Insurance Lawyer Blog

Our San Francisco insurance lawyer knows that far too many local community members have found themselves in the nightmare scenario of paying for insurance for years only to find out the benefits, for whatever reason, are not available when a disaster strikes. Often a consumer finds out he or she does not have sufficient coverage or that there is an exemption in their insurance policy for something only when the damage is already done. And insurance companies are frequently guilty of confusing business practices, i.e. hiding an exemption in tiny print or legalistic language, or outright intimidation of uninformed consumers.

Fortunately, new rules are in effect now to help California homeowner’s insurance consumers (http://www.brodfirm.com/lawyer-attorney-1844610.html) avoid these kinds of nightmarish scenarios. The California Department of Insurance has put in place the new rules to help homeowners be more informed about their policies and keep consumers from being underinsured. Insurance agents and brokers do not have to help consumers come up with a coverage figure, but under the new rules, if they do, the number must be based in reality. The brokers and agents cannot make up a number or give you a random estimate. If the broker or agent gives a homeowner a figure of how much coverage protection they need for their home, that figure must be made on a concrete calculation. In addition and in conjunction with this, the agents and brokers are required to have specific and ongoing training to teach them to do these calculations.

Some insurance brokers and agents have already been doing this voluntarily, but the insurance companies are not happy with these new rules mandating this procedure if a coverage amount is given to a consumer. Naturally, insurance companies do not want to be responsible for telling consumers what coverage is needed. The current system works to the companies’ advantage and helps their bottom line—which is to make more and more money for their coffers, not to assist consumers in times of trouble if they can avoid it. The companies are so concerned with these new rules that law suits have been filed to overturn the rules, but so far the rules are still in effect.

Our San Francisco insurance attorneys often remind consumers that California has other protections for homeowners’ insurance consumers, as well. Insurance brokers’ fees must be fully disclosed and agreed to by the consumer up front and brokers are not permitted to be an agent of the company providing the insurance coverage. Homeowner’s insurance companies are only officially allowed to cancel coverage for nonpayment of premiums, fraud, material misrepresentations or physical changes to the property that make hazardous accidents more likely. Insurance companies are also limited in the rates they charge. Each company calculates rates based factors such as location, choice of deductibles, local fire protection, and the age and condition of the home. Once determined, these rates are subject to approval by the Department of Insurance, which seeks to ensure that rates are competitive and fair.

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California Flood Made Worse By Tricky Insurance Companies

California Insurance Law Fraud Basics

Recently California’s 6th Court of Appeals ruled that when a car is sold, the previous insurance is released from liability even if all of the DMV documents have not been transferred yet. Our San Francisco insurance attorneys think auto insurance consumers should be aware of this important recent ruling when buying a new car and deciding what to do about insuring a new car- the timing could be critical.

This recent case, Thiel v. Mercury General Corporation. (http://www.leagle.com/xmlResult.aspx?xmldoc=In%20CACO%2020111227042.xml&docbase=CSLWAR3-2007-CURR), turns on the specific timing and facts as to when ownership of the car was transferred and therefore when the insurance policy ceased to cover the car. Daniel Thiel bought a 2001 BMW from the Benfords in 2008. He paid for the car both with cash and a check. He was told when his check cleared the Benfords would send him the car title. However, before any paperwork could be finalized, an uninsured drunk driver struck Mr. Thiel as he was driving his new car home the very day he bought it. Mr. Thiel was not at fault for the accident and suffered head, chest and leg injuries, requiring two surgeries on his leg and physical therapy.

Mr. Thiel was also uninsured at the time, perhaps simply because had not made insurance arrangements for the car he bought just that day. Regardless, he filed a claim with Mercury Insurance, which had insured the car under the Benfords, but his claim was rejected because the Benfords filed an online Notice of Transfer and Release of Liability with the local DMV the day after the accident and therefore the coverage was terminated.

Mr. Thiel filed a lawsuit against Mercury and claimed, among other things, insurance bad faith. He cited a California statute stating that in order to be a “bona fide sale” and avoid liability when a car is delivered to the buyer, the seller must also either endorse and give the certificate of ownership or deliver the transfer and release of liability documentation to the DMV. Mr. Thiel said he had not received title and the paperwork had not been filed with the DMV at the time of the accident. The appellate court held that a bona fide sale occurred through the nature of the agreement between the buyer and seller which is not disturbed by mere paperwork delays. The court stated that by filing the online Notice within five days of the sale, the Benfords were released of all liability after the sale date, making the fact that the accident took place prior to the filing of the Notice irrelevant.

While this case has a specific fact pattern that lead to Mr. Thiel’s unfortunate dilemma, there are lessons for California auto insurance consumers. San Francisco Insurance lawyers know that auto insurance, like all insurance, can be tricky for consumers to understand. There are seemingly an endless array of clauses and particularities of when something is covered and when it is not. Perhaps when you buy a new car, you do not think of getting insurance ahead of time. Or maybe you are unaware of what happens to your previous insurance when you buy or sell a car. As always, the important thing is to know about your policy and understand the basics of the insurance laws before a problem arises. Anytime you have concerns about insurance issues, be sure to contact a San Francisco insurance lawyer to get experienced help.

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$54 million Recovered for California Insurance Consumers in 2011

California Insurance Law Fraud Basics

Good news for those interested in the fight to keep the insurance industry fair and honest in California. Commissioner Dave Jones announced on Tuesday that California’s Department of Insurance (CDI) recovered $54 million for consumers in 2011.

The Department has two branches, one to deal with consumer complaints and the other to investigate insurance companies through a thorough examination process (see further discussion of CDI here. The Consumer Services branch runs a consumer hotline that receives about 200,000 calls annually, as well as bureaus on health claims, claims services, and rating and underwriting services. Our San Francisco insurance lawyer was happy to read that the Consumer Services branch recovered over $49 million last year through investigations of the complaints filed. The other division, the Market Conduct Branch, which includes a field claims bureau and a field rating and underwriting bureau, ran 114 examinations of insurance companies last year and recovered an additional $5 million for California insurance consumers. Commissioner Jones stated that protecting consumers is the Department’s top priority and that, “Our consumer complaint services and market conduct exams are important tools that we employ to respond to the needs of consumers and proactively go after any activities that pose a threat to policyholders."

The 2011 numbers are actually down from 2010, when the Department of Insurance recovered $63.8 million for consumers. And the Department recovered $89.1 million in 2009, but that number was higher because the Department was still processing the high volume of claims after California’s devastating 2007-08 wildfires. These high recovery numbers year after year show that the Department of Insurance is needed to be a watchdog for nefarious insurance companies trying to use inappropriate tactics against honest, paying consumers.

Those of us who practice California insurance law should not be surprised by the size of the annual recovery numbers. It is common knowledge that some insurance companies act out of greed and for the sake of profits, trying every means available to pay out as little as possible to the policyholder. The Department of Insurance’s hotline is a good starting point if you are unhappy or feel cheated by your insurance provider, as CDI is tasked with things like ensuring consumers are being treated fairly and imposing penalties for legal violations. The number for the consumer hotline is 1-800-927-HELP (4357), and you can file a formal complaint.

But when the Department gets your complaint, it contacts your insurance company and informs them of the complaint and also asks for the company’s version of the event or issue. The Department does not adjudicate a dispute. The goal of the complaint process is more to find patterns from complaints and when there is a clear instance of an insurance company repeatedly acting in a certain inappropriate or illegal way. If you are in a dispute with your insurance company in our area to receive the benefits or damages that you deserve you might need personalized legal assistance from a qualified San Francisco insurance attorney.

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Blue Shield Settles Rescission Lawsuit

California Insurance Law Fraud Basics

Among the new laws passed in 2011 is a new California insurance law, SB 946, which aims to complement existing law that requires equal coverage of mental health conditions and medical conditions. The Mental Health Parity Law and a settlement agreement reached by insurance companies and the California Department of Managed Health Care provide for insurance coverage of mental health conditions, including the full spectrum of autism. Insurance companies must provide equal mental health coverage and maximum lifetime benefits at the same rates as medical coverage.

Existing regulations required that all treatment be provided by licensed professionals, such as psychologists, registered nurses, and social workers. However, this language excluded certified providers of “applied behavior analysis” (ABA,) a prevalent strategy meant to improve behavior and quality of life for families with autistic children. The distinction between a licensed profession and a certified one is made by how the profession is regulated. Licensed professions are regulated by the state while certified professions are regulated by non-governmental entities.

The new law has a great impact on families with autistic children attempting to obtain health insurance and make claims to pay for behavioral treatments. It requires insurance companies to cover mental health treatment such as applied behavior analysis as long as it is prescribed by a licensed professional. The mental health treatment itself may be carried out by professionals who are not regulated specifically by the State of California.

The California Association of Health Plans opposed the bill, stating an industry study that the bill would effectively raise insurance costs by $850 million. A similar study carried out by the California Health Review found that it would raise insurance costs by about $93 million and lower the costs of special education and social services, paid for by the taxpayer, by about $140 million.

Families affected by the bill should take some exceptions to coverage into consideration. Insurance plans provided by federal and state governments, such as ERISA, CalPERS, Medicare, and Medi-Cal, are excluded from the law’s requirements. Those plans have their own requirements regarding mental healthcare. Also, plans that are considered “self-funded” or paid for by an employer who did not purchase a fully funded plan from a third party are excepted from the bill’s regulations. It is difficult for insured employees to tell the difference and should call their employer’s human resources department to inquire.

Moreover, the bill is effective July 1, 2012, but it sunsets on July 1, 2014 only two years later. The federal healthcare plan is set to take effect at that time and SB 946 will have to be re-evaluated to comply with federal law. Therefore, families should look closely for deadlines and news updates to determine future pay outs for mental healthcare. In the meantime, Autism Speaks, a prominent autism advocacy organization, recommends that persons harmed by insurance companies violating this or other insurance laws contact an attorney to see if legal action is appropriate.

Besides the laws already mentioned, insurance companies doing business in California must adhere to the California Insurance Code. Insurance companies may not engage in tactics meant to delay payment or offer to pay out low amounts on claims in bad faith. Additionally, they must communicate promptly with the insured regarding their claims. The insurance company must tell you why they denied your claim.

Continue reading " New California Insurance Law Seeks to Broaden Parameters of Insurance Coverage for Autism " »

An annual California Employer Health Benefits Survey came out this week with bleak news for California insurance consumers. It polled 770 benefit managers at private companies in the state from July to October 2011. The bottom line of the survey was that fewer companies offered health insurance in 2011 and those that did charged more for it. Those of us who practice insurance law in California are naturally concerned about these newly released statistics and what further impact the numbers could have as the health insurance market feels pressure from the economic downturn.

In California, 63 percent of workers have employer-sponsored health insurance, down from 73 percent two years ago. And premiums for these health plans rose by an astonishing 153.5 percent since 2002, more than five times California’s inflation rate for the same period. About 25 percent of employers either reduced benefits or raised costs on employees in 2011. A large part of this is due to the economic downturn of the last few years coupled with steadily rising costs. And there is no end to this trend in 2012 as 36 percent of California employers stated they are either somewhat or very likely to increase the amount employees pay this year. This upward trend in costs has been present for several decades, but the dramatic upturn in the numbers in this most recent survey are still striking even to experienced San Francisco insurance lawyers.

The numbers are especially alarming considering consumers are getting fewer benefits for their money, as well. The insurance benefits decreased at the same time as co-pays, deductibles, and premiums rose dramatically in cost for the employee-consumers. And employers are paying more than average in California, as well. They contribute, on average, $5,000 per single employee and nearly $12,000 a year for family coverage.

With health insurance squeezed from all sides, Californians should take extra care in being aware of what benefits they are entitled to and informed about their health care policy and what choices they have. A San Francisco insurance attorney can help you understand your insurance and can be your most important resource if you are denied benefits from insurance companies trying to find even more ways to earn more money. As a representative of Consumer Watchdog, a non-profit, stated, the premiums have gone up five times more than inflation and the money is going somewhere. Even accounting for higher costs, the insurance companies’ greed is powerful. Insurance consumers need to be vigilant of their own interests, since the companies’ interest is profit, not your health.

Some of these spiraling costs should be ameliorated, according to industry expectations, in 2014 when the full implementation of President Obama’s healthcare law will go into effect. However, that is still two years away. Also, a measure in the California legislature to regulate health insurance rates failed last year, even though 35 other states have this ability. Remember for now that often being informed is your best option as a consumer in a difficult insurance market.

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Blue Shield Settles Rescission Lawsuit

Health insurance for Small Business Owners

As San Francisco insurance attorneys we were glad to see the latest news that Blue Shield of California and Blue Shield of California Life and Health Insurance Company, a major insurer, finally settled a multi-year lawsuit. It is encouraging to see even a small correction of a gross injustice done to the hardworking insurance consumers of California.

After three years of investigation, the lawsuit was filed in 2008 by then City Attorney Rocky Delgadillo on behalf of the city of Los Angeles, alleging that the insurance provider wrongly dropped policy holders after they became ill, duping consumers into buying insurance that would be rescinded, and other shady business practices. The city of Los Angeles was seeking $1 billion in damages and restitution. Blue Shield was accused of rescinding hundreds of policies of patients after they were hospitalized or required major medical procedures. The consumers had previously applied and were approved for insurance, only to be told once they needed health care benefits that they had made a mistake on their misleading or confusing application form, discovered from a retroactive investigation by the insurance company. Often these consumers had been paying for health insurance for years, only to find out at the critical moment that they paid for nothing. Thousands of cases were investigated. Since 2002, Blue Shield denied benefits to 850 people and delayed benefits to countless more.

A federal ban on these types of rescissions for unintentional mistakes on insurance applications went into effect in September 2010 because of the new healthcare legislation. Now Blue Shield has settled for $2 million, to be split between the city and Los Angeles County, and the company will also pay the legal costs of the lawsuit, but without admitting any fault in the matter.

Part of the settlement requires Blue Shield to submit a new and amended health insurance application form that complies with federal and California requirements in being intelligible to consumers. Blue Shield is limited on an application to asking for relevant, as in “reasonable and necessary”, medical information to calculate the risk of insurance benefits being requested. The settlement also bans Blue Shield from rescinding coverage unless it can prove that the policyholder committed fraud or misrepresented relevant health information on their insurance application. It also bans Blue Shield from giving insurance investigators commissions based on their number of rescissions.

The insurer’s spokesperson stated that Blue Shield settled the suit simply to avoid the costs and distractions of ongoing litigation. Blue Shield also claims it is committed to taking aggressive and proactive steps to provide better access to health care.

Even with this settlement, however, the individual policyholders who were wrongfully denied benefits did not gain any monetary restitution. The settlement may be good news overall, especially as a wake-up call to insurance companies that they must comply with federal legislation and behave in a fair and above-board manner with their customers. But for the many families struggling to cover medical expenses, it is perhaps cold comfort. This is why it is vital to speak to a California insurance lawyer if your insurance company is trying to give you the run around or to rescind your policy or benefits. In something that is so important to you and your family and the future, local families need an experienced San Francisco insurance attorney in your corner working specifically on your case.

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Health Insurance for Small Business Owners

California Insurance Law Fraud Basics