State Farm case filings skyrocket in Arkansas and the U.S.

I've got a couple of underinsured motorist ("UIM") cases pending against State Farm. One of the allegations in the cases is that State Farm denied my clients' claims because they were following a national policy to force claims into court.

Several books have been published about how insurance companies aggressively revamped their claims departments for maximum profit in the mid 1990's, which was a shift away from fairly paying claims. One such book is called Delay, Deny, Defend. The documents showing how this shift was designed call it a "zero sum game," meaning that where the insurance companies win, the insured people must lose. Of course, artificially lowering claim payouts regardless of merit is bad faith on an institutional level.

In connection with my cases, I've done some research on lawsuits involving State Farm in state courts in Arkansas and in federal courts around the country. Here's the chart of the number of State Farm cases in Arkansas over the past 20 years:  

 The trend holds true generally for national cases involving State Farm:

This case filing information is proof that State Farm has ramped up its litigation department in keeping with the delay, deny, defend strategy used by State Farm and other insurance companies.

These are just cases where State Farm was a named party. State Farm is involved in vastly more cases where State Farm stays in the shadows and defends cases against people who caused accidents. It's difficult to determine which insurance companies are involved in these types of cases, since the Arkansas Administrative Office of the Courts and its federal counterpart, Pacer, don't keep track of the identity of insurance companies in these "third party" cases. This prevents the public from identifying trends about which insurance companies are bogging down court systems across the country.

It sure seems like we need to change our laws to shine more light on these insurance company tactics. At the Chaney Law Firm, we fight to expose bad faith insurance tactics, one case at a time.

Fox News on insurance cancellations: blame insurance companies, not Obamacare

A recent opinion piece by a Fox News analyst provides some insight into the cancellation of health insurance policies as the Affordable Care Act (a/k/a Obamacare) goes into effect. He shares our view that pre-ACA, health insurers and their CEOs "made money by finding any excuse, any loophole to deny coverage to the sickest and most vulnerable people in our society." He points out that CEO pay at some of these insurers tops $36 million. We previously reported on how many health insurance company executives make more in a day than most Americans do in a year.

The Fox News analyst blames insurance companies for the cancellations, arguing that the insurers were providing inadequate care. He makes several good analogies about how regulation, including regulation of insurance companies under the ACA, make us all safer: 

You should be blaming your insurance company because they have not been providing you with coverage that meets the minimum basic standards for health care.

Let me put it more bluntly: your insurance companies have been taking advantage of you and the Affordable Care Act puts in place consumer protection and tells them to stop abusing people.

The government did not “force” insurance companies to cancel their own substandard policies.The insurance companies chose to do that rather than do what is right and bring the policies up to code. 

This would be like saying the government “forces” chemical companies to dispose of toxic waste safely rather than dumping it in the river. 

Or the government “forces” people to drive with intact windshields and working brake lights.

How dare they “force” drivers to pay money to get those things fixed if they are broken?

If you are rushed to the hospital in an ambulance, the ACA says your insurance company has to pay for the ambulance ride. 

If your son or daughter has a bout with depression or suffers from panic attacks, the ACA says your insurance company needs to pay for their medicine and treatment from a mental health professional.

People should be angry that their insurance companies were not paying for these humane, common sense benefits all along. 

It baffles me that people are directing their anger at the ACA which rights these terrible wrongs.

I think it's safe to safe that Fox News is generally regarded as a pro-business, anti-regulation news outlet. So when Fox News is accusing an industry of profiteering on the backs of ordinary Americans, you know they're doing something wrong.

Arkansas' non-partisan elections taking partisan, anti-citizen turn

We previously reported on the influence of money in supposedly non-partisan judicial elections here. That post focused on a discovery by investigators that State Farm had lied about the amount of funds it contributed to a judicial election in Illinois. State Farm contributed millions of dollars to a judicial candidate that just so happened to cast the deciding vote overturning a $1 billion verdict against the insurance company for secretly using aftermarket parts to repair vehicles.

Turn now to Arkansas. The Arkansas Chamber of Commerce, an arm of the U.S. Chamber that believes "injured people should have limited ability to sue corporations for damages in the court," is getting involved in two appeals court races in Arkansas. Other partisan money (on both sides, mind you) appears to be pouring in. The retired executive director of the Arkansas Judicial Discipline and Disability Commission explains in detail why this is a bad idea.

We've also got a page that explains why monkeying with the right to a jury trial — guaranteed by the 7th Amendment to the U.S. Constitution and by Article 2, § 7 of the Arkansas Constitution — is a bad idea for citizens.  Our current jury system in Arkansas is about local control. Local citizens serve on juries and make decisions about disputes between, most often, their fellow citizens and huge corporations. In many cases, however, corporations already hold an advantage because current rules permit them to hide their involvement.

The courts are the only place where citizens can stand as equals to major corporations. The legal reform sought by the U.S. and Arkansas Chambers of Commerce would further tip the balance of power by limiting the power of our citizens to access the court system. For this reason, we should be suspect of judicial candidates who take action showing they want money from lobbyists, because it's reasonable to believe they'll return the favor by limiting the right to a jury trial.

Insurers refusing to defend insureds may lose defenses to coverage

An interesting ruling came down in New York recently about the duty to defend. The duty to defend requires an insurance company to pay for a legal defense whenever one of its insureds gets sued. The duty to defend is very broad, and can only be defeated where the allegations in the lawsuit against the insured make it clear there is no insurance coverage. 

In contrast, the duty to indemnify is much narrower. It requires a judgment against the insured (or a settlement) before an insurance company must pay for damages. In some cases, coverage questions or disputes over the amount of damages warrant taking a case to a jury. If the jury decides there is no coverage or no damages, the duty to indemnify is never triggered. However, the insurance company is still required to foot the bill for its insured's legal defense.

In the New York case, the insured had to fight the insurance company over whether his company would be provided a lawyer.  The insurance company lost that battle and tried to claim it had no duty to indemnify the insured based on a coverage issue. New York's highest court of appeals rejected that argument. That Court held that the insurance company's wrongful decision to refuse a lawyer to its insured meant that the insurance company was liable up to its policy limits.

In many cases, insurance companies try to prolong the litigation process in hopes that its opponents will give up or run out of money. With such deep pockets, insurance companies can afford to take several bites at the apple. Kudos to the New York Court of Appeals for recognizing this fact and ruling that an insurance company must play fair if it wants to preserve all of its legal defenses.

We could use a rule like this in Arkansas. I worked a case once where a farmer spent six figures in legal fees defending three lawsuits against his farm. His insurance company wrongfully denied coverage, and it took more than a year in litigation to force the insurance company to pay for his defense. Luckily for him, he had the resources to pay his attorneys; many people would have been bled dry and simply given up. A version of this New York rule would be a good candidate for insurance reform in upcoming legislative cycles.

Insurer called out for bogus "not medically necessary" claim denial

When an insurance company decides it doesn't want to pay a claim, it is required by law in most states to give a legitimate reason. If it doesn't give a reasonable explanation or doesn't have a legitimate reason, the insurance company can be liable for bad faith. 

One way insurance companies try to boost profits and get around these requirements is to claim that certain treatments are "not medically necessary." An extreme example aired on The Today Show several years ago: 

Here are some of the facts from the show:

• A man and his sister had the same health insurance company, United Healthcare

• The man and his sister had same life-threatening disease, cystic fibrosis, and the same mutation of that disease

• The man and his sister had the same doctor

• The doctor for the man and his sister wrote an identical letter to United Healthcare asking it to pay for a new, life-saving medication for cystic fibrosis, which costs $25,000/month

United Healthcare approved the claim for the sister, but denied the claim for the brother as "not medically necessary." For over a year, the man's health declined, while his sister's improved. As The Today Show prepared to air a segment on the man's fight for life against United Healthcare, the show's producers called to ask for a comment by United Healthcare. The response? A complete change in position, so they wouldn't look quite as bad on national television.

Kevin and Katie Dwyer's case shows just how arbitrary insurance companies can be. But most folks aren't going to receive help from The Today Show to make their own insurance company do the right thing. In a country where we are required by law to buy car and health insurance or get hit with severe economic penalties, it is unfair for insurance companies to get away so often with such arbitrary conduct.

Here at the Chaney Law Firm, we see "not medically necessary" claim denials all the time. It is a method insurance companies use to boost profits, often at the expense of their own policyholders. As one example, one car insurance company denied payments for computerized radiographic mensuration analysis (CRMA) services by a medical doctor in Texarkana based upon reports by two chiropractors in Washington State and Georgia. The medical doctor objected to the Washington and Georgia chiropractic boards and the insurance company, but the insurance company wouldn't change its position. In another example from one of our cases, a carrier has a general business practice of capping claim payouts on PIP claims by setting an arbitrary number of treatments for their own policyholders. If the number of treatments exceeds the arbitrary number, the claim is sent to a physician reviewer (most likely in another state) to provide a sham report for the carrier to rely on in underpaying the claim.

These example reflect a common practice; in many instances, the insurance company will attach a boilerplate report from a medical reviewer who lives many states away and who does not know the standards of practice here at home. Another example is when insurance companies hire the same experts here in Arkansas repeatedly because they always issue the same boilerplate reports in favor of the insurance company. You can read more about these so-called "medical reviewers" and their predictable opinions here.

If you've been told by an insurance company your treatment is not medically necessary, you have rights. You can appeal the insurance company's decision, take your case to the Insurance Commissioner for help, or hire an attorney to help you with the process. We provide free consultations and would be happy to see if we can help.