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Insurance Bad Faith

Jones v. Trustmark Insurance Company and Ward Services, Inc.

Type of Case: Insurance Bad Faith

Gary Jones worked as a meat cutter in a market for his entire life. One day Ward Services came to the market and sold Mr. Jones a short-term disability policy issued by Trustmark. Mr. Jones was later disabled because of a heart ailment and Trustmark denied the claim, alleging that Mr. Jones failed to disclose the condition during the application process. Mr. Jones maintained throughout the process that he fully disclosed all medical conditions, including his heart condition, to the Ward Services agent.

Mr. Jones retained Chris Heavens. Heavens sued Ward Services and Trustmark, alleging breach of contract and bad faith. Heavens investigated the Ward Services agent involved in Mr. Jones application and uncovered evidence of past fraud, both as a stockbroker and insurance agent. The agent had previously lost his securities license and his insurance agent’s license. Trustmark attempted to cut Ward Services and the agent loose by asserting an independent contractor defense.

After the deposition of the agent, the case was settled for a confidential amount well in excess of what it would have cost the companies to simply pay Mr. Jones’ claim. Both companies contributed to the settlement.

Mouser v. Trustmark Insurance Company and Ward Services, Inc.

Type of Case: Insurance Bad Faith

James Michael Mouser was a manager at the market where Gary Jones worked as a meat cutter. Mr. Mouser was disabled because of a heart ailment, which actually resulted in him having a heart transplant. Mr. Mouser’s doctor instructed him to stop working when his condition began to deteriorate. Mr. Mouser filed a disability claim and Trustmark denied his claim, asserting that he was suffering from the heart ailment at the time of the application and failed to disclose it to the agent.

Chris Heavens discovered Mr. Mouser’s situation when Heavens began investigating and conducting discovery in the Jones case. Mr. Mouser asked Mr. Heavens for help and Heavens obliged. Heavens had already uncovered evidence of fraud by the Ward Services agent involved in both the Jones and Mouser applications. Mr. Mouser maintained that he fully disclosed his heart ailment at the time of the application and, in fact, that the heart ailment was the reason he was applying for the insurance. In addition, there was a witness present for Mr. Mouser’s application who attested to the fact that he did disclose his heart condition to the agent.

Mr. Mouser’s case was settled for a confidential amount well in excess of what it would have cost the companies to simply pay his claim. Both companies contributed to the settlement.

McCoy v. Kentucky Nat’l Ins. Co., W. Va., Mingo County Cir. Ct., No. 98-C-14, May 26,2000.

The McCoys’ home was damaged in a fire. They submitted a claim to their insurer, Kentucky National Insurance Company, which hired Crawford & Company to investigate and adjust the claim. The investigator concluded the fire was incendiary. Kentucky National then canceled the McCoys’ policy and refused to provide them with a copy of the investigator’s report.

The McCoys’ dwelling policy limit was about $93,000 and their personal property limit was about $45,000. They estimated that their property damage and personal property losses each exceeded $100,000. A contractor hired by Crawford provided a dwelling repair estimate of $56,000, which Crawford offered for the dwelling repairs. Crawford offered about $30,000 for the personal property. After the McCoys refused to settle for these amounts, Kentucky National tried to force them into appraisal.

The McCoys hired Chris Heavens. Heavens sued Kentucky National, alleging it violated state law by canceling their policy. Heavens also alleged that defendant acted in bad faith by refusing to pay full policy benefits and trying to force plaintiffs to resubmit personal property inventory forms and submit to appraisal.

Defendant filed a third party complaint against Crawford & Company, alleging that it was solely responsible for violations of state law because defendant hired it as an independent contractor to handle plaintiffs’ claim.

The parties settled before trial for $512,000*. Kentucky National contributed $462,000, and Crawford & Company, the remainder.

Sharon Drake, as Administratrix of the Estate of Nannie Hager v. Laura Lee Muncy, William E. White, State Farm Insurance Company, Circuit Court of Mingo County, West Virginia, Civil Action No.: 01-C-39

Type of Case: Wrongful Death and Insurance Company Bad Faith

On October 30, 1999, Nannie Hager was injured in a motor vehicle accident. Months later, Ms. Hager passed away as a result of her injuries. The driver of the other vehicle, Laura Muncy, was driving her stepfather’s vehicle, which was insured by State Farm. Ms. Hager’s family contacted Chris Heavens to assist them. State Farm was offering a $100,000 vehicle policy limit to the family, but requesting a release. Heavens investigated and analyzed the family’s options. He counseled them not to sign the release because it would have prevented them from collecting other potential benefits. Mr. Heavens filed suit against both vehicle operators, demanding another $100,000 from Allstate, the insurer of the vehicle in which Ms. Hager had been a passenger. He also demanded an additional $100,000 in under-insured benefits from Allstate. Allstate initially refused to pay these claims. After the lawsuit was filed, Allstate agreed to pay $200,000 to the family. State Farm’s $100,000 offer continued to be extended. However, Mr. Heavens discovered that the driver of the other vehicle, Laura Muncy, had been a resident of her biological father’s household. Mr. Heavens demanded information on the biological father’s vehicle insurance, since the daughter could be covered on that insurance policy. It was learned the State Farm insured the biological father for $50,000. State Farm refused to pay that $50,000 to the Hager family. Mr. Heavens then filed suit against State Farm alleging, in part, that State Farm had failed to promptly disclose the existence of the $50,000 State Farm policy and that State Farm unfairly refused to make a settlement offer from the $50,000 policy. The court ruled that the Hager family was entitled to the $50,000 in additional insurance. State Farm eventually settled the bad faith case for $393,000. Result: $693,000 Total Settlement*.

Counsel: Christopher J. Heavens, Charleston, WV

Tammy Hess, as Executrix of the Estate of Ruth Hess, and John Keith Hess, individually, v. Homeq Servicing Corporation, as successor of TMS Mortgage, d/b/a The Money Store; Alfred Venditti as agent for North Central Life Insurance, Circuit Court of Mingo County, West Virginia, Civil Action No.: 01-C-217

Type of Case: Insurance Company Bad Faith

On August 7, 2000, Ruth Hess passed away. Her family submitted a credit life insurance claim to North Central Life Insurance Company to pay the $40,000 mortgage lien on Mrs. Hess’ home. Mrs. Hess had applied for credit life insurance with North Central when she refinanced her home with The Money Store several years earlier. North Central denied the claim of the Hess family, asserting that Mrs. Hess never had coverage bound because she stated on her application that she had health problems. Furthermore, North Central asserted that it had sent a denial letter to Mrs. Hess soon after the application was completed. The Money Store asserted that it had credited the insurance premium charged to Mrs. Hess’ back against the Money Store mortgage soon after North Central sent out its denial letter. The Money Store changed the locks and Ruth Hess’ home and prepared to foreclose. Chris Heavens was retained by the Hess’ family attorney, Greg Smith. Mr. Heavens sued North Central and The Money Store, alleging that defendants violated West Virginia law by not having a licensed agent present for the taking of Mrs. Hess’ application. Mr. Heavens further alleged that the defendants failed to comply with written notice requirements imposed by West Virginia law in denying coverage to Mrs. Hess. The defendants asserted that there could be no coverage because the face of the application clearly stated that persons answering yes to the health question were not entitled to coverage. The defendants further alleged that their written notice of denial to Mrs. Hess was proper. Result: $400,000 Settlement* (Plus release of the $40,000 lien on Mrs. Hess’

Counsel: Christopher J. Heavens, Charleston, WV Greg K. Smith, WIlliamson, WV

Sean Keene v. James Keene, Rick Knight, and Allstate Insurance Company, United States District Court, Southern District of West Virginia, Civil Action No.: 3:03-2126

Type of Case: Insurance Bad Faith

Sean Keene was accidentally shot by his uncle while hunting. His uncle had an Allstate homeowner’s insurance policy. Allstate opened a liability claim file and concluded that liability was reasonably clear against the uncle within a month or so following the accident. Mr. Keene did not have health insurance. Mr. Keene retained Chris Heavens to represent him when Allstate failed to make a settlement offer to him in what he believed to be a reasonable time frame. Mr. Heavens immediately obtained the $100,000 Allstate policy limit and then filed a lawsuit against Allstate for bad faith. Result: Confidential Settlement.

Counsel: Christopher J. Heavens, Charleston, WV

Nationwide Insurance Company v. Jeffrey Cline, Circuit Court of Mingo County, West Virginia, Civil Action No.: 03-C-189

Jeff Cline and his wife had a fire in 1991 that totally destroyed their house. Nationwide hired a cause and origin expert and electrical engineer to determine the cause of the fire. The heat pump in the house was identified as the cause of the fire. Nationwide paid approximately $125,000 on the claim of Mr. and Mrs. Cline. Jeff Cline and his wife were subsequently divorced. After the divorce, Mr. Cline’s ex-wife contacted Nationwide and implied that Mr. Cline had deliberately set the fire or procured the assistance of some third parties to set the fire. Nationwide then filed a lawsuit against Mr. Cline alleging that he committed arson and fraud. Nationwide made no attempt to contact Mr. Cline before filing suit. Mr. Cline contacted his friend, attorney Greg Smith, when suit was filed. Mr. Smith then asked Chris Heavens to help him. Mr. Heavens immediately contacted the experts who had investigated the house fire back in 1991. Both experts stated that Nationwide had not contacted them to discuss the allegations of Mr. Cline’s ex-wife.

Both experts stated to Mr. Heavens that they were sticking with their original opinions. Mr. Heavens filed a counter-suit against Nationwide, alleging fraud, bad faith, malice and intentional infliction of emotional distress. Nationwide eventually dropped its lawsuit against Mr. Cline and agreed to settle his counter-claims. Result: $500,000 Settlement*.

Counsel: Christopher J. Heavens, Charleston, WV Greg K. Smith, Williamson, WV

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