Insurance Carrier Fraud

By: Douglas A. Williams

You’ve probably heard stories about people who have received workers’ compensation benefits but aren’t really injured.  Local news programs sometimes report such stories.  Certainly, workers’ compensation insurance companies do everything in their power to create the perception that all recipients of workers’ compensation benefits are lazy, shiftless cheats who are out to defraud the system.  It is certainly true that some people do try cheat the system.  Such people are justifiably condemned as they bring suspicion on the overwhelming majority of injured workers who have legitimate injuries.  These workers, as well as their families, have suffered immensely – both physically and mentally.  Having often endured extensive medical treatment, the loss of a job, and great economic hardship, it is the ultimate insult to question their integrity.   

What is less publicized and less well-known is that, sometimes, workers’ compensation insurance carriers try to cheat the system.  Below is a link to an article published in Courthouse News Service.  This article documents a recent class action suit filed in California against several different workers’ compensation insurance carriers, one law firm, and a number of individuals.  In the law suit, Hector Casillas, an injured worker in California, alleged that workers’ compensation insurance companies hacked into a website utilized by the law firm who represented him and stole his confidential information as well as the information of thousands of other individuals.   Casillas further claims that the confidential information that was stolen was used by the insurance carriers to gain a litigation advantage. 

It’s important to note that Casillas’s allegations haven’t yet been proven.  Nonetheless, the case serves as a poignant reminder that insurance companies are constantly striving to get an upper hand against injured workers. 


The Phantom Insurance Company

By: Roger D. Horgan

We all know that one must have insurance to drive the car. However, when you get in an accident, the other guy might only have minimal insurance. Therefore, Pennsylvania residents have the option of purchasing under-insured motorist coverage (UIM coverage). This coverage is designed to permit you to recover more than the limit of the other guy’s insurance. Frequently an accident victim pursues two claims at once: one against the responsible driver and another against his own insurance company for UIM coverage.

This allows the courts to address those suits together. It also creates certain complications which arise from judicial tradition and Rule 411 of the Rules of Civil Procedure, prohibiting the mention of liability insurance to a jury. This prohibition requires the jury to focus on the facts of the case rather than upon the amount of insurance coverage available to satisfy the claim.

This creates an inherent difficulty when the case is tried in front of a jury. The insurance companies have successfully argued that the jury considering the case should not be told that one of the defendants is an insurance company. Nevertheless, because the insurance company is a party to the lawsuit it is permitted to have its attorney participate fully in the trial. So, the jury does not know who the second defense attorney is  representing, but the victim’s attorney is required to contend with two attorneys. Two attorneys are better than one, and the plaintiff has a harder case. 

In one recent case, the judge decided this was unfair and ordered a new trial following a defense verdict. In that case, the jury was not told that State Farm insurance Company was a party to the case or that the second defense attorney who participated in the trial represented State Farm. The jury eventually found that the driver was not negligent, and the jury returned a defense verdict. After the trial, Judge O’Reilly concluded  that the procedure designed to hide the identity of the insurance company denied the plaintiff due process of law, and ordered a new trial. In doing so, he concluded that Rule 411 did not  require that the identity of the insurance company in an UIM case be hidden. He stated in his opinion that the practice of not identifying insurance carriers in motor vehicle cases was the perpetuation of a myth that had outlived its usefulness. He concluded that it was fundamentally unfair to permit the double-teaming of the plaintiff in the name of serving this outmoded principle. 

Not surprisingly, the defendants appealed. The Superior Court reversed the judge’s order, and remanded the case to the trial court with instructions to enter judgment in favor of the defendants. What is most interesting about the Superior Court’s decision is that it did not definitively rule whether the procedure of hiding the identity of the UIM carrier resulted in a denial of due process. Rather, it focused on the jury’s decision that the defendant driver was not negligent. Since the driver was found to be not negligent there could be no judgment against either that driver or the UIM carrier. The Superior Court relied upon the rule of law that a violation of due process does not necessarily lead to a remedy. A party who demonstrates a violation of due process is entitled to a remedy only if that party can also show that the violation resulted in prejudice to him. The Superior Court concluded that the plaintiff could not show prejudice since the identity of the insurance company had no bearing on whether or not the defendant driver was negligent. 

It is anticipated that UIM carrier’s will rely upon this case to argue that their identities should never be disclosed in these circumstances. However, plaintiffs will respond that this is a case that is very much limited to the fact that the defendant driver was not negligent. Plaintiffs’ counsel can be expected to continue to fight for the right to have cases tried on the reality of the parties, and not on the basis of myths and phantoms.


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