Left Out to Dry: When Insurance Companies Protect Themselves More Than Their Clients

In baseball, it’s common knowledge that the “tie goes to the runner” – even if such a rule isn’t codified in the Major League Baseball rulebook. Yet for most non-professional players, it remains more than a rule guiding hitters and fielders.

It’s a phrase that’s become an American idiom for giving certain people or groups of people the benefit of doubt or to err on the side of caution. It’s a sign of fair play, both on and off the field. When all variables are considered equal in a dispute, favor is given to the party making the claim, e.g. the “runner.”

Not surprisingly, it’s also an expression that has become infused in American legal doctrine. In fact, California’s Second District court in 2009 echoed baseball’s unwritten rule stating, “A tie goes to the insured. If you can’t prove what is wrong, [the insurer] pays the claim.” This is especially true when dealing with a particular type of insurance fraud known as “insurance bad faith.”

 
Insurance bad faith is a legal term of art when insurance companies behave improperly such as acting in an unfair or arbitrary manner. Baseless claims denials, unreasonable delays in correspondence, and inaccurate property damage valuations are three of the most common insurance bad faith violations.

While exact figures on insurance bad faith prevalence at the national level are hard to come by, (in part because each state’s laws regarding what constitutes insurance bad faith vary) a 2007 study by the New York Times found that in California, up to one in four long-term care insurance claims were being denied, as policyholders were beset by “unnecessary delays and overwhelming bureaucracies.”

Perhaps no case crystallizes the challenges related to insurance bad faith better than one Viau & Kwasniewski recently litigated. Leaving the names of the claimants and defendants aside, the case centered on the willingness of an insurance company to pay its policyholders following catastrophic flood damage caused by a burst water pipe in their California home. Although the insurance company began a reasonable review process, recognizing extensively photographed damage, that reasonable conduct rapidly eroded as legitimate claims mounted, up to and including the loss of  very valuable family heirlooms, with a loss exceeding $300,000.

In addition to failing to communicate with the claimants in a timely and reasonable fashion, the insurance company accused the policyholders, a young married couple, of fraud. Fortunately, the evidence and case law supporting our clients was robust, and we were able to help them.

So what’s the takeaway? In our view, it’s twofold. First, readers should recognize that insurance bad faith isn’t a black and white violation. The standards of professional mistreatment vary by state. Second, is that just because an insurance company begins a claims investigation in good faith, doesn’t mean it will end that way. That’s why you need expert insurance bad faith lawyers, like Viau & Kwasniewski, to help you get a fair resolution if your case has merit.

Even though California case law supports the notion of the “tie going to the runner,” proving who is right and who is wrong can be exceedingly difficult. Just remember what outfielders think when the umpire shouts his pro-runner call. From the outfielder’s perspective, the ball reached the basemen’s mitt long before the runner’s foot touched the bag.

It’s all about having the proper evidence of your claim and the right legal team to make that strong case.       

Are you in the middle of an insurance bad faith claim or do you suspect your insurance provider is violating the law? Let me know your thoughts in the space below, email the lawyers at Viau & Kwasniewski; Gary Kwasniewski at gkk@vklawyers.com or Jeanette Viau at jlv@vklawyers.com, or call us at (800) 663-1095.