Practice Areas

Insurance Company Bad Faith & Violations of Insurance Consumer Fraud / Unfair Practices Statutes

Warning: Case decisions are often subject to further review by other courts and thus may be affirmed, overturned, or modified in later proceedings; therefore the reader should exercise caution in the reading and interpretation of these cases as the current status of case law and/or statutory law may have changed by the time you read this. Please consult with a licensed attorney in the proper jurisdiction before you take any action based on what you read on this or any other website.

Representative Cases

Jennifer Ritthaler v. I D S Property Casualty Insurance Company

Maricopa County Superior Court, CV2007-007472

United States District Court, CV07-01233-PHX-DGC

Brief Background of Claim:

IDS Property Casualty Insurance Company, Amex Assurance Company, and Ameriprise Auto & Home Insurance Company are subsidiaries of Ameriprise Financial, Inc. For at least eighteen months (June 2006), IDS Property Casualty Insurance Company, Amex Assurance Company, and Ameriprise Auto & Home Insurance Company have been selling automobile insurance, including Medpay (medical payment) benefits coverage, through an arrangement with Costco. These insurance companies recently extended this contract with Costco in the latter part of 2007.

As of June of 2006, advertisements, including mailings, directed at Costco members inform them that Costco members can "save up to 20%" on their auto insurance premiums" and/or that "Costco members report saving up to $400 on their auto insurance when they switch." Such ads direct Costco members (and others) to a toll free 1-888 number or to Costco's website.

During the sell of automobile insurance these insurers ask for a copy of the potential policyholder's declaration page, they then represent that the potential policyholder could save on their insurance premiums without cutting their coverage with their current automobile insurance carrier.

Problem is that they are selling a type of "killer bee" insurance with respect to the medical payment insurance benefits. These insurance companies represent that the potential policyholder will have medical payment benefits if they switch. However, when an insured actually makes an insurance claim which includes medical payment benefits, these insurance companies argue that the medical payment insurance benefits are only "excess" benefits.

The insurers make the following representation regarding medical payment benefits to all potential insurance buyers, "this covers reasonable expenses for your medical and funeral expenses because of injuries caused in an auto accident." As of June 2006, these insurance companies do not provide an option for a potential insurance policyholder to choose medical payment benefits which are "excess" only, at a reduced cost, as opposed to primary coverage. These insurance companies do not allow an insured who has insurance to skip this coverage for a reduced premium. In fact, in Arizona, as of June 2006, these insurance companies make this "killer bee" insurance mandatory. It is automatically included in all Arizona policies as of June 2006. It is listed as "included" in the premium for liability coverage, BUT THERE IS A CHARGE FOR IT (these insurance companies just don't disclose it to the potential insurance policyholders).

After a policyholder makes a claim for medical payment benefits, these insurers, for the first time, disclose their position that policyholders only have medical payment benefits as "excess." This argument is made despite the fact that the declaration page clearly shows that the policy benefits are not excess (sometime in 2007, IDS Property Casualty Insurance Company, Amex Assurance Company, and Ameriprise Auto & Home Insurance Company changed their declaration pages to show "excess" coverage only after Ms. Ritthaler had filed her lawsuit alleging insurance bad faith and violations of Arizona's consumer fraud and insurance unfair practices and deceptions statutes.) It is IDS Property Casualty Insurance Company's, Amex Assurance Company's, and Ameriprise Auto & Home Insurance Company's position that every single policy sold in Arizona is only "excess" medical payment benefits. When a policyholder makes a claim for these needed insurance benefits, these insurance companies send out a letter to insureds threatening that these insurance companies will not issue any medical payment insurance benefits unless the policyholder signs an affidavit "to confirm that [policyholder] understand[s] that the Medical Payment Coverage afforded [policyholder] under the automobile insurance provided by AMEX Assurance Company [or IDS Property Casualty Insurance Company depending upon which subsidiary underwrites the policy] is excess over: 1. Premises insurance affording benefits for medical expenses; 2. Individual, blanket, or group accident, disability or hospitalization insurance; 3. Medical, surgical, hospital or funeral services benefit or reimbursement plan; or 4. Other available valid and collectible automobile medical payments insurance. As of June 2006, none of this language is disclosed during the sell of the product and none of the language is contained in the actual insurance policy. As of June 2006, the actual policy has an ambiguous one line sentence in the Other Insurance \ portion of the policy.

The insurers will refuse to consider a policyholder's medical payment benefits claim until the policyholder submits all their medical expenses, including those out of network, to their health insurance carrier. This obviously creates a problem with treating providers who had agreed to treat on a lien and opens up a can of worms with respect to ERISA subrogation / reimbursement health insurance claims.

In addition to this mess, these insurers use a computer program called Mitchell Medical Decision Point "to assist adjusters process and adjust claims." This is another long story regarding unfair insurance practices and insurance bad faith.

Ms. Ritthaler filed a complaint against Defendant IDS Property Casualty Insurance Company in Arizona state court. Ms. Ritthaler's complaint alleged insurance bad faith and violations of Arizona's consumer fraud and unfair insurance statutes for the conduct described above. Because IDS Property Casualty Insurance Company's counsel filed a legally improper notice of removal to the United States District Court, the matter briefly spent time in the United States District Court for the District of Arizona prior to being remanded with costs and fees being assessed against IDS Property Casualty Insurance Company. The matter eventually settled.

Carmen and Jesus Araceli Rodriguez v. The Progressive Corporation and Progressive Classic Insurance Company

Maricopa County Superior Court, CV2008-050412

United States District Court, CIV 08-494-PHX-ROS

Allegations contained in the Complaint:

That Plaintiffs are, and at all times relevant hereto were, residents of Maricopa County, State of Arizona.

Defendant The Progressive Corporation ("Defendant Progressive") is the management company for Defendant Progressive Classic Insurance Company ("Defendant Progressive Classic).

Defendant Progressive is a holding company that has insurance and non-insurance subsidiaries.

Defendant Progressive does not have any revenue producing operations of its own.

Defendant Progressive creates and dictates the national claim policies, processes and practices utilized by Defendant Progressive Classic on the policies sold by Defendant Progressive Classic.

Progressive Agency Holdings, Inc., a subsidiary of Defendant Progressive, owns all outstanding capital stock in Defendant Progressive Classic.

Defendant Progressive Classic shares common officers with Progressive Casualty, Gregory Trapp (Chairman of Progressive Classic and Progressive Casualty, and President of Progressive Classic), Terence W. Fibbi (Treasurer of Progressive Classic and Progressive Casualty), and Dane E. Shrallow (Secretary of Progressive Classic and Progressive Casualty).

Defendant Progressive Classic and Progressive Casualty share common directors.

Management of Progressive Casualty is headed by Peter B. Lewis and Glen M. Renwick.

Peter B. Lewis is the Chairman of the Board of Defendant Progressive and Glen M. Renwick is its President and CEO.

Defendant Progressive's annual reports set out retirement plans to which the company contributes post-employment benefits, and describes its incentive compensation plans for its "employees" including "a cash gainsharing program" for certain employees.

The Gainsharing program is a nationwide program administered by the Executive Committee of the Board of Directors of Defendant Progressive.

The Gainsharing program is based, at least in part, on Defendants' profits and growth.

Defendant Progressive Classic is, in effect, a sales agent for Defendant Progressive.

Defendant Progressive Classic sells insurance under the name and logo of "PROGRESSIVE."

Defendant Progressive and Defendant Progressive Classic share the same principal office and principal phone numbers.

All premiums written by Defendant Progressive Classic are assigned to a holding company, Progressive Agency Holdings, Inc., a subsidiary of Defendant Progressive.

Defendant Progressive Classic is an insurer authorized to transact insurance business and transacting business within the State of Arizona. Defendant Progressive Classic is a subsidiary of Defendant Progressive.

* * *

The Defendants issued to Plaintiffs' household a certain type and style of insurance policy known as a Progressive Direct plan form 9608 AZ (02/02), and more particularly identified as Policy Number 70752948-1 and Claim Number 055854203.

That, among other things, the aforesaid policy provided for certain protections and benefits in the event Plaintiffs suffered injury due to the fault of an underinsured driver in an automobile collision.

That on May 14, 2005, Plaintiffs were injured in a serious automobile collision and required medical treatment. Nicolette Lavalette was the driver who caused the collision. Ms. Lavalette was insured through State Farm and had bodily injury limits of $25,000.00.

Plaintiffs promptly notified Defendants of the collision and the fact that they would be entitled to benefits under their insurance policy.

On July 14, 2005, Plaintiffs provided copies of their medical expenses for the emergency room hospitalization ($25,976.00 for Plaintiff Araceli Rodriguez and $33,730.40 for Plaintiff Carmen Rodriguez) to Defendants and made a claim for the medical payment benefits to which they were entitled.

On July 15, 2005, Defendants confirmed with State Farm that the liability limits for Ms. Lavalette were $25k/$50k.

On July 20, 2005, Defendants transferred the handling of the claim to Defendants' claims representative David Maxwell.

On August 11, 2005, Plaintiffs informed Defendants that their claims would require underinsured motorist benefits. Defendants requested that Plaintiffs provide them what records Plaintiffs had received thus far. Plaintiffs provided these records to Defendants on August 29, 2005.

On or about September 21, 2005, Defendants indicated a refusal to begin evaluation of the underinsured motorist claim until Plaintiffs had provided proof to Defendants that State Farm's policy limits were only $25k/$50k.

On November 16, 2005, Plaintiff Carmen Rodriguez provided Defendants additional medical and billing records which she had received for treatment due to the collision of May 14, 2005. Plaintiff Carmen Rodriguez's medical expenses to date were in excess of $38,876.67.

On November 16, 2005, Plaintiff Araceli Rodriguez provided Defendants medical and billing records for treatment, which she had received to date, due to the collision of May 14, 2005. Plaintiff Araceli Rodriguez's medical expenses to date were in excess of $29,770.46. Plaintiff Araceli Rodriguez also presented lost wages of $988.80 at this time.

On November 17, 2005, Plaintiff Araceli Rodriguez provided Defendants medical and billing records for treatment with Physicians Physical Therapy due to the collision of May 14, 2005. Plaintiff Araceli Rodriguez's medical expenses to date were in excess of $31,315.46.

On December 16, 2005, Defendants' agent/employee David Maxwell represented during a phone call that he needed further information to evaluate the claims. Mr. Maxwell refused to tell Plaintiffs' counsel what specific information was needed, but assured Plaintiffs' counsel that Defendants would put this in writing.

On December 30, 2005, Plaintiffs' counsel left a voice mail message for David Maxwell regarding Defendants' promise of December 16, 2005, to specifically identify what information was needed. Mr. Maxwell did not return the phone call.

On January 4, 2006, David Maxwell called Plaintiffs' counsel regarding another claim unrelated to this lawsuit. Plaintiffs' counsel inquired as to Defendants' promise of December 16, 2005. Mr. Maxwell promised that Defendants would send a letter tomorrow, January 5, 2006, explaining what additional information was needed to evaluate these claims. Defendants did not send the letter.

On January 17, 2006, Plaintiffs' counsel left another voice mail message for David Maxwell asking for Defendants' letter outlining what additional information was needed to evaluate the claims. Mr. Maxwell did not return the phone call.

On January 19, 2006, Plaintiffs again requested that Defendants explain what information, if any, is necessary for the evaluation of Plaintiffs' UIM claims. Plaintiffs also requested a copy of their insurance policy with Progressive.

On January 24, 2006, David Maxwell represented that he was forwarding Plaintiffs' claims file to his supervisor for review. Defendants did not indicate that any additional information was required to evaluate Plaintiffs' UIM claims.

On February 8, 2006, Defendants presented an offer of $500.00 in UIM benefits for settlement of Plaintiff Araceli Rodriguez's claim. Later during the same phone call, Defendants indicated a final offer of $1,500.00 in UIM benefits for settlement of Plaintiff Araceli Rodriguez's claim. Defendants did not indicate that any additional information was required to evaluate the claim.

On February 8, 2006, Defendants presented a final offer of $4,766.00 in UIM benefits for settlement of Plaintiff Carmen Rodriguez's claim. Defendants did not indicate that any additional information was required to evaluate the claim.

On February 8, 2006, Defendants' represented that they conducted a medical review of its insureds' medical records and bills with respect to these claims. Defendants also told Plaintiffs that if they disagreed with the evaluation and these "final offers," Plaintiffs should arbitrate the claims.

On February 8, 2006, Plaintiffs requested an explanation as to how Defendants evaluated these claims. Plaintiffs requested a copy of the medical review. Plaintiffs inquired as to whether or not Defendants used some type of claim valuation software program to place a value for these claims. Plaintiffs asked if Defendants needed any additional information to evaluate these claims.

On June 7, 2006, Plaintiffs made a second request for the information outlined in paragraph 44 above.

On June 26, 2006, for the first time, Defendants explained the "basis for [Defendants'] evaluation of Ms. [Araceli] Rodriguez's Underinsured Motorist Claim." Defendants did not explain the basis for the evaluation of Plaintiff Carmen Rodriguez's Underinsured Motorist Claim. Defendants did not provide a copy of the medical review or respond as to whether or not a software valuation program was utilized. Defendants did not indicate that any additional information was required to evaluate either of these claims.

On February 24, 2007, Plaintiffs confirmed Defendants' final offers and demanded arbitration for these claims.

On March 7, 2007, Defendants informed Plaintiffs that their claims had been transferred to Defendants' Senior Claims Specialist Kellie Chov.

On March 13, 2007, Plaintiffs confirmed Defendants' final offers and again demanded arbitration for these claims.

On March 23, 2007, Defendants' in-house counsel Shelley Pysell acknowledged Plaintiffs demand for arbitration. Defendants requested, for the first time, that Plaintiffs be subjected to an Examination Under Oath.

On April 2, 2007, Defendants served Uniform Interrogatories; Non-Uniform Interrogatories; Request for Production of Documents; and a Notice of Examination Under Oath, on Plaintiffs. Defendants noticed Plaintiffs for Examinations Under Oath on July 17, 2007.

On May 16, 2007, Plaintiffs presented Defendants with a disclosure statement plus Plaintiffs' discovery responses.

On July 12, 2007, Defendants filed a Rule 35 request compelling Plaintiffs to be examined by Dr. John K. Bradway on October 9, 2007.

On July 12, 2007, Defendants filed a Rule 35 request compelling Plaintiff Araceli Rodriguez to submit to a psychological examination with Robin Ford, Ed.D. Because Plaintiff Araceli Rodriguez was not currently suffering from any psychological difficulties with respect to the collision, and Plaintiff was not making a claim for future psychological or emotional injuries, Defendants cancelled the psychological examination.

On August 1, 2007, Defendants offered $5,000.00 in underinsured motorist benefits to Plaintiff Araceli Rodriguez. Defendants refused to explain the basis for the change in position from the offers presented on February 8, 2006.

On August 1, 2007, Defendants' agent/employee Kellie Chov stated that she understood why Plaintiffs felt forced to demand arbitration based upon Maxwell's offer. Ms. Chov also indicated that Maxwell had lost some previously provided records for Plaintiff Carmen Rodriguez and requested an additional copy. Ms. Chov indicated that these allegedly missing records did not affect the evaluation of these claims.

On August 1, 2007, Plaintiff Araceli Rodriguez requested the basis for Defendants' re-evaluation of her claim from the $1,500.00 offer to the $5,000.00 offer of payment of underinsured motorist benefits.

On August 6, 2007, Defendants subjected Plaintiffs to an Examination Under Oath.

On August 6, 2007, Plaintiff Araceli Rodriguez again requested the basis for Defendants' re-evaluation of her claim.

On August 22, 2007, Defendants denied that Plaintiff Carmen Rodriguez had suffered any injury because of the May 14, 2005 collision. Defendants denied that Plaintiff Carmen Rodriguez experienced medical expenses because of the collision. Defendants denied that Plaintiff Jesus Araceli Rodriguez suffered any injury because of the May 14, 2005 collision. Defendants denied that Plaintiff Jesus Araceli Rodriguez had experienced medical expenses as a result of the collision.

On September 21, 2007, Defendants offered $25,000.00 in underinsured motorist benefits to Plaintiff Araceli Rodriguez and $50,000.00, policy limits, in underinsured motorist benefits to Plaintiff Carmen Rodriguez. Plaintiffs accepted the offers.

On September 25, 2007, Defendants requested that Plaintiffs sign releases which stated that Plaintiffs "do hereby release, acquit, and forever discharge Progressive Classic Insurance Company, their agents, servants, employees, personal representatives, successors, heirs, assigns, insurers, and any other persons, firms, corporations, or entities (the 'Releasing Parties') from any and all claims, demands, actions, causes of action, damages, costs, expenses, losses and damages, including property damage, whatsoever, BOTH KNOWN AND UNKNOWN, FORESEEN AND UNFORESEEN, AND THE CONSEQUENCES THEREOF, WHETHER DEVELOPED OR UNDEVELOPED, sustained, claimed to have been sustained or claimed to have been sustained by the Releasing Parties..." Defendants' releases also included an indemnification clause. Defendants' releases also attempted to expressly deny all liability.

On October 4, 2007, Plaintiffs requested an explanation as to why Defendants did not limit the release to UIM benefits only. Plaintiffs also asked for an explanation as to why Defendants were attempting to force Plaintiff Carmen Rodriguez to sign a release when she had recovered policy limits. Plaintiffs requested an explanation from Defendants as to why Defendants sought to obtain a release from Gilberto, Plaintiff Carmen Rodriguez's husband. Plaintiffs asked for an explanation as to why Defendants included an indemnification clause which was never discussed as part of the resolution of the Underinsured Motorist Claims and not a requirement in order for Defendants' insureds to recover the UIM benefits due them.72. Defendants have in place arbitrary goals for the reduction of claims paid.

* * *

Defendants have policies in place to encourage "loss payment reduction."

Defendants' claims departments have a goal of making and/or increasing profits for Defendants.

Defendants have internal incentives and measures driving claims decisions.

Defendants have nationwide bonus/reward programs known as the "Gain Sharing Program," "Casualty Cup," "Inventory Reduction Sales," and "Prog Buck Program."

Defendants' bonus programs, including the Gain Sharing Program, are tied, at least in part, to Defendants' employees' performance reviews.

Defendants' employees' performance reviews are based in part on Defendants' business units' results.

Defendants' employees' performance reviews are based in part on median bodily injury benefit payments towards claims.

Defendants' Gain Sharing Program is based upon business performance measures including profitability related to loss payouts.

Defendants do not disclose the Gain Sharing Program to potential policyholders.

Defendants have "institutionalize[d] the 'lowest ultimate cost' approach to file handling."

Defendants' performance evaluations for claims personnel are based, in part, on claims payments.

Defendants require employees to sign an oath pledging to "avoid being in a position where your financial or other interest conflict with those of Progressive."

Defendants' claims files are audited to come up with a quality/accuracy rating.

Defendants train their claims representatives to "continue to work on your negotiations techniques [and to] r]efrain from creating the posture that there may be room for additional movement."

Defendants compile and publish bad faith standard operating procedures incorporating the lessons learned from past claims experiences.

Defendants maintain diaries, including "2729's" on all bad faith cases.

Defendants' claims representatives are told to use the concept of "lowest ultimate cost" (LUC) in making claims decisions.

Carmen and Araceli Rodriguez filed the above complaint against Defendant The Progressive Corporation and Progressive Classic Insurance Company in Arizona state court. Shortly after being removed to federal court by Progressive Insurance Company's counsel, this matter reached a confidential settlement.

Glass v. Progressive Insurance Company

On October 1, 2007, Mrs. Glass's high-end vehicle was stolen from her home. Mrs. Glass immediately contacted the police department and notified her insurance company, Progressive Insurance Company, about the theft. Progressive Insurance accepted the claim and requested pay off figures from Mrs. Glass's Credit Union three days following the theft. Then, without any explanation whatsoever to Mrs. Glass, Progressive Insurance Company turned Mrs. Glass's claim over to their special investigation unit and forwarded Mrs. Glass a Reservation of Rights letter. The letter provided no explanation other than that Progressive was investigating the incident.

Progressive Insurance Company did not respond to Mrs. Glass's requests to Progressive Insurance Company for an explanation as to why the claim had been transferred to the special investigation unit. Mrs. Glass inquiry as to whether or not Progressive had simply turned this claim over to the special investigations unit to delay payment of this high-end loss also did not receive a response. Likewise, Progressive Insurance Company did not respond to Mrs. Glass's request for prompt payment of the claim.

Progressive's special investigator, Ted Cimino, contacted Mrs. Glass's neighbors and showed up at Mrs. Glass's home unannounced. Mr. Cimino described this behavior as "typical special investigations unit cold call tactics." Progressive's investigator even went so far as to attempt to question Mrs. Glass's business partner at his home. Again, Mr. Cimino showed up unannounced. Progressive required Mrs. Glass to turn over private phone and financial records, including cell phone records, bank records, and income tax returns. Progressive subjected Mrs. Glass to an examination under oath. This is a process in which Progressive Insurance Company's attorney questions the insured in front of a court reporter and in the presence of the special investigation unit investigator. Progressive refused to allow Mrs. Glass to have anyone, other than her attorney, present. Progressive also refused to allow the examination under oath to be video recorded. These tactics, and more, were extremely upsetting, embarassing and humiliating for Mrs. Glass. Mrs. Glass felt compelled to obtain the assistance of an attorney because her insurance carrier, Progressive Insurance Company, was not treating her fairly and indeed was treating her as a criminal.

On May 15, 2008, this matter resolved for $120,261.29 without the necessity of filing a lawsuit.

Laux and Brown v. Nationwide Insurance Company of America / Allied Insurance Company

At the beginning of a long awaited family trip to Idaho in September of 2006, Ms. Laux and her mother, Ms. Brown, were the victims of a high-speed, hit-and-run collision. Thus, the reason Ms. Laux and Ms. Brown were forced to file an uninsured motorist claim with their insurance company, Nationwide Insurance Company of America / Allied Insurance Company. Despite Nationwide Insurance Company's representation, Nationwide clearly was not "On Their Side." Based upon Ms. Laux's and Ms. Brown's experience, it was their opinion that the advertising slogan of "Nationwide on Your Side" may be an effective marketing campaign with no substance when a valid claim is attempted to be resolved by those who pay premiums to Nationwide Insurance Company.

Just a few miles from the Phoenix, Arizona (Sky Harbor) airport, a vehicle traveling approximately 90-95 miles per hour smashed into the back of Ms. Laux's and Ms. Brown's vehicle, and fled the scene of the collision. As a direct and proximate result of this collision, Ms. Laux's vehicle suffered over $10,000.00 in property damage and both Ms. Laux and Ms. Brown were injured.

Because this family trip had been planned for several months and was extremely important for not only Ms. Brown, but her daughters as well, Ms. Laux and Ms. Brown attempted to continue on with the family trip as planned. Shortly after arriving in Idaho, because the pain became so severe, Ms. Laux and Ms. Brown sought treatment at an Idaho Urgent Care facility. At that time, Ms. Laux's main problem was noted as neck and low back pain. Ms. Brown suffered from pain in her neck, back, and right shoulder. The Urgent Care doctor prescribed anti-inflammatory and pain medication for both Ms. Laux and Ms. Brown and instructed them to follow up with their primary care physician when they returned home to Arizona. Ms. Laux and Ms. Brown followed up with their primary care physician at the Mayo Clinic and Hospital. Ms. Brown suffered from severe low back pain for over two years and tried multiple rehabilitative efforts including therapy, modalities, manual techniques, exercise instruction, and PSIS / iliolumbar ligament / SI joint injections. These injections only helped for about four days. Ms. Brown to this day continues to suffer from severe low back pain which at times radiates down her right side. Ms. Brown incurred approximately $6,000 in medical expenses because of treatment related to this incident.

Prior to this collision, Ms. Brown was an extremely healthy, active, and independent 82-year old mother, grandmother, and great-grandmother. Sadly, Ms. Brown not only lost her health and activity, but her independence. Ms. Brown regularly volunteered at a local elementary school and assisted one of the first grade teachers. This volunteer work was incredibly important to not only Ms. Brown, but also to all the children. Following the collision, Ms. Brown tried to assist with her first-grade class but was unable to do so because of the severe back pain.

Ms. Laux suffered from cervical pain, pain in the mid to low thoracic area, and increasing pain and instability to her left knee. Ms. Laux had extensive treatment including prescription medication, physical therapy, and two surgeries on her left knee. Ms. Laux incurred approximately $38,000.00 in medical expenses because of the treatment related to this incident.

Nationwide Insurance Company assigned adjuster Courtney Martin to handle the uninsured motorist claim. Nationwide refused to consider the injuries to Ms. Laux's knee as part of the claim. Nationwide also refused to explain the factual or legal basis for its position and during the claim, Ms. Martin misrepresented conversations she had with Ms. Laux and Ms. Brown.

On November 28, 2007, Nationwide offered Ms. Laux $8,190.00 to settle Ms. Laux's injury claim and $6,194.00 to settle Ms. Brown's injury claim. Ms. Martin represented that these offers were based, at least in part, on Nationwide's use of a nurse practitioner evaluation. Despite multiple requests, Nationwide refused to put the factual and legal basis for its evaluations in writing and refused to disclose the nurse practitioner report upon which it apparently relied. Instead, on February 26, 2008, Nationwide increased the offers to $12,660.36 for Ms. Laux and $9,471.46. Again, Nationwide refused to disclose to its insureds the basis for these offers and its change in position. Thus, Ms. Laux and Ms. Brown were forced to request arbitration pursuant to their insurance contract with Nationwide Insurance Company.

Ms. Laux and Ms. Brown requested arbitration on March 12, 2008, but Nationwide did not provide the name of its attorney until June 9, 2008 or its arbitrator until June 16, 2008. As part of the arbitration process, Nationwide hired a well-known defense medical examiner, Dr. Ronald Lampert, to examine and issue a negative report against Ms. Laux. Dr. Lampert issued his standard report calling Ms. Laux a "symptom exaggerator." Dr. Lampert testified on behalf of Nationwide during the arbitration hearing. Dr. Lampert claimed to have performed testing on Ms. Laux that the Arbitrators determined did not take place during his examination. Luckily, the examination was videotaped.

A couple days prior to the scheduled arbitration on October 23, 2008, Nationwide presented, without any explanation as to the change in its evaluation, an offer that was nearly twice what it had previously offered on these claims. The arbitration was completed on October 23, 2008.

Ms. Brown was awarded $106,000.00.

Ms. Laux was awarded $163,000.00.

In addition, Nationwide Insurance Company paid $30,000.00 and $55,000.00 respectively for extra-contractual, insurance bad faith damages.

Post-Claims Underwriting: An insurance company that is relying on post claim underwriting, instead of looking to pay your submitted claim for a loss incurred by you as promised under the terms of the insurance policy it issued to you, looks for all the things in your application or coming from your application that it might be able to dig up to rescind (cancel) your policy and avoid having to pay your claim. The insurance company, rather than refusing to issue you a policy at the time you apply because information in the application leads it to believe you are a bad risk, waits until after the policy has been issued (and you are falsely secure in the knowledge that you have insurance protection) and, then after you have submitted a claim, denies coverage on the grounds that the policy should not have been issued in the first place. For example, see Valencia v. Protective Life Insurance Company below.

Linda Valencia v. Protective Life Insurance Company, Family Direct Insurance Services, Inc., et al.

United States Federal District Court - CIV-08-801-PHX-DGC

Plaintiff made the following allegations, which Defendant denied, in her complaint:

In late 2005, Plaintiff and her husband, Arthur Valencia, were contacted by Family Direct Insurace Services, Inc. regarding the prospect of purchasing life insurance. During the month of January, 2006, Plaintiff and her husband met telephonically with Defendant Starks, an insurance producer duly licensed by the Arizona State Department of Insurance, for the purpose of applying for said life insurance policies. Defendant Starks discussed with Plaintiff and Mr. Valencia the prospect of their purchasing two life insurance policies insuring each and naming the other as beneficiary, in order to have the ability to pay off their residential mortgage in the event of the untimely death of either Plaintiff or Mr. Valencia.

During this meeting, Defendant Starks prepared Mr. Valencia and Plaintiff's applications for life insurance with Chase Life Insurance Company based upon questions that she propounded to Mr. Valencia and Plaintiff and their responses. During this process, and in response to questions propounded by Defendant Starks, Mr. Valencia and/or Plaintiff a dvised Defendant Starks that Mr. Valencia had pled no contest to a charge of driving while under the influence of alcohol in the State of California in the past. Defendant Starks then asked Mr. Valencia and/or Plaintiff if the conviction occurred more than five years in the past, to which Mr. Valencia and/or Plaintiff responded affirmatively. Defendant Starks informed Mr. Valencia and/or Plaintiff that they need not include any information regarding Mr. Valencia's DUI, because the conviction was more than five years prior. Defendant Starks completed applications for Mr. Valencia and Plaintiff, and, upon information and belief, subsequently submitted the applications to Chase Life Insurance Company for underwriting and approval.

On February 1, 2006, and at the request of Chase Life Insurance Company and/or Defendant Starks, Mr. Valencia and Plaintiff underwent paramedical examinations at their residence, during which time blood samples were drawn from both Mr. Valencia and Plaintiff.

Subsequent to the completion of the paramedical examinations and completion and submission of the applications, Defendant Starks contacted Mr. Valencia and/or Plaintiff to discuss the rates that were available for each. Given Plaintiff's health history, Mr. Valencia and Plaintiff decided that it would be too expensive to insure Plaintiff's life, and instead opted for a life insurance policy with Chase Life Insurance Company insuring Mr. Valencia only and naming Plaintiff as the beneficiary. Mr. Valencia and/or Plaintiff communicated to Defendant Starks that they wanted enough coverage on Mr. Valencia's policy to pay off the mortgage on their residence in the event of Mr. Valencia's untimely death.

On May 16, 2006, Chase Life Insurance Company issued a term life insurance policy to Mr. Valencia, naming Mr. Valencia as owner and insured and Plaintiff as primary beneficiary.

On September 2, 2007, Mr. Valencia suddenly and unexpectedly died.

Shortly thereafter, Plaintiff submitted a claim to Chase Life Insurance Company for payment of the death benefit under the policy.

Chase Life Insurance Company then submitted Plaintiff's claim through a process of post-claims underwriting, during which time it ordered various of Mr. Valencia's medical care provider records and requested a Criminal Records check.

In a letter to Plaintiff dated January 11, 2008, Chase Life Insurance Company denied Plaintiff's claim and rescinded the policy. In the rescission letter, Chase Life Insurance Company alleges that Mr. Valencia should have answered Yes rather than No to Question 9(b) on the application, which states: Have you ever been convicted of, or are you awaiting trial for reckless driving, driving under the influence of alcohol or drugs, or a felony? Chase Life Insurance Company alleges that Mr. Valencia's failure to respond affirmatively to Question 9(b) was a misrepresentation. Chase Life Insurance Company further alleges that "[o]ur underwriters have opined that had Mr. Valencia revealed his driving history and that combined with the elevated GGT level on the lab work collected on February 1, 2006, we would have declined to issue any policy of insurance."

Chase Life Insurance Company was later purchased by Protective Life Insurance Company.

This matter reached a confidential settlement during the course of litigation.

Total Loss Abandonment -- What does an insured do when their insurance company originally disputes the value of a total loss claim which leads to extensive delay and storage fees, and then upon resolution of the claim, the insurance company abandons the total loss vehicle subjecting the insured to storage fees which in some cases may exceed the actual value of the vehicle?

Coachworks v. Gyerman (Farmers Insurance Company)

Maricopa County Superior Court CV2007-022396

On April 4, 2007, Andras Gyerman was involved in a motor vehicle collision causing damage to Gyerman's 1994 Dodge Dakota 4X2 Club Cab pickup. Following the collision, Gyerman delivered the vehicle to Coachworks Auto Body (hereinafter "Coachworks") for repairs.

Gyerman's insurance company, Farmers Insurance Company, eventually determined the vehicle a total loss so repairs would not be necessary. Coachworks informed Gyerman and Farmers that the vehicle should be removed from the facility or storage fees would continue to accrue.

A lengthy dispute arose between Gyerman and Farmers regarding the total loss value of the vehicle. Rather than removing the vehicle from Coachworks, Farmers Insurance Company and Gyerman left the vehicle in storage with Coachworks. Gyerman eventually resolved his dispute with Farmers Insurance Company regarding the total loss value of the vehicle. However, Farmers abandoned the vehicle and left it up to Gyerman to resolve the accruing storage fees.

On June 22, 2007, Coachworks sent a notification of storage fees to Farmers. That same day, Farmers Insurance sent correspondence indicating that they would pay fees, including storage of the vehicle, up to the date of April 19th, 2007, and that its policy holder, Gyerman, is responsible for all charges incurred past that date. Again, neither Gyerman or Farmers removed the vehicle.

Gyerman does not deny that storage fees are owed. Gyerman simply believes that his insurance company, Farmers Insurance Company, should pay the fees. Likewise, Farmers believes its insured should have paid the fees.

Coachworks made multiple requests for payment of storage and to have the vehicle removed. Gyerman and Farmers ignored these requests. Because Gyerman had delivered the vehicle under a repair contract, Coachworks could not seek an abandoned title on the vehicle.

Gyerman did not remove the vehicle until September 11, 2008. Gyerman's Counsel which was hired and paid for through Farmers Insurance Company, Teresa Goering, made arrangements for Farmers Insurance Company to have the vehicle removed from Coachworks. The only plausible explanation as to why it was not removed sooner is because of the dispute between Gyerman and his insurance company, Farmers.

Farmers eventually paid approximately $20,000.00 to resolve this dispute.

Coachworks v. Rogers ("Farmers Insurance Company")

Maricopa County Superior Court CV2007-022395

On or about May 8, 2005, Gloria Rogers was involved in a motor vehicle collision causing damage to Roger's 1995 Volvo 850. Following the collision, Defendant Roger's had the vehicle towed to Coachworks Auto Body (hereinafter "Coachworks") for repairs.

Rogers' insurance company, Farmers Insurance Company, eventually determined that the Volvo was a total loss so repairs would not be necessary. Coachworks informed Rogers and their insurance company, Farmers Insurance Company, that the vehicle should be removed from the facility or storage fees would continue to accrue.

A lengthy dispute arose between Rogers and Farmers Insurance Company regarding the total loss value of the Volvo. Rather than removing the vehicle from Coachworks, Rogers and/or Farmers Insurance Company left the Volvo in storage with Coachworks. Rogers and Farmers Insurance Company resolved their dispute regarding the total loss value of the Volvo. However, both Rogers and Farmers Insurance Company refused to remove the salvage from Coachwork's lot.

On October 03, 2005, Coachworks sent a notification of storage fees to Rogers insurance carrier, Farmers Insurance Company, and copied Rogers' attorney. Farmers indicated that they would pay fees, including storage fees, up to the date of June 13, 2005, and that Rogers would be responsible for all charges incurred past that date. After multiple failed attempts to get the vehicle removed, this lawsuit resulted.

Farmers eventually settled the lawsuit for approximately $37,500.00.

Armendarez v. Progressive Insurance Company

Maricopa County Superior Court, CV2010-051055

Plaintiff made the following allegations in her complaint. Progressive Insurance Company did not file an Answer and the matter was settled confidentially.

That on February 11, 2009, Plaintiff was injured in a hit-and-run automobile collision and required medical treatment. Plaintiff promptly notified her insurance carrier, Progressive Insurance Company, of the collision. On February 11, 2009, Progressive Insurance Company took Plaintiff's recorded statement. Progressive Insurance Company investigated the collision and determined that Plaintiff would be entitled to uninsured motorist benefits under her insurance policy.

On or about March 10, 2009, Progressive Insurance Company transferred the handling of the claim from Progressive's adjuster Brandon Whitener to Progressive's Adjuster Kjell A. Griebesland. Progressive Insurance Company demanded a second recorded statement from Plaintiff. On or about March 17, 2009, Progressive Insurance Company took a second recorded statement of Plaintiff.

On September 3, 2009, Plaintiff provided copies of her medical records to Progressive Insurance Company and made a claim for the uninsured motorist benefits to which she was entitled. On or about September 12, 2009, Progressive Insurance Company evaluated Plaintiff's claim at $6,005.00. Progressive Insurance Company represented that it had determined that all of Plaintiff's medical treatment was reasonable and necessary except for $122.00 of treatment from a chiropractor. Thus, Progressive Insurance Company determined that Plaintiff was only entitled to $930.84 in general damages for pain, suffering, inconvenience, etc. Progressive Insurance Company indicated that if Plaintiff did not agree with the evaluation amount her insurance policy required her to request arbitration.

On September 12, 2009, Plaintiff requested the undisputed, uninsured motorist benefits for the medical specials per Progressive Insurance Company's evaluation. Plaintiff also requested a written explanation as to how Progressive Insurance Company evaluated this particular claim and determined that Plaintiff only suffered $930.84 in general damages, i.e., pain, suffering, loss of enjoyment of life, etc. Plaintiff also requested an explanation as to how Progressive Insurance Company determined that only $6,005.00 in uninsured motorist benefits were due.

Progressive Insurance Company's insurance policy forces its insureds to demand arbitration if Progressive Insurance Company and its insured person cannot agree on the amount of damages sustained. On September 12, 2009, Plaintiff demanded arbitration.

On or about September 16, 2009, Progressive Insurance Company transferred the claim to Progressive's adjuster Katie Wakeham. Progressive Insurance Company failed to provide an explanation for its evaluation and indicated that it would "be contacting you periodically to address the status of the claim." Progressive Insurance Company failed to pay the undisputed, medical specials.

On September 21, 2009, Plaintiff again requested the undisputed benefits in the amount of the undisputed medical specials. Plaintiff again requested an explanation as to how Progressive Insurance Company determined that Plaintiff was only entitled to $930.84 in general damages.

On September 21, 2009, despite its prior evaluation, Progressive Insurance Company represented that "the amount of the medical bills incurred by your client is subject to debate of what is reasonable and necessary." Progressive Insurance Company refused to pay the undisputed, medical specials because "there is not any explicit provision in the contract language under the uninsured motorist bodily injury coverage, which provides for the immediate payment of medical bills." Progressive Insurance Company further represented that "the prior adjuster, Kjell Greibesland, relied on his independent professional judgment when he made an offer to settle [Plaintiff's] uninsured motorist bodily injury claim." Progressive Insurance Company failed to provide an explanation as to how it evaluated Plaintiff's general damages at $930.84.

On September 23, 2009, despite the fact Progressive Insurance Company knew that only $122.00 of Plaintiff's medical treatment was in dispute, Progressive Insurance Company requested "authorizations for any and all healthcare providers, including pharmacies, for the time period encompassing 2004 to present." Although Progressive Insurance Company failed to provide the requested authorization forms, Progressive Insurance Company wanted the authorizations to be returned within fifteen (15) days. Progressive Insurance Company failed to provide an explanation of its evaluation. Progressive Insurance Company failed to pay the undisputed, medical specials.

On September 24, 2009, Plaintiff confirmed that the only dispute was the $122.00 of chiropractic treatment and a fair amount for Plaintiff's general damages. Plaintiff requested payment of benefits for the undisputed, medical specials. Plaintiff requested a written explanation of how Progressive Insurance Company evaluated this claim and determined that Plaintiff was only entitled to $930.84 for general damages.

On September 29, 2009, Progressive Insurance Company represented that "Progressive has made a fair and reasonable offer based on the limited information available." This was the first time that Progressive Insurance Company had ever represented that it had "limited information" when it completed its evaluation this claim. Progressive Insurance Company failed to indicate what additional information was necessary for the fair evaluation of this claim.

On October 8, 2009, Progressive Insurance Company' staff counsel indicated that he was unavailable during the entire rest of 2009 so the scheduling of the arbitration hearing was delayed until January 29, 2010. Progressive Insurance Company demanded that Plaintiff "[l]ist the name and address of every healthcare provider who has treated or examined Claimant in the seven year period proceeding, and at any time since the accident, showing for each, year of treatment or examination and the nature of the physical condition for which treatment or examination was sought;" "...the name, address and telephone number of every pharmacy where you have had prescriptions filled in the last 10 years;" and "...the date and nature of any diagnostic testing ever performed upon any part of your body including, but not limited to, x-rays, MRI's, CT scans, etc."

On October 8, 2009, Progressive Insurance Company demanded that Plaintiff turn over various documents including, but not limited to: "Any and all information, medical reports, medical bills, statements, police reports, or documentation of any type concerning any accident that the Claimant has had or any physical condition for which treatment or examinations was sought within the last ten (10) years;" All calendars, diaries, etc. that reflect documentation of any physical symptoms from 1/1/01 to the present, whether you allege the symptoms are due to the subject accident or not;" and All calendars, diaries, etc. that reflect either any treatment obtained from a healthcare provider regarding physical or mental conditions, that reflect documentation of any physical symptoms, and/or that reflect your personal, recreational and/or professional activities on a daily basis for the time period encompassing three (3) years prior to the subject accident to present." Despite the fact that the Arizona Rules of Civil Procedure allows a party 40 days to respond to such requests, Progressive Insurance Company demanded that "authorizations for any and all healthcare providers, pharmacies and/or employers for the past ten (10) years" and "blank authorizations" be signed and returned "within fifteen (15) days." Progressive Insurance Company threatened that if Plaintiff did not turn over the authorizations within fifteen days, Progressive Insurance Company would further delay the arbitration hearing.

On October 8, 2009, despite taking two previous recorded statements of Plaintiff, Progressive Insurance Company demanded that Plaintiff appear for an Examination Under Oath on December 1, 2009. This was the first time that Progressive Insurance Company had indicated that an Examination Under Oath would be necessary for the fair evaluation of this claim.

On October 20, 2009, Progressive Insurance Company represented that they "reserve[d] the right to raise any applicable liability defense including comparative negligence, based upon investigation and discovery." Progressive Insurance Company claimed that "Claimant may have had pre-existing injuries or conditions and may have failed to mitigate her damages." Progressive Insurance Company listed all of Plaintiff's medical providers for the past fifteen (15) years as witnesses and all of Plaintiff's medical records for the seven (7) years prior to the hit-and-run collision as exhibits. Progressive Insurance Company also referenced two recorded statements but failed to provide copies of either.

On October 26, 2009, Plaintiff confirmed that the only dispute with respect to medical treatment was the $122.00 in chiropractic treatment. Plaintiff requested payment of the undisputed, medical specials. Plaintiff requested a written explanation as to how Progressive Insurance Company evaluated this particular claim and determined that only $930.84 in uninsured motorist benefits were due to Plaintiff for general damages. Plaintiff also requested copies of the two previous recorded statements. Plaintiff requested an explanation as to Progressive Insurance Company recent allegations of comparative fault.

On November 2, 2009, Progressive Insurance Company apologized for the "hastily drafted October 8, 2009, letter." Because the only medical specials in dispute was the $122.00, Progressive Insurance Company now requested only an authorization for the chiropractic treatment. Progressive Insurance Company represented that "The recorded statements you requested have been sent out for transcription." Progressive Insurance Company further represented that they had "not contended or alleged any comparative fault at this time."

On November 5, 2009, Progressive Insurance Company disclosed that the recorded statement dated 2/11/2009 was unavailable because of "tape damage, unable to play / transcribe tape, no transcript." Progressive Insurance Company also disclosed that the recorded statement dated 3/17/2009 had "problems - tape was scratchy and weak and there were several "inaudible" portions..."

On November 20, 2009, Progressive Insurance Company refused to turn over their entire claims file, including but not limited to all claims notes, with respect to the uninsured motorist claim the subject of the uninsured motorist arbitration. Progressive Insurance Company also refused to turn over any and all documents, including any expert reports, medical reviews, etc., which Progressive Insurance Company relied upon in making any of its offers of resolution with respect to this uninsured motorist claim.

On November 20, 2009, Progressive Insurance Company represented that they did not know what bills from chiropractor are or are not related to Plaintiff's injuries in the hit-and-run collision. Progressive Insurance Company represented that the factual basis of their offers of resolution for Plaintiff's uninsured motorist claim was "Claimant's post-accident medical records, police report, photographs, and damage estimates for Claimant's vehicle." Progressive Insurance Company claimed that they had "not alleged any affirmative defenses" with respect to Plaintiff's uninsured motorist claim.

On December 8, 2009, Progressive Insurance Company subjected Plaintiff to an Examination Under Oath. The examination took place at Progressive Insurance Company' staff counsel's office at 4835 E. Cactus Road, Suite 265, Scottsdale, Arizona 85254, lasted approximately 52 minutes, at a cost of $103.50 to Plaintiff for a copy of the transcript.

On or about December 29, 2009, Progressive Insurance Company revised their evaluation of Plaintiff's uninsured motorist claim. This amount now consisted of the entire medical specials and $5,000.00, as opposed to $930.84, for general damages. Plaintiff accepted the evaluation.

On December 31, 2009, Progressive Insurance Company requested that Plaintiff sign a Release of All Claims which stated that Plaintiffs "do hereby release, acquit, and forever discharge Progressive Casualty Insurance Company, their agents, servants, employees, personal representatives, successors, heirs, assigns, insurers, and any other persons, firms, corporations, or entities (the 'Releasing Parties') from any and all claims, demands, actions, causes of action, damages, costs, expenses, losses and damages, including property damage, whatsoever, BOTH KNOWN AND UNKNOWN, FORESEEN AND UNFORESEEN, AND THE CONSEQUENCES THEREOF, WHETHER DEVELOPED OR UNDEVELOPED, sustained, claimed to have been sustained or claimed to have been sustained by the Releasing Parties..." Progressive Insurance Company's release also included an indemnification clause that was never discussed as part of resolution. Progressive Insurance Company's release also attempted to expressly deny all liability. In addition, Progressive Insurance Company insisted that Plaintiff's husband, who was not involved in the collision and not a party to the uninsured motorist claim, sign the release.

On January 6, 2010, Progressive Insurance Company claimed that the Release of All Claims was sent out as an "oversight" and "in a rush."

On January 28, 2010, Patrick Lacke, Progressive Insurance Company' Claim Manager, claimed that Progressive Insurance Company "extensively reviewed the handling" of Plaintiff's uninsured motorist claim and Progressive Insurance Company determined that "there isn't any evidence of bad faith handling."

On or about April 30, 2010, Progressive Insurance Company and Plaintiff settled this matter.

WHEN SHOULD YOUR HIRE A SCOTTSDALE INSURANCE BAD FAITH ATTORNEY?

There is no harm in contacting an insurance bad faith attorney immediately. We have offices in Phoenix and Scottsdale, Arizona and have handled claims throughout the entire state of Arizona with an emphasis in the Phoenix Metro area so give us a call at (480) 874-2918. The bad faith attorney can help you appropriately present your insurance claim to your insurance company so that you avoid potential problems, and the insurance bad faith attorney can explain to you your insurance rights and your contract obligations. However, if your insurance company starts making multiple document requests for the same or similar information, demands that you undergo a sworn statement or examination under oath prior to accepting your insurance claim, or an examination by an expert of the insurance company's choice, you should immediately contact a Scottsdale insurance bad faith attorney. If you believe your insurance company is delaying payment on your insurance claim or your insurance company has wrongfully denied payment for your insurance claim, you have a right to seek independent representation with an insurance bad faith attorney and to seek compensation for insurance bad faith from your insurance company.

Scottsdale insurance bad faith attorney Shane Harward represents the interests of insureds in all areas, including but not limited to, insurance coverage disputes, examinations under oath, subrogation issues, gap insurance claims, insurance policy limits stacking, underinsured motorist and uninsured motorist insurance claims, health insurance claims, property damage insurance claims, liability insurance claims, no fault insurance claims, medical payment insurance benefit claims, unfair insurance claims practice violations, and insurance bad faith litigation throughout the state of Arizona 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, 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, Surpise, Snowflake, Tombstone, Wickenberg, Winslow, Wilcox, Williams, Young, Youngtown, and surrounding areas.

To learn what an insurance bad faith lawyer can do to help you, please contact us today for a free initial consultation. We offer reduced rates to those contacting our attorney through the Internet.

For immediate assistance of an insurance bad faith attorney call us at 480-874-2918. We look forward to helping you.

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Law Offices of Shane L. Harward PLC
Scottsdale and Phoenix Personal Injury Attorney
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