CUNA Mutual Liable For $6.2M In Bad Faith Insurance Case; Fraudulent Practices Uncovered

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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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UPDATED: Dec 16, 2019

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A South Dakota jury found Wisconsin based CUNA Mutual Insurance Society liable for $6.2 million in a bad faith disability insurance lawsuit. The trial exposed a long history of fraudulent claims practices against the cooperative and credit union provider of financial services – and now the insurer is doing anything it can to avoid further lawsuits.

Taking bad faith to a whole new level

This bad faith insurance lawsuit involves conduct which most people would say takes bad faith to a whole new level. According to news reports, Teri Powell was a high school teacher in Rapid City, South Dakota for over 25 years. She became very ill in 2002, developing rheumatoid arthritis, osteoarthritis, progressive joint disease, spinal scoliosis and other ailments, and was forced to retire from teaching.

Although she had disability insurance with CUNA Mutual Insurance Society, she tried to support herself by pet sitting and doing other odd jobs which didn’t interfere with her disability as much. She found out that she had cancer in 2005 and finally filed a claim with CUNA. However, CUNA denied her claim by saying that it needed to investigate whether she was disabled – and then did nothing. Even though Powell continually followed up, CUNA continually ignored her requests up until the day she died in 2006.

$6.2 million verdict

Powell’s estate sued CUNA for bad faith and a jury recently awarded it $6.2 million in damages, some of that constituting punitive damages against the insurer. At the trial, her bad faith insurance attorney discovered that CUNA was treating other policyholders the same way and exposed a long history of fraudulent claims practices.

Unfortunately, Powell’s estate may not get that money right away. CUNA is appealing the verdict because it feels that the judge erred by letting the jury see evidence that 1) the company allegedly denied thousands of claims, 2) the company created spreadsheets tracking the amount of money involved in each denial and 3) court documents in which CUNA initially claimed the spreadsheets didn’t exist. In the meantime, legal experts say that the company is doing anything it can to settle claims and avoid further lawsuits.

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