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Workers Compensation Insurance Claim Problems

Baseless Insurance Claim Denials

When a person has an insurance company policy, for which they pay a premium dollar amount they expect in return that the policy will cover the insured person for what the policy refers to as being covered. An insurance policy is an agreement or contract for an insurance company to pay for certain losses stated in the policy, if those losses occur. The insurance company is responsible only for paying out on losses that are stated in the policy as well as the conditions of those losses having occurred in a certain manner. This is true in health insurance policies, auto insurance policies, property liability policies, flood or wind insurance policies to name but a few categories.

When the insured person or business makes a claim, the insurance company is required by law to reasonably investigate the validity of the claim before deciding to deny the claim as being invalid. Unfortunately, some insurance companies and their representatives do not reasonably investigate. They simply deny it without any real investigation of it and avoid paying money out.

If the policyholder can prove in court, with evidence, that the insurance carrier did not in “good faith” reasonably investigate the claim before denial of payment on the claim, the insurance company may be held liable not only for the out-of-pocket actual losses caused by the insurance company’s unreasonable denial on the claim, but in many circumstances, an award of punitive damages against the company may be made. This is allowed to deter future similar insurance company misconduct in dealing with claims by policy holders. Cases arising out of these disputes, as to whether payout should have been made or not, are typically referred to as “bad faith insurance refusal cases” or simply “bad faith cases”.

The South Carolina Supreme Court recognized the validity of this type of case in Tadlock Painting Co. vs. Maryland Casualty Co., 322 S.C. 398, 478 S.E.2d 52 (1996), stating in that decision that an insured policyholder is allowed to assert a case or cause of action for breach of the implied covenant of good faith and fair dealing against the insurance company in question. The decision went on to list the specific points that an insured had to prove, with evidence, against an insurance company in order to succeed: (“proof” is usually determined by a jury reviewing evidence presented by both sides)

  1. he existence of a mutually binding contract of insurance between the plaintiff/insured and the defendant/insurance company;
  2.  a refusal by an insurer to pay benefits due under the contract;
  3. resulting from the insurance bad faith or unreasonable action in breach of an implied covenant of good faith and fair dealing in the contract;
  4.  that causes damages(losses) to the insured policyholder as a result of the bad faith denial for coverage under the policy.

This type of case is often complicated and expensive to prove. When successful though, substantial money awards, against the insurance company, are often made to dissuade insurance companies from arbitrarily, without justification, denying pay outs on policies. This type of case provides an appropriate countermeasure against intentional efforts by an insurance carrier to deny or wrongfully reduce the insurance company’s obligations to payout on a legitimate claim.

The circumstances of each dispute must be reviewed carefully. Normally, experts are required to provide testimony about the circumstances of the claim and how it was or was not investigated in good faith, by the insurance company, before denial. More and more frequently, this kind of circumstance arises when dealing with health insurance companies unjustifiably denying any obligation to pay out under their policy, when the circumstances in the policy, in fact, require a payout. From the insurance carrier’s perspective, the company is answering to shareholders about profits and profits are not normally increased by pay outs on claims under their policies. Clearly, there is strong incentive for insurance companies to do their best to deny claims even unjustifiably.

This is not to say that every claim made to an insurance company, by an insured policyholder, should be paid out. Every claim is different. If there is enough proof/evidence that insurance carrier made an unreasonable denial for payout of the claim, the carrier maybe exposed to the very real possibility that a jury will make an award against the insurance company requiring the company to make up the losses suffered by the insured policyholder as well as penalty dollars to dissuade the insurance company from doing the same to other policyholders in the hope that the policyholders will just go away and accept the unjustified denial.

How Does Anybody Pay A Lawyer To Handle These Cases?

These cases are normally accepted on the basis of a contingency fee. The client and the attorney must sign a written agreement as to the terms of the representation including the percentage of the recovery that goes to a fee to page the lawyer. “Contingency” means any fee to the lawyer is only paid if the lawyer succeeds in making a recovery either through settlement or through a court award. As I stated earlier, these cases are often expensive to take through and litigation and it is the rare client the can afford these expenses. For that reason, any lawyer considering taking a case, must look at the circumstances very carefully to analyze the risks involved in making a successful recovery for a dollar amount of potential recovery that the lawyer considers worthwhile to take the risk on accepting the representation and litigation of the case understanding anything could develop including no award or smaller than expected award based on how the case circumstances develop later. Typically though, the client pays nothing to the attorney unless a recovery of money is accomplished by the attorney.

Do You Have A Good Case?

Typically, meeting with a lawyer to review the circumstances is required to even get any kind of feel as to the validity of a case. The initial meeting often requires some follow-up investigation to collect information to further help in determining likely success of proving a particular case. If you think you might have a circumstance involving an insurance company that unfairly denied your claim, the initial consult/office meeting to review the circumstances, is free. Typically, that meeting takes about one hour and you should bring any and everything regarding documents/paperwork you have involving the claim and the denial.

Time Limit Considerations

If you’re considering getting legal help for possible case involving a bad faith insurance claim, you should not delay in doing so. There are legal time limitations the require anyone who has this type of case to file it and serve it on the insurance carrier within three years of the time of the bad faith denial by the insurance company. If the case has not been filed and served within that time limitation, South Carolina law prohibits you from filing any case at all.

It takes time to investigate the validity of these cases, so you should not delay if you are considering pursuing a bad faith claim. Typically, these types of claims are not ones that you can just have a quick meeting with the lawyer and file the case and next day. Usually, it involves several weeks of further investigation and follow-up after the first meeting. If you come in to close to the deadline passing, it may preclude us from even considering the handling of your claim in that we don’t have enough time to investigate it as to its validity before filing a matter with the court system. In other words, if you’re serious about possibly doing something, get an appointment for consult now and don’t delay.