Talk:Insurance bad faith

A couple of things that may need to be addressed/clarified:

I think it would be useful to have less general historical background on insurance (and contract) law in general, and offer more focused information specifically on case law that relates to, and defines, bad faith insurance laws.

Insurance bad faith can exist under certain conditions but insurance bad faith law may still not apply.

No mention is given to the landmark California decision that put teeth behind present-day bad faith laws. In 1979. attorney William Shernoff led the fight in Egan v. Mutual of Omaha. The landmark decision held that "insurance companies are legally bound by a 'covenant of good faith and fair dealing' in treating their policyholders." This case law is relied upon far more than the outdated 1900s law cited in the article.

ERISA-governed insurance plans need to be distinguished as different. For example, in most cases ERISA law still pre-empts insurance bad faith law; therefore, ERISA-governed managed care (HMO) policies typically cannot be sued for tort damages - even when there really are damages or losses suffered for delay in treatment, denial of treatment, or inadequate care due to the insurers acts of bad faith.

The article states; "Bad faith is a fluid concept and is defined primarily by court decisions in case law." But no examples are cited. Specifically, of importance is the landmark case that addressed this loophole, at lease partially: UNUM Life Ins. Co. of America v. Ward, 526 U.S. 358 (1999). Appellate specialist Mr. Ehrlich briefed and argued before the U.S. Supreme Court as to whether the federal statute governing employee benefit plans, ERISA, overrode state insurance statutes and rules, which provided considerable protection to policyholders. In a unanimous decision the Supreme Court adopted the position advocated by Mr. Ehrlich, and limited ERISA’s preemptive scope. The Ward decision benefited more than 80 million people who obtain their health insurance, life insurance, or disability insurance through their employer but it still did not open up easy access to tort damages for insurance bad faith for ERISA-governed plans.

Medicare is yet another issue when it comes to what constitutes insurance bad faith as a tort. The first decision holding that bad-faith claims against Medicare HMOs were not preempted by the Medicare Act, was Hofler v. Aetna US Healthcare of California, Inc., 296 F.3d 764 (9th Cir. 2002). And still, another suit providing case law regarding insurance bad faith was Kotler v. Pacificare of California (2005) 126 Cal.App.4th 950. This was a landmark decision because it was the first case in California to hold that an HMO could be sued for bad-faith for making its subscribers wait an unreasonable amount of time for medical treatment.

The criteria for insurance bad faith should be cleaned up. I found it wordy and hard to follow and I do have a pretty keen understanding bad faith law having written about it in the past.

In early 2009 Montana lawmakers voted down HB 345, which would have amended the state’s existing third-party bad faith law to allow for punitive damages and attorney fees. So the article is not an completely accurate picture of how bad faith laws are applied.

This is an article that deserves attention. Without bad faith laws, insurers can do what they want without worry of lawsuits. Consumers and policyholders should know their rights and remedies (and limitations). This is a complex subject, but I feel the article can be written in a more user-friendly tone that would provide tangible information to information seekers who are interested in learning more about insurance bad faith.

--76.89.177.206 (talk) 23:04, 4 May 2009 (UTC)L. Wolfe (who understands bad faith insurance, but is new to Wikipedia so please forgive and broken rules)

Sources:

What is Insurance Bad Faith?

Landmark ERISA and Bad Faith Insurance Cases

Further cleanup of this mess

The list of bad faith statutes is inaccurate and totally useless. Only a nonlawyer or a law student would think such a list is useful. For example, there hasn't been a private right of action under California Insurance Code Section 790.03 since 1989! Wikipedia is NOT an indiscriminate collection of random information; see core policy WP:NOT. I'm getting rid of it now. --Coolcaesar (talk) 01:47, 25 October 2009 (UTC)

I'm reverting some of this edit, which I just noticed. The basis for how bad faith lawsuits are allowed in given states is clearly relevant, even if it should ideally be sourced. I'll be looking into that. The better approach would have been to discuss/trim the non-applicable state statutes in particular. I don't see any basis for the removal of the other information or sources, such as the III's overview of bad faith cases and mold. Also, try to be less emotional in your editing, and use better section titles. The article was not a "pigpen", and, no offense, but it is often observed that lawyers write very badly, so comments about how good lawyers are at writing seem odd.

As far as the statute list, the California statute in question had a disclaimer saying the private cause of action was disallowed in 1987. II | (t - c) 17:15, 21 April 2010 (UTC)

Actually, if you read the article from which that ridiculous assertion about the Hilker case was based, it's clear that the article is a piece of garbage published by a third-tier journal by a graduate of a third-tier school. The article is basically a disorganized catalog of cases, the kind of thing that a second-year summer associate would write. It's also 16 years out of date! Try reading an up-to-date treatise on insurance law like Couch on Insurance 3d or Stempel on Insurance Contracts, both of which do a much better job of organizing and explaining the current body of insurance law. Comunale is the landmark case where most discussions of bad faith law begin, and the Seton Hall article skips right over it.

The other problem is that most states (at least the ones in which insurance bad faith is heavily litigated, like California) don't rely upon statutory underpinnings at all for insurance bad faith cases; rather, it's all a matter of contract case law. There are statutes authorizing causes of action for bad claims handling, but those causes of action exist separate and apart from the breach of implied covenant cause of action. It's a VERY common mistake among laypersons and non-insurance lawyers to confuse the statutory causes of action with the common law causes of action. If you ever look at a properly drafted complaint against an insurer, you should see two or three causes of action: breach of contract, breach of the implied covenant, and (if the state allows it) violation of the state statute governing minimum claims handling requirements. Then if plaintiff's counsel is crazy, creative, or just incompetent, one would also see fraud, conspiracy, negligence, punitive damages (pleaded as a separate claim), etc. --Coolcaesar (talk) 08:13, 24 May 2010 (UTC)

Okay, no response, as I expected. Here we go again with the deletions. The mold text also is going, by the way, because it's a wild tangent. --Coolcaesar (talk) 04:57, 29 May 2010 (UTC)

I re-read Communale but I could not find Hilker, although I noticed that Communale cites Hilker twice. So I'll let that rest and look into it later. I think you might have been misreading the section from the NAMIC. It's not talking about statutes authorizing causes of action for bad claims chandling. It's talking about statutes which, as my wording put it, "allow insureds to recover legal costs and prejudgment interest" when they file suit against an insurer, and it is entirely likely that many states had these statutes in the 1950s. As far as the mold, is there any topic which is so closely associated with bad faith as mold? I don't think so. So I think it needs to be re-added, and I will do so. It helps to put the issue in perspective for readers. II | (t - c) 16:47, 29 May 2010 (UTC)