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Seatback Failures
Front occupant seatbacks play a vital safety role in rear-end crashes, similar to the purpose of airbags and seatbelts in frontal impacts. In a rear impact, a front seat should be designed to absorb energy and contain the occupant in the front seating space. Weak, defective front seats can fail, collapse and cause front occupants […]
The Insurance Industry Quick-Hit Settlement
If you’ve been in a collision and it was someone else’s fault, odds are very good that you will hear from the at-fault driver’s insurance company as soon as possible. It’s a tactic that is happening more and more in Arizona. This is done for a variety of reasons: (1) the insurance company would like to catch you off guard and when vulnerable following the collision; (2) most people are in shock following a collision and haven’t had time to determine the full extent of their injuries; and (3) the insurance company would like to get to you before you have had a chance to speak with a lawyer.
It’s very common for the insurance company to call you the same day and in some cases shortly after the collision. The adjuster will act friendly and attempt to build trust. Most people involved in a collision are vulnerable and feeling awful, both mentally and physically. It’s comforting to have an insurance company call you so quickly. Some will even say “we are admitting fault for the collision.”
But then, inevitably, you will be asked for a “recorded statement.” The adjuster will tell you that it is standard practice for anyone making a claim even if fault is admitted. Most people involved in a collision think it is an opportunity to tell “my side of the story to help my claim.” It’s NOT. I do NOT allow my clients to give recorded statements. And, I have never seen a recorded statement “help” a claim although I have seen plenty that hurt. If you are asked to give a recorded statement, you should politely decline.
Next, the insurance adjuster is going to request that you sign a medical authorization so that the insurance company can get your doctors paid. Again, this is a tactic. It will be a blanket authorization. It will be unlimited in time and scope. Do you really want to give an authorization to an insurance company so that it can obtain your medical records from any and every medical provider that you have ever seen in your life? I do NOT allow my clients to sign authorizations for the insurance company absent a confidentiality agreement or court order limiting the authorization to those records relevant to the injuries sustained in the collision. Again, if you are asked to sign blanket authorizations, you should politely decline.
This brings up what I consider the insurance company’s most egregious tactic. The insurance company, immediately following a collision, will offer a quick, nominal settlement in return for a signed or verbal release of your claim. Think about it – the insurance company offers you a quick $1,000 to $3,000 simply to walk away before you’ve even seen a doctor or received any treatment. Tempting? It’s very tempting and the insurance company knows that it is taking advantage of someone in a vulnerable position. Someone who has just been in a traumatic event can still be in shock and shouldn’t be making legal decisions like signing away their rights. Remember that most people involved in a collision usually do not realize the full extent of their injuries for days or longer.
Several years ago, before this quick settlement tactic fully developed, State Farm Insurance Company had a document called, “The Do’s And Don’ts Of A Minor Car Accident.” This document stated: “Don’t assume there aren’t injuries . . . Even low-impact collisions can cause injuries, some not appearing until days after the accident.” Of course, this great advice from State Farm disappeared about five years ago for some reason.
I am seeing a lot of this quick-hit settlement practice from most insurance companies here in Arizona. I’ll give you two examples of cases I have dealt with recently. The first case is the typical situation. Young man involved in a rear-end collision on Friday. He clearly had no fault for being rear-ended. He had never been in a collision before and had never made an insurance claim of any kind before. Geico called him soon after the collision. According to him, it was a nice adjuster who truly seemed to be concerned about his well-being. Geico’s adjuster spoke to him in length on the phone. She persuaded him to give a recorded statement. At the time she was speaking to him, he said he was experiencing pain between 6 to 8 on a scale of 1 to 10 with 10 being the most severe pain he had ever felt. He told her that he would follow up with his doctor the following week.
Soon thereafter, Geico’s adjuster ended the recorded statement. However, she did not end the conversation. In fact, this young man did not realize that she had stopped recording the phone call. The Geico adjuster indicated that she had run his expected treatment through her computer and the treatment would cost about $750.00. According the young man, the Geico adjuster then offered the $750.00 as an advance payment towards his future medical bills. The problem is that the Geico adjuster told him that he would need to give his permission for getting paid the “advance.” So, Geico turned the recorder back on and verbally stated a full and final release of ALL claims. The young man who had just been in a collision, knew nothing about insurance claims, and had no idea what was going on, simply affirmed the verbal, recorded release for $750.00.
The next day the young man could barely move because his injuries were so severe. His medical bills were going to be several thousand dollars. When he contacted Geico to pay the additional bills, Geico basically told him “so sad, too bad” because you released everything for $750.00.
Can an oral contract to release be valid? Sure. Is this “release” an adhesion contact? Yes. Is Geico’s conduct in inducing the settlement fraudulent? Probably, but it is difficult to prove because Geico did not record the entire conversation and argues that it honestly handled the young man’s personal injury claim. And, this is now no longer just a personal injury (tort) case. It is a contract case between Geico and the young man. In contact cases, attorneys’ fees can be awarded. Geico litigated a similar case in Texas a couple years ago. Not only did the Texas court uphold the release, it awarded Geico $10,000 for attorneys’ fees. So, there is an obvious risk when contesting these despicable quick-hit settlement releases.
My second case is much more unusual and also has a much happier ending. It involved another collision. Although my client had never been in a collision before and had never made a claim before, he was older and more experienced. The at-fault carrier (Allstate) called him the day of the collision. He refused to give a recorded statement. Allstate did not give up. Allstate eventually offered $1,600 to settle the claim. There was back pain, but it didn’t seem too bad at the time. My client was tempted, but discussed it with his wife. Thankfully, they decided to wait. No settlement check cashed. No release signed.
During the next few days, the back pain grew worse. It became excruciating. His legs started to go numb. His family doctor sent him to get an MRI. The MRI showed a herniation because of the collision. It was severe and required neurosurgery. He suffered permanent disability. Allstate unsuccessfully tried to get a quick-hit settlement for $1,600 on a claim that was eventually valued at over $600,000. Can you imagine how devastating it would have been to his family had he accepted Allstate’s quick-hit settlement offer?
Insurance companies are not on your side. Insurance companies are not good neighbors. Insurance companies don’t really care about you. The opposing insurance adjusters believe it is their job to settle claims as quickly and for as little as possible. No matter how nice or kind they sound, their loyalty is to their insurance employer not the injury victim. There is nothing fair about it. Please, even if you do not hire an attorney, do not give recorded statements to the opposing insurance company and absolutely do not sign personal injury releases without at least being checked by your family doctor. Of course, the best practice is to hire an attorney to look out for your interest and with the goal of protecting your rights.
Arizona Court of Appeals Gives Guidance on Negligent Misrepresentation and Insurance Consumer Fraud
In the case of Larkey v. Health Net Life Insur. Co., (June 2012) the insured, Alan Larkey, had a policy with Blue Cross Blue Shield for personal health insurance. However, Larkey decided that he wanted to switch providers to get a lower deductible without compromising his coverage. Larkey had a family member research health insurance policies; and an insurance agent (“Eddy”) from Health Net told the family member that a Health Net policy would be “just as good” as the Blue Cross Blue Shield policy Larkey owned. Upon hearing this Larkey contracted with Health Net, although he did not receive a copy of the insurance policy at the time of the transaction.
Over 8 years after switching insurers Larkey developed Hepatitis C and needed to undergo liver transplant surgery. However, Larkey was denied pre-certification because his policy specifically excluded this procedure, although his former coverage would have covered it. Larkey then filed a lawsuit alleging negligent misrepresentation and other claims including violation of Arizona’s Consumer Fraud Act against the insurance agent and insurer. The defendants alleged that the statement that their policy was “just as good” as the Blue Cross policy was vague and could not specifically mean that it was the same coverage under both policies. However, the Arizona Court of Appeals ruled that the statement was enough to give an average consumer the expectation that the policy was the same.
The court also went to lengths to explain that the mere fact that a consumer can reveal whether a statement is true or false based on their own investigation is not enough to limit their right to sue a company for misrepresentation and consumer fraud. The term “deceptive” as used in Arizona’s Consumer Fraud Act has been “interpreted to include representations that have a tendency and capacity to convey misleading impressions to consumers even though the interpretation that would not be misleading also are possible.” “The meaning and impression are to be taken from all that is reasonably implied, not just from what is said . . . and in evaluating the representations, the test is whether the least sophisticated reader would be misled.”
The court went on to explain that a claim for negligent misrepresentation may be based on false information given in the form of an opinion. Restatement (Second) of Torts § 552 cmt. b. (“The rule stated in this Section applies not only to information given as to the existence of facts but also to an opinion given upon facts equally well known to both the supplier and the recipient.”). The court held that “under such circumstances, including the fact Eddy was a licensed agent with expertise in recommending health coverage policies, Larkey was entitled to rely on Eddy’s representation the Policy was “just as good as” his Blue Cross policy without conducting his own investigation.” “In the absence of circumstances putting a reasonable person on inquiry, a person is justified in relying on a misrepresentation of a material fact without making further inquiry.” St. Joseph’s Hosp. & Med. Ctr. v. Reserve Life Ins. Co.
This case is helpful for consumers because it shows that insurance agents, who hold themselves out as someone with superior knowledge in the realm of insurance, can be held accountable for failing to investigate and evaluate insurance policies properly. And, insurance companies cannot hide behind vague assurances of coverage then later claim that the language was not certain enough to mislead a consumer. Although keep in mind that insurers are allowed a certain amount of “puffery” so statements like low insurance rates and broad coverage are probably not enough to warrant coverage for specific issues.
Negligence Claims Against Insurance Agents Are Assignable in Arizona
Since 2008 professional negligence claims against insurance agents have been assignable to others in Arizona. In Webb v. Gittlen, 174 P.3d 275 (2008) the Arizona Supreme Court overturned the longstanding principal that professional negligence lawsuits cannot be assigned to others. In the Gittlen case, liquor store owners purchased liability insurance from a Hartford Casualty Insurance Agent, Victoria Gittlen. However, Gittlen failed to inform them that a special liquor liability coverage was necessary to protect against liability for selling alcohol. The business owners found themselves subject to a wrongful death lawsuit after they sold beer to a minor who accidently killed another minor during a car crash while driving intoxicated. Hartford refused to defend the wrongful death lawsuit because the business owners failed to purchase liquor liability coverage.
The business owners then settled with the parents of the deceased minor partly by assigning the rights to the lawsuit against Gittlen to the parents. The insurance agent was able to get the lawsuit dismissed in the trial court, but on appeal the Arizona Supreme Court ruled that there is no fiduciary duty that would prevent an insurance agent’s customer from selling or assigning the rights to their lawsuit to another.
Homeowner’s Insurance Appraisal Process
The term “appraisal” as defined in a homeowner’s insurance policy has an entirely different meaning than the one more commonly used in every day language. Normally when we hear the term appraisal, we think of a real estate appraisal that is used to determine the value of a home. However, in a homeowner’s insurance policy, the appraisal process is more similar to a three-member-panel arbitration proceeding which is used to determine the value of a personal property loss or home repair dispute that results from a covered homeowner’s insurance loss.
Similar to arbitration, the appraisal process is an alternative dispute resolution intended to resolve disputes without the need for litigation. It is supposed to be less expensive to the insured and less time consuming. The majority of homeowner’s insurance policies enable appraisal when the insurance company and policy holder are unable to agree concerning the value of loss to a covered property. Appraisal is not available when there is a coverage dispute. In an appraisal, each party generally names their own appraiser to value the loss and attempt to reach an agreement. If the parties’ appraisers cannot agree on an amount, then it is up to a third appraiser, usually called an umpire, to resolve the dispute. Each party is responsible for the cost of their own appraiser and equally split the cost for the umpire. Attorneys’ fees and costs usually are not recoverable through the appraisal process.
Unfortunately in recent years, insurance companies have been writing complex agreements detailing the scope and procedure for the appraisal. These complex, sophisticated appraisal agreements have led to an increase in disputes between the insurance consumer and their insurance companies. Of course, the insurance consumer has no input whatsoever into the terms contained within these appraisal agreements because the insurance company simply includes the language in the insurance policy. Because insurance contracts are generally considered contracts of adhesion, i.e., the insurer draws up the contract and the insured has little or no ability to make material changes to it, Arizona consumers best defense to unfair, unforeseen terms is Arizona’s “reasonable expectation” doctrine.
Insurance companies are also becoming more aggressive in insisting that the insurance consumer sign an appraisal agreement even though the insurance consumer may not understand that the agreement does not always cover the entire scope of the loss. The insured homeowner needs to make sure the agreement he or she signs completely encompasses the scope of the insurance loss. If it does not, the insurance company will argue that the insurance consumer should not be allowed to assert a claim for those additional damages not included in the agreement.
Legal Remedies for Dealing with Insurance Misrepresentation
Although rare, sometimes insurance agents mislead consumers into thinking that their insurance covers more than it actually does. Insurers do this hoping that the insured will never have to make a claim. However, when the insured tries to make a claim on the insurance that they were fraudulently induced to buy, the insurer will often refuse full payment. If this happens, the insured will have several options which would include filing a complaint with Arizona’s Department of Insurance at http://www.id.state.az.us/forms/cad_complaint_form.pdf.
Arizona law allows an insured to bring a declaratory judgment action in court in order for a declaration as to whether the insurance company was legally bound to provide coverage for the harm the insured experienced. The downside of such actions is that they do not in and of themselves require any party to do anything and requires no compensation for damages; it just affirms what the parties’ true legal rights and obligations are.
The insured can also bring a claim for breach of contract. Winning a judgment based on breach of contract does allow an insured compensation for certain damages limited to the terms of the contract plus attorneys’ fees in the discretion of the court. Another strategy is to file a case based in the tort of insurance bad faith including a cause of action for misrepresentation or an insurance producer malpractice lawsuit which would allow for a much broader recovery of damages including compensation for general (pain, suffering, etc.) damages.
The decision as to whether either breach of contract or tort claims can be filed is complex and depends on the circumstances of each case. These claims may be brought forward for a wide variety of cases including: insurance agent or broker neglect, improper failure to pay claims, failure to settle within policy limits, intentional delay of payment, improper investigation of claims, and refusal to defend lawsuits.
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The Arizona personal injury, accident, and insurance bad faith dispute lawyers at the Law Offices of Shane L. Harward PLC represent insurance, personal injury and accident victims throughout the state of Arizona (AZ) including, but not limited to, Phoenix, Scottsdale, Mesa, Tempe, Chandler, Glendale, Gilbert, Sun West, Sun City, Tucson, Flagstaff, Kingman, Bullhead City, Yuma, Lake Havasu, Fountain Hills, Anthem, Ahwatukee, Carefree, Cave Creek, Gold Canyon, Bisbee, Sierra Vista, Cochise, Paradise Valley, East Valley, Maricopa, Pima, Pinal, Gila, White Mountain, Heber, Payson, Prescott, Forest Lakes, Apache Junction, Avondale, Queen Creek, Benson, Black Canyon City, New River, Buckeye, Casa Grande, Coolidge, Cottonwood, Douglas, Florence, Gila Bend, Goodyear, Greer, Glendale, Lakeside, Guadalupe, Holbrook, Huachuca City, Oro Valley, Overgaard, Avra Valley, Parker, Peoria, Pinetop, Pine, Prescott Valley, Quartzite, Strawberry, Safford, Show Low, Sun City West, Sun Lakes, Superior, Surprise, Snowflake, Tombstone, Wickenburg, Winslow, Wilcox, Williams, Young, Youngtown, and surrounding areas.