Carol Rosenbloom Associates, LLC | Pittsburgh, Pennsylvania
Disability Insurance Attorney ● Pennsylvania Insurance Bad Faith Act
Disability insurance is meant to protect individuals and their families from the financial consequences of a disabling injury. A person, who is an independent contractor, such as a contract truck driver, may purchase a disability policy along with a medical benefits policy. In a truck driver’s situation these policies can be called “truckers occupational accident insurance.” These types of policies are meant to take the place of workers compensation insurance. Sometimes a person is just concerned about paying the medical bills and is unaware of the disability or wage loss benefits. The insurance company does not always remind the insured about these benefits. You should always request a copy of the policy to determine if you are eligible for disability benefits.
You should request a copy of the policy even if the insurance company is sending you a disability check. The importance of obtaining a copy of the policy is that the amount of your disability checks can be determined using different calculations depending on you length of employment with the company. The insurance company may send you a disability check using a calculation that is not appropriate for your length of employment. After examining the terms of the policy, you may calculate another amount that may be a significantly greater.
Unfortunately, a disability insurer may refuse to pay the proceeds of the policy for any number of reasons in order to avoid paying benefits under the policy. One trial court has ruled that although partial payments are not specifically required by an insurance carrier, the company must accord the interests of its insured the same faithful consideration it gives its own interests. Accordingly, the Court held that the insurance company engaged in bad faith when it failed to make a partial claim in an underinsurance claim. The case is on appeal.
If your insurance carrier's denial is frivolous, unfounded, dishonest, or otherwise in "bad faith," under Pennsylvania law, you may be entitled to compensatory damages, interest, punitive damages, attorney’s fees and court costs.
Does Bad Faith Apply To Disability Insurance Claims?
There are essentially two types of Disability Insurance Policies: the Long Term Disability or Group Policy (LTD) and the Individual Disability Income Policy (DI).
LTD Policies are generally governed by ERISA, or the Employee Retirement Income Security Act of 1974. Recent Federal Court decisions have, for all intents and purposes, determined that there is no State Insurance bad faith cause of action under ERISA.
The U.S. Supreme Court held in Aetna Health v. Davila (2004) that ERISA preempts a state statute cause of action in a non-LTD ERISA case. The 3rd Circuit Court of Appeals held in Barber v. UNUM Life Insurance Company of America (2004) that the Pennsylvania insurance bad faith statute is preempted by ERISA in an LTD case. Therefore, it is likely that the U.S. Supreme Court would hold that ERISA preempts a state statutory bad faith claim in an LTD case when or if presented with these facts. This then leaves no viable punitive remedy to enforce the covenant of "Good Faith and Fair Dealing" in an ERISA LTD case. The Courts have effectively condoned any claims practice in LTD cases.
On the other hand, the Pennsylvania bad faith statute (as well as other States’ similar Statutes) does apply to DI claims. However, an insured needs to understand that insurance bad faith is very hard to prove and is often confused with either claims handling conduct that does not rise to the Bad Faith level of severity, or with an adverse decision, despite your disagreement, with a reasonable basis.
A federal court jury in Nevada returned verdicts in July of 2008 against Paul Revere Life Insurance Company and Unum Provident Corporation (Unum Group). This was a partial retrial of a lawsuit originally tried to verdict in 2004. In the first trial, the jury awarded $1.6 million in compensatory damages and 410 million in punitive damages to G. Clinton Merrick in connection with the insurers’ denial of his disability claim. The insurers appealed and the punitive award was ultimately sent back for a retrial before a new jury. The new jury ordered Paul Revere Life Insurance Company to pay $24 million and Unum Provident Corporation was ordered to pay $36 million. In the case, it was alleged that improper claims handling practices which were initiated at Provident were brought to Paul Revere and influenced its improper claim handling with respect to Mr. Merrick’s claim both before the initial denial and afterward.
If your disability insurance claim has been denied and you believe the denial was made in bad faith claim, contact a Pennsylvania bad faith insurance lawyer at Carol Rosenbloom Associates, LLC, today to schedule a free initial consultation.
At Carol Rosenbloom Associates, LLC, we have a thorough understanding of the laws governing insurance bad faith in Pennsylvania.
Lately, insurers are suing their insureds in declaratory judgment actions to support the insurers’ denial of a first party claim. There are several motives for the popularity of such litigation with insurers. The declaratory judgment action is a technique by which insurers can be aggressive, rather than inactive and wait for insureds to act. Insurers can decide when it wants to bring the lawsuit and in what court, federal or state. Insurers can also decide who to sue. This allows insurers to gain the upper hand and control the litigation. This ability significantly increases its opportunity to win. Traditionally, insureds had fours years to bring a lawsuit to resolve a first party claim and could budget accordingly. However, with the declaratory judgment action, insureds could have to decide within a day after the denial to pay additional money for an attorney or lose the claim. At least one State has prohibited such a practice. Unfortunately, the Pennsylvania courts have not explicitly addressed the question, but we believe that such action should be reviewed for bad faith.
We welcome the chance to work for justice and a vindication of your rights in the face of a dishonest insurer. To learn more about insurance bad faith, contact our Pennsylvania insurance bad faith attorneys today to schedule a free initial consultation.
We offer free initial consultations. The majority of our services are provided on a contingent fee basis. This means you will pay no attorneys' fees unless we are able to achieve a verdict or settlement on your behalf.
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Carol Rosenbloom Associates, LLC
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