A Tale of Two Bad Faith Insurance Lawsuits

Philadelphia, PAIn somewhat of a ‘David and Goliath’ tale, two bad faith insurance lawsuits aptly demonstrate the mindset and motivations of insurance companies, regardless of whether they are dealing with individuals, corporations, or state governance.

The individual here is Martha Holland, who has a bone to pick with Unum Life Insurance Company of America (Unum). Her lawsuit against the insurer was filed earlier this month in Pennsylvania.

According to a summary of the Long term denied disability lawsuit published in the Pennsylvania Record (09/13/16), Holland alleges that she became disabled in January, 2015 and applied for long term disability benefits from her insurer, Unum. Her benefits were denied. While the publication did not identify the way in which the plaintiff became disabled, it remains a common occurrence for insurance companies to assume an improper, unfair or fraudulent claim and deny benefits – regardless of the payment history of the insured, most of whom undertake their premiums with due diligence and file claims that are wholly legitimate.

Holland filed her Long term disability fraud insurance lawsuit against Unum September 9 (Case No. 2:16-cv-04863-WB, US District Court, Eastern District of Pennsylvania).

Meanwhile, on the larger side of the ledger the Attorney General’s Office for the State of Nevada is taking The Insurance Company of the State of Pennsylvania – a subsidiary of AIG – to task for putting its interests above those of the state, or so it is alleged.

“People know that some insurance companies do everything they can to avoid paying valid claims. Even so, I find it incredible that a company owned by AIG – a recipient of billions of dollars in taxpayer bailout funds – would attempt to side-step its obligations to the State,” said Nevada Attorney General Adam Paul Laxalt, in a statement (07/06/16). “After years of receiving millions of dollars in policy premiums, AIG refuses to uphold its end of the bargain.

“Today, my Office brings this bad faith lawsuit not only on behalf of the State of Nevada, but also for every Nevadan who has ever been stiffed by an insurance company.” According to the lawsuit, the State of Nevada carried insurance with the AIG subsidiary for a period of 13 years, paying a total of $5.4 million in premiums over that time without ever submitting a claim until only recently. The matter related to a lawsuit that the State of Nevada determined would be less expensive to settle, than to defend.

The state, in turn, submitted a claim to The Insurance Company of the State of Pennsylvania based on coverage the State of Nevada claims is reflected in the contract language associated with the policy.

The Insurance Company of the State of Pennsylvania, it is alleged, denied the claim. The State subsequently launched a bad faith insurance lawsuit alleging, in part, that the defendant admitted the potential existence of coverage, only to subsequently deny the existence of coverage through one-sided and incorrect interpretations of policy exceptions, or so it is alleged.

The bad faith insurance lawsuit is State of Nevada v. The Insurance Company of the State of Pennsylvania, Case No. A-16-739570-C, filed July 6, 2016 at US District Court, Clark County, Nevada.