‘Inexcusable failure’ to provide information, ‘misrepresentations’ about filing time and ‘failure’ to give notice in Woodruff v. State Farm
When it comes to “Mad Dog” defense tactics, State Farm Mutual Automobile Insurance Company is one insurance company I write about often on the pages of this auto law blog. But it’s not my fault. They keep giving me more and more to write about.
Just last week, it was their despicable decision to refuse to pay PIP benefits to a disabled man who was hit by a car in his wheelchair (State Farm said he should have insurance on his wheelchair, even though the coverage doesn’t even exist!).
Before that, I wrote about how the Utah Supreme Court had criticized State Farm for:
- “[R]epeatedly and deliberately deceiv[ing] and cheat[ing] its customers”; and,
- “[I]nstruct[ing] its attorneys and claim superintendents to employ ‘mad dog defense tactics’” such as “using the company’s large resources to ‘wear out’ opposing attorneys by prolonging litigation, making meritless objections, claiming false privileges, destroying documents, and abusing the law and motion process.”
To read more, check out my blog post, “Have State Farm’s ‘Mad Dog’ tactics taken a bite out of you?”
And her comes the latest – a recent ruling from the Michigan Court of Appeals confirms State Farm is still relying heavily on dirty tricks from its “Mad Dog” defense playbook.
In Woodruff v. State Farm Mutual Automobile Insurance Company, the Court of Appeals highlighted and rejected State Farm’s use of stonewalling, misrepresentation and deception to deny Michigan auto accident victim Pamela Woodruff’s claim for “uninsured motorist” benefits.
After a rear-end car crash in Waterford, Michigan, caused by an uninsured driver when Ms. Woodruff was driving her sister’s Tennessee-registered and Tennessee-insured vehicle, Ms. Woodruff’s claim for uninsured motorist (UM) benefits was denied by her sister’s auto insurer, State Farm Mutual Automobile Insurance Company.
The Woodruff court ruled as follows regarding State Farm’s conduct in denying Ms. Woodruff’s UM claim and in opposing her lawsuit for unpaid UM benefits:
- Stonewalling – When Ms. Woodruff asked State Farm for a copy of her sister’s Tennessee auto policy under which Ms. Woodruff was claiming uninsured motorist benefits, State Farm repeatedly refused to provide a copy of the policy for more than two years. The Court of Appeals concluded that “State Farm’s inexcusable failure to provide Woodruff with a copy of the policy effectively prevented Woodruff from complying with the policy’s conditions for the recovery of uninsured motorist benefits.”
- Misrepresentation – Even though the policy in question imposed a “contractually shortened period of limitations” of two years, the court found that “State Farm’s representatives made significant misrepresentations concerning the applicable policy” when they “specifically told Woodruff’s lawyer that Woodruff would have six years within which to assert her claim.”
- Deception – When asked its reasons for denying Ms. Woodruff’s “uninsured motorist” claim, State Farm provided an incomplete answer, failing to mention the reasons the auto insurer would ultimately rely on when seeking to dismiss Ms. Woodruff’s lawsuit (i.e., Ms. Woodruff’s alleged “noncompliance” with the UM policy’s requirements about who must be sued and its shortened period of limitation). Additionally, when asked to provide its “affirmative defenses” to Ms. Woodruff’s lawsuit, State Farm ducked the question by failing to provide the specific facts that are required by law. For example, even though State Farm would eventually insist on dismissal based on Ms. Woodruff’s “noncompliance” with State Farm’s UM policy, “State Farm did not even identify, let alone attach to its answer, the specific contractual provisions with which Woodruff purportedly failed to comply.” Based on this, the Court of Appeals concluded State Farm had “failed to give Woodruff fair notice” of its defenses and had “engaged in a course of conduct” that “reasonably led Woodruff to believe she had complied with the terms” of State Farm’s UM policy.
The significance of the Woodruff ruling on insurance company dirty tricks
Consequently, the Court of Appeals in Woodruff ruled that, in light of State Farm’s stonewalling, misrepresentation and deception, Ms. Woodruff’s lawsuit for unpaid uninsured motorist benefits could not be dismissed for “noncompliance” with State Farm’s UM policy requirements and/or with State Farm’s contractually shortened period of limitations for filing a UM claim.
The Woodruff ruling is very significant and important for any automobile accident victims in Michigan, in my opinion, for the following reasons:
- First, it is a sadly rare but welcome instance of Michigan courts coming to the aid of an auto accident victim mistreated by an insurance company. Sadly, in the last two decades we have had Republican majorities who have ruled far more often in favor of the insurance companies that donate so much money to their judicial campaigns.
- Second, it provides an insight into the type of anti-consumer behavior that I see nearly every single day as an automobile accident and insurance attorney in Michigan. In this case involving State Farm, it provides the public with a snapshot of the lengths to which the state’s largest auto insurer, State Farm Mutual Automobile Insurance Consumer, is willing to engage in to avoid paying out PIP No Fault insurance benefits to accident and injury victims.
- Third, the Woodruff ruling provides compelling and urgent real proof of the long-overdue need for auto insurance reform in Michigan, such as the enactment of “bad faith” legislation, the amendment of the Michigan Consumer Protection Act to apply to auto insurance companies and the need for punitive damages (Michigan is one of the few states that doesn’t have punitive damages when insurers engage in egregious cut-offs and denials of claims).