We represent insured individuals who have suffered a loss and been treated unfairly by their insurance company. Sometimes the insurance company has denied the claim without a legal or factual basis; sometimes they have used illegitimate tactics. Our firm has extensive experience in representing consumers and homeowners who have been cheated or treated unfairly by their insurance company. We handle all areas of insurance bad faith including claims arising under homeowner, automobile, errors and omissions, medical, health, workers compensation, commercial general liability and officers' and directors' insurance policies.

Implicit in every contract is an implied covenant of good faith and fair dealing.  This tenet applies to insurance contracts as well.  A "special relationship" between the insurer and the insured is deemed to exist as a result of the unequal bargaining power of the parties, i.e. overwhelming economic power, bargaining position and semantic sophistication of the insurer.  The recognition of these unique characteristics of the insurer/insured relationship and the importance of insurance to society is the impetus behind the court's development of a body of law we commonly refer to as "bad faith." The Mississippi Supreme Court in Andrew Jackson Life Insurance Co. v. Williams, 566 So. 2d 1172 (Miss. 1990), recognized the above inequalities of the insurer/insured relationship and quoted a California Supreme Court opinion which opined,

It is a matter almost of common knowledge that a very small percentage of policy holders are actually cognizant of the provisions of their policies and many of them are ignorant of the names of the companies issuing the said policies.  The policies are prepared by the experts of the companies, they are highly technical in their phraseology, they are complicated and voluminous... and in their numerous conditions and stipulations furnishing what may be veritable traps for the unwary. - . [C]ourts, while zealous to uphold the legal contracts, should not sacrifice the spirit to the letter nor should they be slow to aid the confiding and innocent.

Williams at 1189 (quoting Raulet v. Northwestern Nat'l Ins. Co. of Milwaukee, 107 P. 292, 298 [1910]).

Two of the critical cases on bad faith in Mississippi are Standard Life Insurance Co. v.  Veal., 354 So. 2d 239 (Miss. 1977) and Universal Life Insurance Co. v. Veasley, 610 So. 2d 290 (Miss. 1992), outlining what constitutes a "legitimate, arguable reason" to deny a claim.

One of the most comprehensive opinions handed down by Mississippi Supreme Court on bad faith in recent years is Andrew Jackson Life Insurance Co. v. Williams, 566 So. 2d 1172 (Miss. 1990).  It describes the willfulness of the conduct which must be present to entitle a plaintiff to punitive damages for the bad faith denial.  Here are some specific examples of bad faith "categories" of conduct.  The decision in State Farm Mut. Auto. Ins. v. Grimes, 722 So. 2d 637 (Miss. 1998) is also insightful on the elements of the claim and conduct necessary for a punitive damage award.

What most believe is the leading decision in the state on workers' compensation bad faith is Rogers v. Hartford Accident and Indemnity Co., 133 F.3d 309 (5th Cir. 1998).  This is a case that we handled all the way up through the Fifth Circuit, with oral argument permitted, placing comp carriers and employers in the same shoes as traditional carriers and requiring that they also act in good faith when adjusting a claim.  We also wrote a published article on this decision and its impact on workers' compensation claims in "Rogers v. Hartford: The Claimant Gets Justice," VOIR DIRE, 1998.

A few cases illustrate the duty of an insurer to investigate.  In Reserve Life Insurance Co. v. McGee, 444 So. 2d 803 (Miss. 1983), McGee purchased health insurance in early 1980.  In September and December of 1980, McGee was hospitalized for a bladder lesion and an inflamed bladder respectively.  McGee submitted the proper loss forms to Reserve Life after his hospitalizations.  As of January 21, 1981, McGee's bills remained unpaid, as his files were "incomplete" and Reserve Life's investigation was still pending.  On February 12, 1981, Reserve Life formally denied McGee's claims on the basis of material misrepresentations by McGee on the application for insurance.

Reserve Life engaged in classic "post-claims underwriting."  Rather than check the medical history of McGee at the time of McGee's application for insurance, Reserve Life sought to do so only after a claim was filed.  Therefore, Reserve Life embarked on a typical fishing expedition for matters which would allow them to deny McGee's claim.

Interestingly, Justice Robertson in a special concurrence opined that he would as a matter of law hold that where an insured discloses the name of his personal treating physician and executes the proper form authorizing his physician to release information to the insurer in the application for insurance, the insurance company should be charged with the knowledge of all information which the doctor's records and the doctor himself may disclose about the applicant.  Id. at 816.

Another illustrative case about the duty of the insurer to investigate is Bankers Life and Casualty Co. v. Crenshaw, 483 So. 2d 254 (Miss. 1985).  Here, when Crenshaw submitted his claims to Bankers Life, the insurance company referred the claims to its in-house medical director for review.  After more than three months of investigation, Bankers Life, relying on the advice of its own in-house medical director, denied Crenshaw's claim based upon a pre-existing condition.  The in-house medical director did not examine Crenshaw personally, did not contact Crenshaw's treating physician, and made no request for Crenshaw's complete medical records.  The in-house medical director was not an independent physician, but an employee and agent of Bankers Life; therefore, the Court opined, facts which were known or should have been known by the in-house medical director were imputed to the insurance company.  Id. at 274.  According to the Court, where an insurance company chooses to rely on the medical opinion of an employee based upon an incomplete medical record instead of relying on the medical evaluation of a disinterested physician, the punitive damages issue can be properly submitted to the jury.

An insurance company is under a continuing duty to reevaluate its position when it chooses to deny a claim.  Eichenseer at 1372.

In Valley Forge Ins. Co. v. Strickland, 620 So. 2d 535 (Miss. 1993), the Mississippi Supreme Court affirmed a judgment against Valley Forge for $1 million in punitive damages.  The trial court stated that "Valley Forge has engaged in a bad faith effort to assert in Mississippi a contention [subrogation] Valley Forge knows it cannot successfully assert in Louisiana, the state where the contract was made." Id. at 539.  The Court opined that Valley Forge owed Tina Strickland a duty not to interfere with her recovery of the amounts due her, a duty which transcends the contract between Valley Forge and the Stricklands.  By asserting an unmeritous subrogation claim for which it had no arguable basis for asserting, Valley Forge breached this duty.  Id. at 54.

This duty becomes of particular importance in cases where a carrier has knowledge that the plaintiff will not be "made whole" by an underlying settlement.  The leading case on this concept is also a Stevens & Ward case at the Mississippi Supreme Court titled Hare v. State of Mississippi, 733 So.2d 277 (Miss. 1999).

In Richards v. Allstate Insurance Co., 693 F.2d 502 (5th Cir. 1982), Allstate's standard automobile insurance policy contained an exclusion which had been declared invalid and void by the Mississippi Supreme Court in Lowery v. State Farm Mutual Automobile Insurance Co., 285 So. 2d 767 (Miss. 1973).  In 1977, Richards suffered personal injuries while operating an owned but not insured vehicle as a result of the negligence of an uninsured motorist.  Allstate denied Richards' claim based on the invalid exclusion even after the Lowery decision was repeatedly brought to the attention of Allstate employees, emphasizing its fatal effect on the exclusion.

Richards filed suit.  The Fifth Circuit affirmed a jury verdict of $2500 actual damages and $750,000 punitive damages, remitted to $350,000.  Even though admittedly aware of the Lowery decision, Allstate nevertheless decided not to delete the invalid exclusion from its standard policy.  Allstate's failure to do so represented a corporate decision by Allstate to not inform its policyholders of undisclosed coverage required by Mississippi law.

A few years later in Employers Mutual Casualty Co. v. Tompkins, 490 So. 2d 897 (Miss. 1986), the same exclusion in Allstate's policy was in Employers Mutual's policy.  At trial, Employers Mutual tried to claim that the claims adjuster's reading of the policy was a simple mistake.  However, the Mississippi Supreme Court held no mistake was made, as the claims adjuster had a correct reading of the void exclusion contained in the insurance company's policy and made a denial based on the void exclusion.  The result was a $500 actual damage award and a $400,000 punitive damage award.

These are but a few of the examples of conduct which must be deterred through bad faith litigation.  It is not a matter of receiving unjust rewards; it is a matter of preventing giant insurance companies from running over average policyholders in order to fatten their checkbooks.  We admit to getting additional pleasure out of these claims because they force the insurance industry to do the right thing for our client and every client after him who is similarly situated.

You can provide information to Stevens & Ward at this site in order for us to provide you with a free evaluation of your potential case. Until we offer to represent you and you agree to sign a contract, however, you are not represented by this firm.

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