Chaney Firm featured in Arkansas Business

Our firm was recently featured in an article in the Arkansas Business magazine. The article discusses how we came together as a family firm, how the practice works on a day-to-day basis, and what types of law we handle. We appreciate Arkansas Business doing the article about us, and we'd appreciate it if you'd click on over and read the article.

Insurers refusing to defend insureds may lose defenses to coverage

An interesting ruling came down in New York recently about the duty to defend. The duty to defend requires an insurance company to pay for a legal defense whenever one of its insureds gets sued. The duty to defend is very broad, and can only be defeated where the allegations in the lawsuit against the insured make it clear there is no insurance coverage. 

In contrast, the duty to indemnify is much narrower. It requires a judgment against the insured (or a settlement) before an insurance company must pay for damages. In some cases, coverage questions or disputes over the amount of damages warrant taking a case to a jury. If the jury decides there is no coverage or no damages, the duty to indemnify is never triggered. However, the insurance company is still required to foot the bill for its insured's legal defense.

In the New York case, the insured had to fight the insurance company over whether his company would be provided a lawyer.  The insurance company lost that battle and tried to claim it had no duty to indemnify the insured based on a coverage issue. New York's highest court of appeals rejected that argument. That Court held that the insurance company's wrongful decision to refuse a lawyer to its insured meant that the insurance company was liable up to its policy limits.

In many cases, insurance companies try to prolong the litigation process in hopes that its opponents will give up or run out of money. With such deep pockets, insurance companies can afford to take several bites at the apple. Kudos to the New York Court of Appeals for recognizing this fact and ruling that an insurance company must play fair if it wants to preserve all of its legal defenses.

We could use a rule like this in Arkansas. I worked a case once where a farmer spent six figures in legal fees defending three lawsuits against his farm. His insurance company wrongfully denied coverage, and it took more than a year in litigation to force the insurance company to pay for his defense. Luckily for him, he had the resources to pay his attorneys; many people would have been bled dry and simply given up. A version of this New York rule would be a good candidate for insurance reform in upcoming legislative cycles.

Insurer called out for bogus "not medically necessary" claim denial

When an insurance company decides it doesn't want to pay a claim, it is required by law in most states to give a legitimate reason. If it doesn't give a reasonable explanation or doesn't have a legitimate reason, the insurance company can be liable for bad faith. 

One way insurance companies try to boost profits and get around these requirements is to claim that certain treatments are "not medically necessary." An extreme example aired on The Today Show several years ago: 

Here are some of the facts from the show:

• A man and his sister had the same health insurance company, United Healthcare

• The man and his sister had same life-threatening disease, cystic fibrosis, and the same mutation of that disease

• The man and his sister had the same doctor

• The doctor for the man and his sister wrote an identical letter to United Healthcare asking it to pay for a new, life-saving medication for cystic fibrosis, which costs $25,000/month

United Healthcare approved the claim for the sister, but denied the claim for the brother as "not medically necessary." For over a year, the man's health declined, while his sister's improved. As The Today Show prepared to air a segment on the man's fight for life against United Healthcare, the show's producers called to ask for a comment by United Healthcare. The response? A complete change in position, so they wouldn't look quite as bad on national television.

Kevin and Katie Dwyer's case shows just how arbitrary insurance companies can be. But most folks aren't going to receive help from The Today Show to make their own insurance company do the right thing. In a country where we are required by law to buy car and health insurance or get hit with severe economic penalties, it is unfair for insurance companies to get away so often with such arbitrary conduct.

Here at the Chaney Law Firm, we see "not medically necessary" claim denials all the time. It is a method insurance companies use to boost profits, often at the expense of their own policyholders. As one example, one car insurance company denied payments for computerized radiographic mensuration analysis (CRMA) services by a medical doctor in Texarkana based upon reports by two chiropractors in Washington State and Georgia. The medical doctor objected to the Washington and Georgia chiropractic boards and the insurance company, but the insurance company wouldn't change its position. In another example from one of our cases, a carrier has a general business practice of capping claim payouts on PIP claims by setting an arbitrary number of treatments for their own policyholders. If the number of treatments exceeds the arbitrary number, the claim is sent to a physician reviewer (most likely in another state) to provide a sham report for the carrier to rely on in underpaying the claim.

These example reflect a common practice; in many instances, the insurance company will attach a boilerplate report from a medical reviewer who lives many states away and who does not know the standards of practice here at home. Another example is when insurance companies hire the same experts here in Arkansas repeatedly because they always issue the same boilerplate reports in favor of the insurance company. You can read more about these so-called "medical reviewers" and their predictable opinions here.

If you've been told by an insurance company your treatment is not medically necessary, you have rights. You can appeal the insurance company's decision, take your case to the Insurance Commissioner for help, or hire an attorney to help you with the process. We provide free consultations and would be happy to see if we can help. 

Chaney Firm verdict upheld on appeal

I argued a case to the Eighth Circuit Court of Appeals in January (here's an earlier report on the argument). We tried the case in January 2012 in federal court in Hot Springs and received a nice verdict for our client. We're pleased that the Eighth Circuit agreed with us and allowed the verdict to stand. The Court's decision is posted here.

One issue on appeal dealt with the routine use of medical visual aids based upon CRMA, digitized x-rays, and proton density MRIs. The defense claimed that the visual aids were misleading and were used as actual evidence, rather than illustrations to help doctors testify about injuries to specific body parts. The Court held that the medical illustrations were not misleading because a doctor testified that they were accurate and helped him teach the jury about complex medical issues.

The other main issue on appeal was a procedural question concerning two professional defense witnesses that were excluded; the defense tried to call these new experts at the last minute because its original expert's theory of degeneration did not hold up under cross-examination. When the trial judge didn't let them call new witnesses, they changed tactics and tried to claim they needed the new experts because they were surprised by what our client's doctors had to say. The trial judge saw through this charade. On appeal, the defense claimed that our client's doctors should have been excluded. The appeals court rejected the surprise argument, as the defense had all the relevant medical records, had received a summary of the anticipated testimony, and never took depositions of the doctors.

We're pleased to have obtained a good result for a deserving client. 

Cite: Bradshaw v. FFE Trans. Servs., Inc., 715 F.3d 1104 (8th Cir. June 3, 2013).

Chaney Law Firm Newsletter

Clients and friends should be receiving a copy of a newsletter from our firm this week. Since many folks are hitting lakes and rivers to keep cool, the newsletter contains some helpful information on boating and swimming safety rules. Snag a copy of the newsletter here, or read it below.