WXYZ-TV Channel 7 has exposed a particularly nasty insurance company tactic in Michigan that’s causing real harm to people injured in car accidents. Some Michigan insurance companies like Nationwide, Allstate and State Farm stop paying legitimate insurance claims for no reason, except to say a person is “under investigation.”
This can happen to anyone. In the news story, Nationwide Mutual Insurance Company put a well-respected elderly woman “under investigation” and cut off her benefits entirely. This woman had no history of wrongdoing and never even filed a prior insurance claim. She wasn’t told why her insurance benefits were being terminated, what she had done wrong or how she could reinstate them.
Below is a video of the TV news story:
While this was the first time a Detroit news station exposed this egregious insurance scheme, it’s something Michigan personal injury lawyers have been dealing with for a long time.
How Michigan Insurance Companies Can Ruin Lives
You might wonder what it really means when someone is put “under investigation.” Sadly, it means that the insurance company responsible for paying an injured person’s medical bills stops paying all together — making it impossible for the individual to obtain medical help for his or her injuries. It also means the insurance company suddenly and without explanation cuts off the injured person’s wage loss benefits. This creates tremendous financial pressure for people who can’t go back to work because of their personal injuries.
To put it frankly, when an insurance company such as State Farm puts injured people “under investigation,” the company is ruining lives by placing these people in impossible positions. For those who are seriously hurt from car accidents and cannot return to work, the hardship is incredible.
To further complicate matters, injured people can’t even find out why they’re being put under investigation. And there is nothing anyone can do to force an insurance company to start paying up. Filing a lawsuit is the last resort. So a lawyer must be hired (and paid) to compel an insurance company to pay what they should have been paying in the first place.
Michigan Lawyers Can’t Stop Insurance Companies from Cutting Off Benefits
The terrible truth is that there’s almost nothing Michigan lawyers can do to stop this unfair practice. Michigan does not have bad faith laws or punitive damages to punish insurance companies when they have intentionally wreaked havoc on innocent lives by refusing to pay out on legitimate claims. These insurance companies are protected from consumer protection claims that would otherwise be brought under the Michigan Consumer Protection Act (MCPA). According to Michigan law, there is also no claim that a lawyer can bring for intentional infliction of emotional distress when innocent lives are ruined.
This doesn’t happen in other states on such a grand scale. Instead, when legitimate claims are wrongfully denied, people in other states can bring claims for bad faith or punitive damages. There is redress for innocent victims, and a true deterrent for dishonest conduct by insurance companies.
But without any of these protections, all Michigan auto accident lawyers can do is file a lawsuit and, if the case is taken all the way through expensive and slow litigation to a jury verdict, seek 12 percent penalty interest and a reasonable attorney fee. But even seeking the penalty interest has become increasingly difficult following the recent Michigan Supreme Court holding Moore v. Secura.
Cutting Off Insurance Benefits to Injured People is Illegal
When insurance companies blatantly cut off auto accident victims’ benefits without cause, they are breaking the law. According to Michigan’s no-fault insurance laws, an insurance company does not have the legal right to simply stop paying claims under the guise a person is being investigated. In fact, Michigan automobile insurance companies already have methods to legally protect themselves if they suspect a fraudulent claim: An insurance company is allowed to wait until reasonable receipt of proof is provided before paying a claim. This allows an insurance company adjuster to properly investigate suspicious claims. Still, once reasonable proof has been provided, an insurance company is supposed to pay legitimate claims.
The practice of illegally handling claims is spreading like wildfire in Michigan, and again, there’s almost nothing that can be done to immediately stop it. If you have been injured in a car accident or truck accident and have been unfairly treated by your insurance company, please contact Michigan Auto Law to discuss your legal rights.