Dr. William E. Smith Jr., a surgeon, filed a complaint in March, 2017 in the U.S. District Court for the Northern District of Florida. He alleges that he became disabled in December 2014 and applied for disability benefits. His application was denied in August 2015.Smith claims that Guardian Life Insurance Co. of America’s denial was not based on a deliberate, principled reasoning process. This kind of case is also known as a “bad faith denial” claim.
Long delay, which may be an insurer’s goal in bad faith denial situations, can push financially strained plaintiffs into a quick settlement or buyout agreement. It is a tactic that saves unscrupulous insurers lots of money, especially when compared to the uncertain cost of years of long term disability payments.
Typically, the misbehavior alleged in denied disability lawsuits includes:
• Unreasonable delay in processing a claim;
• Denial of benefits unsupported by facts or law;
• Misrepresentation of policy benefits;
• Excessive, unnecessary, or duplicative information requests;
• Failure to complete prompt, fair and equitable settlements of claims once liability has become clear;
• Benefits promised in promotional literature that are not paid when owed;
• Alteration of applications without knowledge of the insured, followed by an attempt to settle claims based on altered applications;
• Failure to pay benefits under a section of a policy, in order to affect settlements based on other sections of that policy;
• Abusive and coercive tactics to settle a claim;
• Advising claimants not to obtain the services of an attorney; or
• Misleading a claimant as to applicable statutes of limitations.
Various states have recognized the plight of the underfunded plaintiff in litigation against insurers.
In Florida, for example, regardless of whether the insurer acted in good faith in denying coverage, the company will be liable for attorney’s fees and court costs where the claimant proves a wrongful denial.
Whether this will affect the mediation in the Smith denied disability lawsuit remains to be seen. For future plaintiffs, the best tool is a watchful attitude, alert to a pattern of behavior which may indicate bad faith.