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PURSUING PERSONAL INJURY CLAIMS WITH INSURANCE COMPANIES
(What You Do Not Know Can Hurt You!)

     Insurance companies make money when they don’t pay claims. Therefore, it is more profitable for them to minimize or even deny claims. We have said in previous articles that insurance companies can resort to tricks and unfair tactics in claims practices. They can deny or delay valid claims, confuse consumers with hard-to-understand insurance contracts, or unfairly cancel policies that have or will become too expensive to pay.

     Even when claimants successfully pursued their claims and reached a deal with the insurance company to pay their damages, it is not always a guarantee that they will get all the amounts they fought for. Sometimes, it can be tricky, particularly for personal injury claimants who have been promised “structured settlements.” A structured settlement will allow the insurance company not to pay a lump sum at the time of the settlement but instead to make payments to the claimant over an extended period of time. The payments may be made monthly for a period of, for example, 5 years.

     Claimants who have agreed to be paid their damages in a structured settlement may discover that their monetary recoveries may have deductions for “fees” or “costs.” Consider what happened to about 21,000 claimants against The Hartford:

     The Hartford Financial Services Group was sued in federal court in a national class-action lawsuit by personal injury and workers’ compensation claimants. The lawsuit accused The Hartford of fraud in the administration of the structured settlements by keeping for itself millions of dollars in fees that should have been paid to the accident victims.

     The claimants were due payments for claims involving car accidents, workers compensation and other injuries. These persons were to be paid their damages via structured settlements. Structured settlement payments are usually funded as annuities.

     In this case, the lawsuit alleged that The Hartford developed a scheme in which its property and casualty companies purchased the annuities from its life insurance subsidiary, Hartford Life. Hartford Life then paid a kickback to the property and casualty companies. The lawsuit accused the company of violating a racketeering law.

    Moreover, the lawsuit alleged that although The Hartford told its claimants the value of their respective settlements, the claimants were not told that the company would deduct at least 15 percent from the settlement amounts to cover for fees, costs, taxes and profits. Because The Hartford retained these amounts, the claimants did not get all the settlement monies owed to them. The claimants did not know that they were being underpaid on their claims.

     After five years of litigation, the lawsuit was certified as a nationwide class action. When The Hartford challenged the class certification in appellate court, the appeals court rejected the company's challenge. Rather than face the uncertainty and increasing costs of continued litigation, The Hartford settled the case for $72.5 million. Even though it settled the case, the company still did not admit to fraud.

     As the above example shows, the insurance claims process can become highly technical and convoluted. A claimant who is not knowledgeable about it can easily become confused and victimized. This is why when pursuing a claim, particularly when large amounts of damages are at stake, it is always smart to consult with an experienced insurance attorney.

© Law Offices C. Joe Sayas, Jr.