Bad Faith Disability Insurance Practices: When to Contact the Commissioner

UPDATED: Jul 12, 2023Fact Checked

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Jeffrey Johnson

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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Mary Martin

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UPDATED: Jul 12, 2023

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UPDATED: Jul 12, 2023Fact Checked

When your disability insurance company has denied your valid benefits or delayed your claim for an unreasonable amount of time, it’s important to contact your state’s Insurance Commissioner so they can investigate.

What the Commissioner can do

Every state has an Insurance Commissioner whose job it is to oversee his or her state’s insurance department. But, what can the Commissioner really do? A lot, according to Bob Scott, a California attorney and partner with the Advocate Law Group. In a recent interview, he told us that the California State Insurance Commissioner’s Office, now headed by Steve Poizner, has done much to combat the sometimes unethical tactics of disability insurers – such as impose fines. He explained:

The Commissioner fined companies $8 million a couple of years ago. A couple of those cases that they used in findings were my cases. He used those and others from other plaintiff lawyers like me that specialize in this field in California. He used all those cases against them, and I will say that the one attorney standing next to the Insurance Commissioner when he announced his find to the press was me.

Filing a complaint with the Commissioner is very important because it lets the Commissioner, and the world, know how many complaints there are against a company. Those are all public record; consumers can go on any Insurance Commissioner’s site and find the number of complaints that have come in on any individual company, and that’s very important for them to look at. They ought to be looking at that before they buy the insurance, but insurance agencies of course don’t tell them that.

Can filing a claim have repercussions?

We asked Scott whether claimants need to be worried about repercussions from their insurance company if they file a complaint with the Commissioner. He emphatically told us, “Absolutely not. That would be the worst action an insurance company could take. Frankly, carriers simply apply the next step of their strategy when a complaint is filed. They’ll respond and say, ‘Oh no, we’ve done the right thing,’ even though it’s not true. So, you’re forced to get a lawyer to litigate this issue to get your insurance benefits. There’s no other choice.

“It is important for individual insureds to make sure that they understand that when they get that second letter from their insurer saying that it’s done its job that it’s just a form letter. So don’t feel as though the matter is resolved. What they’re trying to do is wear out these claimants who are already sick and disabled from going forward to taking the next step after they’re denied, which is to try to find a lawyer and have that lawyer engage with the company to get their benefits. In many cases, people walk away from a lifetime worth of benefits. Unfortunately, the insurance company wins when they shouldn’t and the people don’t get the benefits for which they’ve paid. That’s crazy!”

Do these tactics apply across the board?

We wondered whether these tactics were primarily limited to one or two insurers or to the disability insurance industry as a whole. Scott summed it up very simply by saying, “Well, let me put it this way: I have yet to find a carrier that applies the standard correctly.”

If your disability insurance company has denied your valid benefits, contact an attorney whose practice focuses in disability law to discuss your situation. To speak with a qualified attorney, please click here. Consultations are free, without obligation and are strictly confidential.

Case Studies: Bad Faith Disability Insurance Practices

Case Study 1: The Smith Family vs. SecureLife Insurance

In this case study, the Smith family had a disability insurance policy with SecureLife Insurance. When Mr. Smith suffered a severe injury that left him unable to work, he filed a claim for disability benefits. However, SecureLife Insurance denied the claim, stating that the injury did not meet their criteria for disability coverage.

Despite medical evidence supporting Mr. Smith’s inability to work, the insurance company refused to reconsider their decision. Frustrated by this bad faith denial, the Smith family contacted the Insurance Commissioner to file a complaint and seek redress.

Case Study 2: Sarah Johnson vs. Reliable Insurers

Sarah Johnson had been paying premiums for disability insurance coverage provided by Reliable Insurers for several years. When she was diagnosed with a chronic illness that rendered her unable to work, she filed a claim for disability benefits.

However, Reliable Insurers continuously delayed processing her claim, requesting additional documentation and subjecting her to numerous medical examinations. Sarah faced financial hardship due to the delays and the insurance company’s tactics to discourage her from pursuing her rightful benefits.

Determined to fight back, Sarah lodged a complaint with the Insurance Commissioner to expose Reliable Insurers’ bad faith practices.

Case Study 3: John Anderson vs. Trustworthy Assurance

John Anderson had been a loyal customer of Trustworthy Assurance for over a decade, paying his disability insurance premiums diligently. When he suffered a debilitating accident that left him permanently disabled, he expected Trustworthy Assurance to honor his policy and provide the necessary benefits.

However, the insurance company deliberately misinterpreted the policy terms, arguing that John’s disability did not meet their definition of “total disability.” Despite overwhelming evidence of his inability to perform any occupation, Trustworthy Assurance refused to acknowledge his claim.

Frustrated and seeking justice, John reported the bad faith actions of Trustworthy Assurance to the Insurance Commissioner.

 

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Jeffrey Johnson

Insurance Lawyer

Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

Insurance Lawyer

Mary Martin

Published Legal Expert

Mary Martin has been a legal writer and editor for over 20 years, responsible for ensuring that content is straightforward, correct, and helpful for the consumer. In addition, she worked on writing monthly newsletter columns for media, lawyers, and consumers. Ms. Martin also has experience with internal staff and HR operations. Mary was employed for almost 30 years by the nationwide legal publi...

Published Legal Expert

Editorial Guidelines: We are a free online resource for anyone interested in learning more about legal topics and insurance. Our goal is to be an objective, third-party resource for everything legal and insurance related. We update our site regularly, and all content is reviewed by experts.

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