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Bad Faith Litigation

Bad faith litigation is becoming more common as the insurance industry continues to engage in the bad faith insurance practices we've all heard about — especially concerning health insurance — such as:

Denying insurance for an invalid reason
Unfairly denying benefits to a policyholder
Issuing only a fraction of the appropriate amount of insurance policy benefits
Delaying the resolution of an insurance claim
Using biased investigators, medical staff, or other parties to reach a decision favorable to the insurance company

Bad faith litigation involves taking the insurance company to court, when necessary, to compel the insurance company to act legally and in accord with both the policy it issued and relevant laws.

Bad faith litigation usually involves an insurance policyholder alleging that the insurer has acted in "bad faith," a term indicating that the insurer has not honored the agreement of the contract (policy). However, in many cases, bad faith litigation is initiated by a government agency, such as a state's Department of Insurance, against one or more insurance companies that are alleged to have committed hundreds of instances of bad faith. States' Attorneys General are another potential source of bad faith litigation; they are charged with protecting the public from fraud and bad faith practices.

What Is Bad Faith Litigation?

The details of bad faith litigation differ with every case, but as with all types of litigation, a few common features are:

The party that feels that they have been wronged; that is, the plaintiff(s). In insurance bad faith litigation, this is usually an individual or a family that bought an insurance policy (health, life, auto, disaster, business, etc.)

The party that is alleged to have engaged in bad faith; that is, the defendant(s). This is the insurance company, or multiple divisions or subsidiaries.

The insurance company that is the subject of bad faith litigation is certain to have its own legal representation — in fact, it will have its own legal department of lawyers devoted to defending the insurer against lawsuits. It is advisable for a plaintiff to obtain legal representation. If the insurance problem at the heart of the matter is not resolved by the plaintiff acting alone, a bad faith attorney's assistance and advice may be crucial to the resolution of the problem.

The Insurance Bad Faith Litigation Process

A bad faith lawyer or law firm will investigate the case and try to settle the matter to the plaintiff's satisfaction without going to court if possible. Full-blown litigation — that is, taking up a case in a trial before a judge or jury — is an expensive and time-consuming matter. Plaintiffs' attorneys try to first resolve a case through negotiation with the insurance company.

To learn more about the legal options for a plaintiff considering bad faith litigation, contact a bad faith attorney in your area today.

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