The horrific experience of La Rosa Carrington recently made national headlines. Ms. Carrington’s health insurance carrier threatened to cut off her health insurance coverage while she was going through chemotherapy for leukemia. The reason was not that Ms. Carrington had not paid her health insurance premiums; she had in fact paid, but her insurance carrier had erroneously determined that her payment was 1 cent short. Fortunately for Ms. Carrington, her insurance carrier ultimately found that she had paid the correct amount and stopped their threats to end her coverage. But what if they hadn’t sufficiently investigated and had actually ended her coverage? What if Ms. Carrington was left to try to find new insurance coverage while seriously ill and receiving expensive treatment? The result could have been a bad faith insurance lawsuit.
What is Bad Faith?
Simply put, an insurance company acts in bad faith when the company acts unfairly towards its policyholder. An insurer cannot unreasonably deny a covered claim, or deny the claim without proper cause. Bad faith exists when the insurance company acts with malice or in a way that exceeds all bounds of decency.
If My Insurance Company Denies My Claim, Have They Acted in Bad Faith?
Not necessarily. An insurance company may have a legitimate reason for denying your claim. For example, an insurance company can deny your claim if you fail to meet your obligations under the policy – for example, if you do not make your premium payments on time, or wait too long to ask for benefits once they are due. It can also lawfully deny a claim for a loss or event not covered under the policy. If your insurance company erroneously denies you benefits that you are entitled to under the policy, that may violate your insurance policy contract, but it does not necessarily reach the level of bad faith
What is The End Difference Between a Mistaken Violation of an Insurance Contract and A Bad Faith Violation?
The main difference is the amount and type of damages that an insurance company will likely have to pay if a jury decides the insurance company acted in bad faith. If an insurance company acts in bad faith, it can be sued for punitive damages, the sole purpose of which is to punish and deter outrageous behavior. Outrageous behavior may exist where an insurance company claims manager or executive acts with malice or reckless disregard for the rights of the insured person.
Consider The California Case of Patsy Bates vs. Health Net, Inc.
In the California case Bates vs. Health Net, Inc. , Health Net, Inc. was ordered to pay more than $9 million to a breast cancer patient, Patsy Bates, whom it dropped while she was in the middle of chemotherapy. Patsy Bates was left with more than $129,000 in medical bills and as a result was forced to stop chemotherapy for several months. Newspaper reports said the private arbitration judge who decided the dispute called Health Net’s actions “egregious” and said that Health Net demonstrated little interest in its insured; had this case gone to trial, it likely would have resulted in a verdict of bad faith. A verdict of bad faith requires a showing that an insurance company did something for which it should be seriously punished.
What Should You Do If Your Insurance Claim Is Denied?
If your claim for benefits under any policy of insurance – health, disability, homeowners, auto, or business – has been wrongfully denied, please contact the experienced attorneys at San Diego Law Firm. We can quickly determine whether your claim is covered under your policy, and evaluate the grounds for the denial. If there is a substantial amount of money at stake, we will make a written demand to the insurance company for payment of your benefits. If that demand is refused, we will take your case to arbitration, mediation, or a trial, and will seek justice and full compensation for you. For more information or an appointment, please call San Diego Law Firm at 619-794-0243. We look forward to helping you.
