy. We convinced the insurance carrier that its denial, based upon the insured having allegedly died from complications arising out of a preexisting condition, was wrongful.
Jury verdict in favor of first party insured, against a property casualty insurance carrier, arising from a fire loss involving total destruction of a private residence and loss of all contents.
Order obtained by the Chancery Division, upon emergent application, restoring insurance benefits to a paraplegic whose carrier had denied life sustaining reimbursement for around the clock nursing care, restoring vital benefits to the policy holder.
Serving as personal counsel, we achieved a settlement under a Comprehensive General Liability policy in favor of a builder defendant, by overcoming the insurance carrier’s reservation of rights claim denial. The insurance carrier paid a significant portion of the underlying damages. This resulted in a favorable settlement achieved on behalf of our client.
Retained as local counsel for a Fortune 500 national waste hauling firm. The claims involved reimbursement for defense costs and indemnity payments arising from alleged disposal of hazardous substances at a large New Jersey landfill. Stark & Stark served as personal counsel to waste hauler defendant in coverage litigation against numerous CGL and excess carriers over multi-million dollar claims emanating from a closed landfill. After several years of litigation, settlements were achieved with all parties.
Retained as personal counsel to multiple defendants (battery manufacturers) in connection with alleged disposal of hazardous substances at a municipal landfill. As personal counsel to defendants in contribution action over multi-million dollar claims emanating from a closed landfill. A favorable settlement was achieved in connection with all claims.
Assigned as a mediator for complex insurance coverage matter involving approximately six insurance carriers in an action seeking to apportion coverage among various layers of general liability insurance. Mediated settlement in complex environmental coverage claim involving layers of underlying and excess coverage in multi-decade asbestos claims. After several lengthy sessions, we assisted the parties in bringing about a global settlement of all claims.
Representative long-term disability clients of ours include:
A Fortune 500 global marketing executive who became disabled by a benign brain tumor.
An OB/GYN who became disabled as a consequence of carpal tunnel syndrome and other orthopedic conditions.
A chiropractor who became unable to perform required procedures as a consequence of disabling back injuries.
A medical devices salesperson who became disabled as a consequence of chronic back problems.
A highly placed corporate executive who became disabled as a consequence of contracting HIV AIDS.
A dentist who became disabled as a consequence of a heart attack and other complications.
A young woman who became disabled as a consequence of eating disorders and other complications.
Various individuals whom we have successfully represented over the last 20 years.
In all of the cases described, we successfully established ongoing benefits or effectively negotiated a buyout of the long-term disability policies at issue. Several matters were resolved during the pre-suit stage, and the remainder after we filed suit and litigated the matters to conclusion.