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: Jan 5, 2020

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A federal jury awarded the estate of a South Dakota school teacher $6.2 million, most of which constituted punitive damages, after her insurance company, CUNA Mutual Insurance Society, failed to pay her valid disability benefits.

Bad faith insurance lawsuit

This South Dakota bad faith insurance lawsuit involves a former Spanish teacher who was not willing to back down from her insurance company’s wrongful denials. According to an article in South Dakota’s Rapid City Journal, Teri Powell purchased a disability policy from CUNA Mutual Insurance Society (CUNA) in 2001. In 2002, her doctors advised her to stop working because she had rheumatoid arthritis, osteoarthritis, sacro dysfunction and hypertension. She took a medical retirement, but continued paying on her disability policy without asking for benefits.

She was diagnosed with cancer in 2005 and then contacted CUNA to collect on her policy. The company denied her claim stating that, despite all of her medical conditions (including cancer), she could have still worked during that time. She sued CUNA for bad faith insurance practices. Unfortunately, Teri passed away in 2007 from her cancer, but her case continued. A jury recently awarded her estate $6.2 million – $200,000 in compensatory damages and $6 million in punitive damages. Her bad faith insurance lawyer said CUNA used the same tactics on other policyholders.

Insurance is a contract

When you take out an insurance policy, it is a contract between you and the insurance company. You pay premiums in exchange for the insurance company’s underwriting of a specified risk. In Teri’s case, the risk that CUNA underwrote was that it would pay her benefits if she became disabled. She paid her premiums faithfully, but when it came time for the insurer to live up to its end of the agreement, it breached the contract.

That breach is considered bad faith and policyholders, like Teri, can sue insurance companies when they deny or delay the payment of valid benefits. An experienced bad faith insurance lawyer can explain more and evaluate your situation to determine whether you might have a case.