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Not a Good Neighbor: State Farm finally loses Case due to Unclean Hands

February 28, 2008 by Steven M. Gursten

On February 14, 2008, the Michigan Court of Appeals ruled against State Farm Insurance Company on an important new uninsured motorist case (Suminski v State Farm). State Farm, it seems, did not act like a good neighbor, which comes as no surprise to Michigan No Fault Attorneys. The surprise with this case is that State Farm’s pattern of bad acts towards injured policy holders did not work in favor of the insurance company (this time).

Lesson for people injured in a Michigan No Fault Accident:

Immediately read and strictly obey the requirements of your auto no fault insurance policy, including separate provisions for uninsured and underinsured motorist coverage. When policy holders don’t adhere to the exact requirements – on time – they lose coverage, with no recourse. Even if it is “technical” or “procedural” and does not substantively affect your insurance company, you will forfeit your own case and the insurance company can and will deny the claim in full. Michigan no fault lawyers have seen far too many injured people denied coverage because they were unaware of important notice requirements and time limits, such as 30 days notice for hit and run accidents. The line of cases that supports this in Michigan, with the exception of Suminski, is overwhelming.

What makes the Suminski case so Unique?

This is an extremely important case for Michigan lawyers who handle automobile accident cases. State Farm has long been identified by auto accident lawyers as an insurance company that treats its own insured policy holders far worse than other insurance companies in paying legally owing Michigan No Fault insurance benefits. State Farm employs tactics such as placing claims “under investigation” in order to delay, and ultimately deny, valid No-Fault insurance claims. Without bad faith laws or punitive damages available to victims of Michigan accidents and their lawyers, State Farm is gaming the system and routinely profiting from its unethical practice. Suminski made a small bump in State Farm’s long and profitable road.

Suminski Case Facts:

The case exposing State Farm stems from a car accident occurring in Oakland County, Michigan. Mr. Suminski was insured with State Farm and was injured when he was rear-ended by an uninsured driver. Mr. Suminski had an insurance policy that included uninsured motorist coverage. Uninsured motorist coverage is a very important insurance coverage that allows a person to turn to his or her own insurance company to receive pain and suffering compensation if they are hit by an uninsured driver. Otherwise, a person without uninsured motorist coverage would likely receive nothing for his or her personal injuries [the auto attorneys at Michigan Auto Law strongly recommend this very inexpensive uninsured and underinsured motorist coverage].

Mr. Suminski’s accident lawyer filed a lawsuit against the uninsured driver who caused the automobile accident, as well as State Farm Insurance Company, because State Farm was refusing to pay out on its uninsured motorist contract for which Mr. Suminski paid for.

State Farm had a clause in its insurance contract that required its insured or his lawyer to first receive permission from State Farm to settle the case with the uninsured driver. Most Michigan insurance companies have identical language, and Michigan courts have consistently upheld the rights of insurance companies to bar recovery of uninsured and underinsured motorist benefits when a Michigan lawyer releases or settles a case without receiving written permission first to do so. In this case, State Farm tried to rely on this provision as a last resort to refuse to pay uninsured motorist benefits, but its actions up to that point were found to waive its right to do so.

The Court found that State Farm was still liable to its own insured because it had repeatedly had notice of Mr. Suminski’s claim and pending settlement with the uninsured driver. First, State Farm had issued the insurance policy and was a party to the lawsuit. Second, the trial court had mailed notice to the lawyers representing the parties reflecting the case evaluation award that showed the plaintiff and the uninsured defendant had both accepted the award. Third, State Farm did not step forward to raise the policy’s clause in a timely manner before or after case evaluation. Also, by letter copied to the State Farm lawyer, the uninsured driver’s lawyer had asked the injured plaintiff’s lawyer if there was any objection to the mutual acceptances of case evaluation. State Farm was repeatedly made aware of all of this because it was also a named party defendant to the action, and yet it said and did nothing to raise its exclusion language. State Farm and the lawyer for the injured plaintiff then tried to facilitate the matter using an agreed upon mediator and actively engaged in ongoing settlement discussions. Finally, only as trial loomed did State Farm then try to raise the exclusion clause. The Court ruled State Farm had “unclean hands,” that its actions went far beyond mere silence and in-fact constituted willing acts and conduct from which, in the interests of justice, waived State Farm’s own contractual requirement. The case is Suminski v. State Farm Mutual Auto Ins. Co., No. 273947, unpublished February 14, 2008.

This case demonstrates just one of many tactics being used by State Farm and other Michigan auto insurance companies to avoid paying benefits to innocent policy holders who are injured in motor vehicle crashes. The Suminski case is the sole exception. If you have been injured in an auto accident and have any doubts about how to interpret policy requirements or how to proceed, ask a Michigan No Fault attorney for help in reviewing your policies.

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