• On August 12, 2014, the Arizona Court of Appeals decided the case of Miriam Arellano v. Primerica Life Insurance Co. Miriam Arellano initially met with Tammy, an agent of Huels Cox dba Cox & Associates (Huel) to start a $100,000 life insurance policy on her husband, Martin Arellano. After the policy started, Mrs. Arellano called Huel to request the policy be cancelled, citing it was too expensive. Following this request, Donald, a second agent for Huel, met with Mrs. Arellano at her home to discuss coverage options. Ultimately, Mrs. Arellano agreed to a policy of $150,000 even though it was a slightly higher premium. Donald told Mrs. Arellano that her premium check was enough to bind coverage, though she never completed a second application. Donald then submitted a forged application to Primerica for the policy, which was found to have errors. Further, the disclosed medical condition of Mr. Arellano warranted a medical interview and exam. When contacted to schedule the interview, Mr. Arellano explained that he believed he already had coverage through another policy that his wife established. Primerica’s medical vendor left a message for Donald explaining the Primerica coverage had been cancelled. At that time, however, Donald was no longer working for Huel and there was no follow up by another agent.
Mr. Arellano died on March 14, 2007. His wife filed a claim with Primerica, which they denied, stating that coverage had not been secured. Primerica provided Mrs. Arellano a copy of the second application, to which she claimed the signatures and initials were forgeries. Mrs. Arellano sued Huel, Donald and Tammy for negligence, breach of contract and fraud. She also brought claims of negligence, insurance bad faith and breach of contract against Primerica.
• On July 15th, 2014, the Arizona Court of Appeals decided the case of Midtown Medical Group, Inc. v. Farmers Insurance Group. The issue in this case was the resolution of medical liens against personal injury settlements. On two separate occasions, Farmers had issued a single settlement check in the name of both the injured party and Midtown Medical Group (the lienholder). The checks were endorsed and cashed without Midtown’s authorization. Midtown then sued Farmers for payment of its liens. Farmers tried to argue that Midtown should not have been allowed to sue because Farmers had issued payment. The Court decided that Midtown was allowed to sue.
This case could change the way Arizona personal injury settlements are paid. Currently, many insurers will resolve a medical lien by issuing a single payment with both the injured party and lienholder named as payees. Insurers may now require medical liens to be satisfied before they will pay an injured party. Check back for updates on this developing area of the law.
• On May 20th, 2014, the Arizona Court of Appeals decided the case of Beaver v. American Family Insurance Company. The issue in this case was the rejection of underinsured motorist (UIM) coverage for Beaver under her father’s policy with American Family after an accident. Beaver was driving a motorcycle when she was struck by a negligent driver. The driver’s insurance company paid up to their policy limits. Beaver submitted the claim to American Family under UIM. American Family denied the claim because the UIM coverage for family members excluded family members who own another vehicle.
Beaver argued that the “other vehicle” exclusion was against public policy. The trial court agreed, and held that she was entitled to UIM coverage. The Court of Appeals reversed, finding that American Family’s “other vehicle” exclusion was valid.
• On October 25th, 2012, the Superior Court of Pennsylvania decided the case of Daniel Berg v. Nationwide Mutual Insurance Company, Inc. The issue in this case was the settlement and repair of damage to Berg’s Jeep after an accident and claim with Nationwide. When the claim was filed, Nationwide instructed Berg to have his vehicle repaired at Lindgren Chrysler-Plymouth, Inc., one of Nationwide’s direct repair program shops. Approximately ten months after being repaired, Berg received a call from a former Lindgren employee stating that there may be serious structural damage to the Jeep. This led Berg to file suit against Nationwide, claiming breach of contract and negligence, among other things. The Court decided that Nationwide had, in fact, been negligent in returning the Jeep to Berg with knowledge that the repairs had failed.
This case is an important demonstration of bad faith insurance settlements. Though insurance companies are required to honor the contracts they provide when paying for a loss, there are situations when that may not happen. Being educated about your rights as an insured under any insurance policy is key to making sure your claims are settled quickly and fairly.