Tag: Bad Faith claims handling

Have we seen the end of rational economics? Behavioral Economics explains the Scheme.

With the very recent publishing of yet another list of the worst bad faith insurers, this time by the American Association for Justice, the topic of why the public holds these companies in such low esteem again becomes topical.

We’ve well chronicled the dirty tricks and underhanded tactics these socially deviant companies employ to satisfy their relentless thirst for profit but that is not the thrust of this post. Rather, in keeping with today’s theme of “the why” as Nowdy linked my comment on the Yahoo Allstate message board in her Daily slab post I’m expanding on the concepts from that post and in the process explain one of the possible reasons why an insurer with a good reputation in Chubb will be inherently more profitable than one with a bad reputation in Allstate.

When I first met Nowdy and we began to get to know each other I told her my favorite hobby was investing and to that end, the fields of Game Theory and Behavioral Finance were of great interest to me along with their political first cousin Public Choice theory, the latter two economic disiplines being relative newcomers to our body of collective knowledge.

After 20 months of writing here at slabbed I finally get to indulge those passions and perhaps educate our readers on the mechanisms at work that resulted in what became known here on Slabbed as The Scheme, a series of posts by Nowdy that explained the bad behavior of the insurers here after Katrina. In short not only do we tell you who dunnit but also how it could happen in a large organization like State Farm, Nationwide, USAA, Allstate and others. We start with the July-August edition of the Harvard Business Review and Dan Ariely’s article The End of Rational Economics:

In 2008, a massive earthquake reduced the financial world to rubble. Standing in the smoke and ash, Alan Greenspan, the former chairman of the U.S. Federal Reserve once hailed as “the greatest banker who ever lived,” confessed to Congress that he was “shocked” that the markets did not operate according to his lifelong expectations. He had “made a mistake in presuming that the self-interest of organizations, specifically banks and others, was such that they were best capable of protecting their own shareholders.” Continue reading “Have we seen the end of rational economics? Behavioral Economics explains the Scheme.”

A reader shared this with us today (Updated with revised lyrics)

With the suggestion that in cases involving State Farm bad faith claims (and lord knows State Farm and Bad Faith go together like Love and Marriage), that a pretrial motion be submitted to let the policyholder lawyers show this video in jury selection and question the jury about it. This sounds reasonable to me but the slabbed may barf when they view the video to decide the merits of this suggestion for themselves. Mark my words this will happen, it’s just a question of when.  😉

[youtube=http://www.youtube.com/watch?v=9PMwTwY7SUs] Continue reading “A reader shared this with us today (Updated with revised lyrics)”

Spreading knowledge via the internet is sometimes Fraught with danger: Frught v State Farm

To understand how State Farm conducts litigation to the detriment of the court system you have to look at the big picture and how cases such as Watkins in Oklahoma City relate to cases like O’Keefe, Kuehn, and a multitude of others involving bad faith claims adjusting by the Farm here in the aftermath of Katrina. The Farm’s tactics are pretty simple after a major natural disaster. Deny valid claims and then spend the next 7 years or so wearing out individual policyholders in the already clogged US court system in the process slithering their way out of otherwise valid contractual obligations. Simply put, the majority of litigants, just like Thomas McIntosh simply wear out and take peanuts on their claims.

A good way to drag out litigation is to not properly produce evidence during the discovery phase of the litigation and then fight for months over motions to compel witnesses and/or documents. As we’ve said here repeatedly State Farm does this because judges, many former insurance defense lawyers themselves, let them get by with such bad behavior without consequence.

This post and the landing of Frught on our radar screens resulted from one of our readers sending me Magistrate Judge Wilkinson’s related order on this case along with the following note:

It is a travesty every time he gets passed over to be a district judge, simply because he……. (has) no strong political ties. (Judge Wilkinson) knows more about federal procedure than (many of the) judges in the Eastern District of Louisiana Courthouse.

Of course reading Judge Wilkinson’s order immediately sent me to PACER for the original motion to compel and it was there I found the Frught’s lawyers certainly must be a frosty bunch and regular slabbed readers as documents from O’Keefe, a case Nowdy and I have profiled repeatedly here on Slabbed, surface in support of the Frught’s motion to compel. For State Farm, the knowledge we spread is indeed fraught with danger for the company and certain of the unethical lawyers that are willing to do their bidding by ignoring valid discovery requests in hopes the lawyers on the other side are ignorant of the goings on in other cases covering the same issues. It is for that reason and with some pride that I’ll add that lawyers with active wind water cases are not fully representing their clients if they do not read our case profiles regularily.

For the balance of this post I’ll present the docs in the order I read them beginning with Judge Wilkinson’s order on the Frught’s motion to compel:

All of State Farm’s objections to Topics Nos. 1, 2, 3, 4, 6 and 7 are overruled. Discovery concerning these topics is highly relevant and clearly calculated to lead to the discovery of admissible evidence. The topics are in no way vague or unduly burdensome. If State Farm persists in the position taken in its motion papers that it has no knowledge concerning Topics Nos. 3 and 4, despite the evidence presented by plaintiff to the contrary, it should produce a corporate representative to say so under oath, so that the witness may be impeached, if plaintiff can do so. Continue reading “Spreading knowledge via the internet is sometimes Fraught with danger: Frught v State Farm”

Kuehn v State Farm: From a simple ass to an ass-clown. Team State Farm sets new lows courtesy of the insurance defense bar.

Nowdy has been doing yeoman’s work keeping Slabbed stocked with material in my absence but when she emailed me the recent case activity in Kuehn v State Farm I knew it was time to get back into the game. To bring everyone up to speed I highly recommend Nowdy’s two previous posts on this case which can be found here and here.  The long story greatly shortened is the Kuehn’s invoked a policy provision called appraisal, a process involving three professionals that calculate the amount due under the policy in question. State Farm had “adjusted” the claim and paid the Kuehn’s the whopping sum of $10,765. The appraisers found $174,812 of covered damage. The Farm, through their Oxford based lawyers, went postal and now the case is before Judge Senter.

An interesting case twist came about during the deposition of State Farm appraiser John Minor in February of this year. During that depo it became very apparent State Farm lawyers H. Scot Spragins and Lucky Tucker had crossed the line from being legal advocates to agents of State Farm. When that fact became clear to Kuehn lawyer Earl Denham that such was indeed the case, Mr Minor’s depo was shut down with Mr Spragin’s acquiescence and State Farm hired new lawyers.

I wrote that short synopysis because I felt the need to refresh myself on the case. My memory’s reputation is impeccable but reading State Farm’s very curious case filings left me confused as to the events that lead us to this point – to the point where new State Farm lawyer John Banahan was misleading positing a rossmillerian fantasy of epic proportions.  IMHO these filings are of the type that wastes valuable court time and short changes other policyholders that have now been waiting over three and a half years for their day in court.

First Banahan begins by trying to salvage the reputations of Hal “Scot” Spragins and Lucky Tucker and their Oxford based law firm Hickman, Goza & Spragins with a rambling 19 page nonsensical response to the plaintiff’s DQ motion. There is no text in the document worth quoting as the brief has no basis in the reality of this case as it relies on the notion that three appraisers determined the cause of damage rather than the extent of covered damage, an assertion State Farm’s own appraiser vigorously denied. Continue reading “Kuehn v State Farm: From a simple ass to an ass-clown. Team State Farm sets new lows courtesy of the insurance defense bar.”

Delay declared “Bad faith” action on uncovered claim

With xxx, pro se v Lexington on my mind, I remembered this post from Insurance Law Hawaii. Mississippi law falls short of the protection Louisiana law provides; however, it is my understanding that insurers here have an obligation similar to Washington State’s  “respond promptly”.

the Washington Supreme Court recently held the insured could pursue bad faith claims for delay in processing the claim even when there is no coverage under the policy.  See St. Paul Fire and Marine Ins. Co. v. Onvia, Inc., 2008 Wash. LEXIS 1055 (Wash. Nov. 26, 2008).

….the issue was whether the insured could pursue common law bad faith and claims under the Consumer Protection Act based on St. Paul’s delay in handling the claim…

It took nine months for St. Paul to deny coverage…

The suit for declaratory relief alleged St. Paul violated a number of insurance Continue reading “Delay declared “Bad faith” action on uncovered claim”