Saturday, December 27, 2008

Insurers: Liable for mental anguish

Guess which insurance company didn't pay up for a Katrina claim? It's the same company who has this as it's motto for claims, "Deny, deny, deny and then delay." Now insurance companies can be held liable for mental anguish. And who would this noxious insurance company be? One more clue-It's the same Insurance company that never paid the claim, for the boys on the Duke Lacrosse team who were falsely accused of rape. It's none other than the taxpayer-backed criminal enterprise, AIG!

Here's the story:

In a rare win for policyholders in an appellate court, the Fifth U.S. Circuit Court of Appeals said this week that insurers can be held responsible for mental anguish damages when they show bad faith in paying claims.

The decision upheld a ruling from federal court in New Orleans in the case of Marrero homeowner Dale Dickerson, who was forced to live his bathtub refinishing shop and take showers under a cold garden hose while standing on a wooden pallet in an unheated room for a year and a half while fighting Lexington Insurance Co., a unit of AIG, for proper payment of his Hurricane Katrina claim.

A three-judge panel upheld U.S. District Court Judge Carl Barbier's finding that Lexington acted in bad faith for dragging out payment of Dickerson's claim without reason and should be held responsible for inflicting unnecessary stress on Dickerson's life. Bad faith means that an insurer was abitrary and capricious in its claims-handling, and failed to pay without probable cause.

Plaintiffs attorneys around the city immediately started incorporating the Dickerson ruling into their briefs in pressing for mental distress damages against other insurance companies...

Maniloff predicted that the Fifth Circuit's ruling would be the end of the case on mental anguish, for Lexington would be wasting its time to try appeal to the U.S. Supreme Court. "I think they're out of options," he said...

Maniloff said that the case should be a reminder to insurers to pay the portion of a claim that is settled while they work with homeowners on portions of the claim that are still in dispute.