"10 Points Of The Law"

You run into the darndest arguments from insurance companies when it comes time to pay up, whether it’s a disability income, accidental death or any other kind of policy..  When it comes time to pay, they say, “Go away.”

We recently represented the husband of a 31-year-old mother with three young children who died as a result of surgical malpractice when she tried to alleviate her scoliosis condition.  The poor woman went in for a major back operation and never came out of the hospital.  She died because the anesthesiologist in inserting a catheter, nicked a large vein which bled into her chest cavity, and then having not deposited the catheter in the vein, fluid flowed from the catheter into her chest cavity rather than into the vein.

When the insurer American International Group (AIG) was asked to deliver the accidental death policy proceeds, AIG claimed her death was not an “accident” because it was caused by complications of surgery due to “misplacement” of a central venous catheter.

AIG hired a supposedly independent physician to review its findings.  This doctor decided to call the negligent insertion of the catheter a “complication” of surgery rather than the malpractice it was.  (For more on insurance company “independent medical exams”, see IME.  Relying on this doctor’s “complication” call, AIG again denied the husband’s appeal and refused to pay.

Upon our appeal, the Federal judge, in his 15-page opinion , Barnes v. AIG, 2010 WL 376127 (S.D.N.Y.) carefully documented his finding that the malpractice was accidental under the terms of the policy.  The court found there was no language in the policy that would authorize AIG to not pay the policy benefits to the husband of the deceased wife.  The Court also ordered AIG to pay interest, legal fees and costs.

As the court pointed out, the insurer had every opportunity to exclude medical malpractice from triggering benefits by clearly putting such language in the policy.  But, not having done so, AIG then tried to dance around the issue to its advantage thereby delaying payment in an effort to get the claimant husband to “wimp” out and abandon his claim.

Insurance companies know that it is almost universally held that any ambiguities in policy language will favor the policyholder.  If any unstrained interpretation of a policy would favor a policyholder, just about every court in the nation will so do, with a long line of precedents lending support.

So, you may wonder why insurers such as AIG go through such a song and dance routine when they know deep down that the policy and the facts say they should pay. 

The simple answer is that while they hold the money, the claimant doesn’t have it and they do.  Lots of things can happen to eliminate a claim before the insurer has to pay:

* The claimant may die and there may be no one willing to pursue the claim further.
* The claimant may give up the chase in disgust or frustration.
* An inexperienced claims attorney may fumble the ball and lose the case.
* A claimant may settle for far less than entitled to just to stop the music.

We have all heard the expression, especially when we were kids, that “Possession is 9 points of the law”.   It is not accurate.  The saying should be: “Possession is 9 points of the law when you have to go to court to collect”.  This is because the burden of proof is on the claimant to obtain possession of what the possessor already has.

The possession may be absolutely wrong but the claimant has to actively prove to a court that it is wrong, meaning the loss of legal fees, court costs, and a lot of time and energy.  All the possessor has to do is sit back and snipe at the claimant’s case, while enjoying the use of the money in its possession.

Is it any wonder that insurance companies hold on to benefit monies for as long as they can?  One of the many things that can happen to eliminate a claim could happen.
Then possession by the insurance company becomes “…all 10 points of the law.”




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