Why do insurance companies get a free “fraud” pass?
Did you know there’s a No Fault “fraud” double-standard between how the law treats normal people like you and me, and the giant auto insurance companies in Michigan?
Unfortunately, that double-standard between how people are treated and how insurance companies are treated just got a lot bigger after a terrible recent ruling by the Michigan Court of Appeals.
In Bahri v. IDS Property Casualty Insurance Company, which I blogged about yesterday, the Michigan Court of Appeals ruled a No Fault auto insurance company could use a “fraud exclusion” in its policy to deny No Fault benefits to an auto accident victim. The insurance company defense attorneys argued that what may clearly have been an innocent mistake concerning three weeks of replacement services forms, plus surveillance video that is ambiguous at best, were supposedly “fraudulent representations.”
Based upon the Bahri case, the No Fault “fraud” double-standard in Michigan now looks something like this:
- The bar for proving fraud is nearly impossible when it comes to a normal person who accusing his insurance company of fraud: “When an auto insurance company is accused of fraud by one of its insureds, [the Supreme Court has] raised the bar for proving fraud. … But, when it is the auto insurance company accusing one of its insureds of fraud, the activist, Republican justices [have] lowered the bar.” To learn more, take a look at my blog post, “Activist Michigan Supreme Court justice bends law to favor auto insurance companies in fraud cases.”
- Unlike auto accident victims, auto insurance companies are seldom held accountable for their wrongdoing and, in the rare instance they are, the penalty interest and attorney fees in No Fault cases now pale in comparison to the new draconian penalty of complete dismissal of all current – and future – no fault insurance PIP benefits after Bahri.
- There is no penalty whatsoever for when insurance companies, claims adjusters, and insurance defense lawyers who make the most wild and specious accusations of fraud against an injured auto accident victim seeking PIP No Fault benefits.
- There is however, considerable harm done to that person’s reputation and good name, especially when these accusations are made in legal proceedings and on the permanent public records.
- There is now a huge cottage industry of insurance company hired guns, these so called “independent medical examiners” or insurance medical examiners who are hired by workers compensation carriers and No Fault insurance companies to accuse people they examine of malingering, exaggeration and fraud. There is no penalty for doctors who do this, and they make vast sums of money in doing so.
The Bahri ruling is a perfect example of my second point above.
The auto accident victim in Bahri made mistakes about dates and, in the auto insurer’s judgment, appeared on surveillance video moving in a way that the insurer claimed to be inconsistent with her injuries. As a result, she suffered a permanent denial of all present and future benefits.
But what about the normal day-to-day cases I see as an auto accident attorney, where defense attorneys accuse personal injury plaintiffs of the most vile things? The more wild the accusations, the better, as it is effective in getting a lower case evaluation awards when mediators have not fully-read the summaries, or are inexperienced and shouldn’t even be sitting as mediators (which seems to be the majority of divorce lawyers and general practitioners now sitting in Oakland County personal injury panels and increasingly also in Wayne County and Macomb County these days).
And what about the hired-gun IME doctors and insurance adjusters who just lie and completely ignore files that are piling up on their desks, no matter how much harm they cause to their own insureds?
The auto insurers who clearly do commit fraud are never sanctioned.
But contrast this with Bahri, where based upon two ambiguous mistakes that are being interpreted as fraudulent misrepresentations, the auto accident victim in Bahri now loses everything, including the right to future No Fault benefits and all insurance benefits already incurred.
To see but one example of insurance companies committing fraud and misrepresenting and obstructing justice, read my blog post, “State Farm gets slammed for stonewalling, deceiving auto accident victim.”
Also, to see one example of the rampant IME abuse that I see as an attorney every single day, stay tuned for my forthcoming blog post about my own case, Fairley v. Schiber Truck, where you can read for yourself about an auto insurance company’s IME psychiatrist and decide, as a Jackson County, Michigan jury did, that Dr. Griffin lied about statements my client made in his IME exam, fabricated medical conditions my client didn’t even have, and then blamed my client’s serious physical injuries on medical conditions that didn’t exist.
The ‘reverse fraud exclusion’
Even though Michigan auto insurance consumers don’t write the auto insurance policies they purchase, they should still be able to protect themselves from fraud – just like the auto insurers do.
Whereas auto insurance companies write a “fraud exclusion” into their policies, the Michigan Legislature should write a “reverse fraud exclusion” into the Insurance Code.
In Bahri, the “fraud exclusion” in IDS’s No Fault policy provided:
“We do not provide coverage for any insured who has made fraudulent statements or engaged in fraudulent conduct in connection with any accident or loss for which coverage is sought under this policy.”
Here’s what I’m thinking in terms of a “reverse fraud exclusion”:
- “Any person who has paid for a No Fault auto insurance policy and is being fraudulently denied No Fault coverage on a claim made under that policy shall receive a full refund of all premiums paid on the policy from its inception.”
- “The claim in question will be reassigned through the Michigan Assigned Claims Plan to another Michigan No Fault auto insurance company.”
- “No Fault benefits paid on the claim in question by the assigned auto insurer will be reimbursed 100% – on a strict liability basis – within 30 days by the auto insurer that fraudulently denied its insured’s No Fault claim.”
What do you think? Does that go far enough?
– Photo courtesy of Creative Commons, by Go Doughboy