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Sample Bad Faith Cases and Lawsuits

The vast majority of lawsuits against disability insurers are settled in conjunction with confidentiality agreements. However, it is estimated that between 1992 and 2002 as many as 10,000 lawsuits have been brought against the nations' leading disability insurer for denying claims in bad faith.

In general, these cases involve bad faith, that is a claim by an insured that they have been wrongfully and improperly denied coverage by an insurance company. Since an insurance policy is a contract between the two parties, the agreement obliges the insurance company and the insurerd to both act in "good faith." When one of the parties acts in a deceptive or improper way, such as when a company withholds the benefits of the policy it owes to the insured, it is termed "bad faith."

A Boston doctor was able to receive a $1 million settlement against his disability insurance company that refused to pay after he was diagnosed and treated for cancer.

The company argued that the doctor an, obstetrician/gynecologist, was not "totally disabled" even though he could no longer perform obstetrical surgery. The insurance company then denied coverage arguing, the doctor could still engage in some gynecological procedures. The insurer stated the policy required that he be unable to perform all of his work in order to qualify for benefits.

The policy in question defined "occupation" as a "recognized specialty." Before getting cancer, the doctor spent saw mainly obstetrical patients. During the course of the cancer's progression, the physician was physically incapable of helping woman deliver babies and related medical duties according to the unanimous opinion of his own four treating physicians.

The insurance company denied the claim saying he could still practice gynecology. However, "gynecology" and "obstetrics" are not recognized medical specialties, the medical profession groups "obstetrics and gynecology" as a single recognized specialty.

The case settled after mediation for $1 million.

Horace Mann Class Action Lawsuit Settles: $5 Million

July, 2001

The Horace Mann Illinois insurer has settled a class action suit that was filed against the company from consumers of various disability policies.

The $5 million settlement is based on confusing language in a provision of the policy's offsetting benefits relating to receipt of others means of income. Offset provisions try and account for fact that many people have other forms of income to protect against disability, which includes retirement benefits, social security and added insurance policies.

Find an Attorney: Bad Faith Claims