Rejection of benefits leads to bad faith insurance lawsuit

Many people in Florida and elsewhere do not question an insurer when it issues a denial of benefits. In many instances, however, insurers will interpret language in the policy to their own benefit. When they do that blindly and ignore their plain responsibilities to their insured customer, the company may be liable to the insured under the principles of bad faith insurance law.

In one recent case, a woman in another state is suing the Northwestern Mutual Life Insurance Company for denying to pay disability benefits that she claims are due her under the policy. She filed the suit in a federal district court, claiming bad faith against the insurer. She alleges buying three policies from the company, apparently through her employer.

She asserts submitting a claim for disability benefits in 2015 and receiving several denials from the company. She asserts having provided the company with her medical records. The company’s denial appears to be based on the assertion that the insured is “legally” disqualified for benefits instead of factually disqualified. The press reports on the lawsuit do not explain the company’s meaning behind that unusual reason for rejecting benefits.

The procedure in the federal court will provide for discovery so that the plaintiff will be able to determine more precisely the steps taken by the company to come up with the rejection decision. Discovery can prove to be beneficial in a bad faith insurance case if internal memos between the employees reveal inconsistencies or improper reasons for taking negative action. The procedures followed in a federal court in Florida with respect to insurance litigation will be generally the same as in a federal court in another state.

Source: wvrecord.com, “Huntington woman sues Northwestern Mutual, company says she doesn’t qualify for benefits“, Kyla Asbury, Nov. 23, 2016

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