Insurance Fraud/ Bad Faith/ Outrage Cases

Physicians Mutual Insurance Company Class Action

Result:  $23 million for class representatives and class members residing in the states of 
Alabama, Mississippi, and Texas.
Venue:  Alabama, Mississippi, Texas

Named plaintiffs entered into insurance contracts with Physicians Mutual Insurance Company which contained a rider that provided certain outpatient sickness and accident benefits.  The plaintiffs alleged that Physicians Mutual wrongfully failed to pay insurance claims for the plaintiffs and other class members.

Physicians Mutual is an insurance company based in Omaha, Nebraska that sells numerous types of insurance products throughout the United States.  Beginning in 1993, Physicians Mutual began selling a supplemental insurance product in Alabama called the “Outpatient Plus Plan,” which is a supplemental insurance product comprised of a hospital indemnity policy and a combination of two or more riders.  One of the riders attached to the hospital indemnity policy was the outpatient benefit rider, which pays a fixed benefit of $100.00 each time a policyholder makes a claim that meets the requirements of the rider.  
The Plaintiffs entered into insurance contracts with Physicians Mutual which contained a rider that provided certain outpatient sickness and accident benefits.  In the lawsuit, the plaintiffs, individually and on behalf of all class members, alleged that Physicians Mutual wrongfully failed to pay insurance claims.
Through the discovery process, the plaintiffs gathered significant documentation to support the allegations.  The result was that Physicians Mutual paid $23 million for class representatives and class members residing in the states of Alabama, Mississippi, and Texas.

This case was handled by partner Chris Hellums.  He can be reached at ChrisH@pittmandutton.com.

Leo Brown v. Acceptance Insurance Company (Circuit Court of Perry County, Alabama)

Leo and Gloria Brown operated G & L Grocery, a convenient store.  Leo purchased a commercial general-liability insurance policy for the store from Acceptance Insurance Company.  Subsequently, the Browns were informed that R.G. and M.D. were planning to burglarize the store.  They returned to their store later that night to apprehend any suspected burglars.

 While hiding in the pump house located next to the convenience store, Leo and Gloria heard noises coming form outside.  As Leo left the pump house, Gloria heard the store’s burglar alarm.  She left the pump house to find S.S. in front of the store.  As Leo walked around to the front of the store, he was involved in an altercation with S.S.  While trying to escape the altercation with Leo, S.S. turned towards Gloria and was shot in the abdomen.

As a result of this encounter, S.S. filed a tort action alleging that Leo and Gloria Brown had “negligently and/or wantonly” injured him.  The Browns sent a letter to Acceptance requesting that they defend the Browns in the civil lawsuit filed by S.S.  Acceptance later informed the Browns that it would not be defending them in the lawsuit because coverage had been disclaimed under the “intentional acts” and “assault and battery” exclusions of the general-liability policy. 

 The Browns brought suit against Acceptance seeking a judgment declaring that Acceptance was required to defend and indemnify them in the lawsuit filed by S.S.  After a judgment was entered against the Browns in the lawsuit filed by S.S., the Browns amended their complaint, adding that Acceptance had breached its contract with them and in bad faith breached its duty to defend and indemnify them.