Insurance Fraud

Berger Montague’s Insurance Practice Group specializes in class action litigation on behalf of consumers and small businesses against insurance companies who violate the terms of their policies or otherwise engage in unlawful, deceptive and unfair misconduct relating to the marketing of those policies or the denial of benefits.

Insurance is designed to protect our most valuable assets and today it touches almost every facet of modern life, ranging from:  life insurance, health insurance, home insurance, automobile insurance, long term care insurance, mortgage insurance, disability insurance, travel insurance, workers’ compensation insurance, credit insurance and accident insurance.  These policies are often difficult to understand and the issues surrounding their proper enforcement involve an array of technical statutes, rules and regulations that can be unique to different states.

Insurance companies can use their specialized knowledge about their complex products–which are sold on a “take it or leave it basis”–to take unfair advantage of consumers or businesses who have little practical ability to engage in solo litigation with large, well-financed insurers when the individual damages they have suffered can be relatively small given the burden and expense of individual prosecution of the complex litigation necessitated by these insurers’ actions. Berger Montague’s Insurance practice Group takes pride in its dedicated efforts to secure justice for the thousands of individuals and businesses who need help in these overwhelming circumstances

Frequently Asked Questions

What types of insurance cases are suitable for being brought as a class action?

Class actions can be brought related to any type of insurance, whether the grievance involves homeowners, automobile, long term care, life, health insurance or any other kind of policy. However, not every type of insurer breach of contract or unfair sales and claims practice is able to be remedied through means of a class action lawsuit. Insurance class actions are appropriate when one policyholder has the same grievance as other policyholders, and the insurer’s misconduct has been equally directed to numerous other policyholders who have likewise been harmed in the same manner.

When insurance companies engage in a widespread breach of their contracts or other types of broad-based illegal, deceptive and unfair misconduct, policyholders who have been cheated or mistreated often cannot afford to individually pay a lawyer by the hour to pursue a remedy on their behalf and the amount of the claimed loss by a single policyholder is frequently too small to make it economically practical for a lawyer to take the case individually.  This is what makes a class action lawsuit particularly well suited for redressing wrongs in the area of insurance, since class action attorneys work on a contingent fee basis, which means they don’t charge by the hour and only earn their fee based on what they recover for the class as a whole (and no fee will be owed if there is no recovery).

As a policyholder, am I owed a fiduciary duty by my insurer?

A fiduciary duty is the highest standard of care owed from one person to another to avoid harm to another, and it is generally defined by a relationship in which there exists a legal obligation of one party to act solely in the best interest of another. This typically occurs when someone is entrusted with the care of money or property of another.  For most types of insurance, the relationship between an insurer and its policyholders is not considered by the courts to be a fiduciary relationship.  Instead, insurers’ legal obligations to their policyholders generally arise only from their contractual obligations as set forth in the policies they sell, as well as their statutory and common law duties to refrain from engaging in fraud and other deceptive and unfair business practices or to act in good faith by at least giving equal consideration to the insured’s interest, as well as their own.  Class actions in the insurance field usually proceed under this framework.

What is the impact of individual state’s own laws regulating insurance on insurance class actions?

Historically, Congress has expressly acknowledged that the regulation of the business of insurance was best left to the individual states, and that has remained true to the present.  Thus, for most types of insurance (with some limited exceptions in the area of health care), there are a patchwork of state rules and standards across the 50 states that regulate insurers’ conduct to assure policyholders that the contracts they have purchased can be relied on in terms of insurer solvency and to protect policyholders, as consumers, from abusive insurer practices.

Because of this array of diverse state regulatory systems (and the absence of a single insurance regulator for the entire country), insurance class actions tend to be narrowly-tailored for filing on a single or multistate (versus nationwide) basis—even when the defendant insurance company is a nationwide insurer. This is one reason experience like that of our attorneys is a key factor in bringing successful class action in the insurance field.

What are Some Examples of Berger Montague’s Insurance Class Cases?

Casey v. Citibank, N.A., et al., USDC, N.D. NY., Case Nos. 5:12-cv-820 and 1:13-cv-353. Status: Case settled for $122 million (2014).  Berger Montague, together with co-class counsel, prosecuted this nationwide class action on behalf of borrowers with mortgages serviced by Citibank, N.A. and CitiMortgage, Inc.  The class of borrowers alleged that defendants schemed to require certain borrowers to (1) purchase hazard and/or flood insurance at inflated cost due to the bank’s conduct, and (2) purchase flood insurance coverage in excess of the amount required by their mortgage contract or federal law.

Arnett v. Bank of America, USDC, D. OR., Case No. 11-cv-1372. Status: Case settled for $31 million (2014). Berger Montague prosecuted this nationwide class action on behalf of borrowers with mortgages serviced by Bank of America.  The class of borrowers alleged that Bank of America, N.A. schemed to require certain borrowers to (1) purchase flood insurance at inflated cost due to the bank’s conduct, and (2) purchase flood insurance coverage in excess of the amount required by their mortgage contract or federal law.

Clements v. JP Morgan Chase Bank, N.A., USDC, N.D. Cal., Case No. 3:12-cv-2179. Status: Case settled for $22.1 million (2014).  Berger Montague, together with co-class counsel, prosecuted this nationwide class action on behalf of borrowers with mortgages serviced by Chase Bank.  The class of borrowers alleged that JPMorgan Chase Bank schemed to require certain borrowers to (1) purchase flood insurance at inflated cost due to the bank’s conduct, and (2) purchase flood insurance coverage in excess of the amount required by their mortgage contract or federal law.

Ormond, et al. v. Anthem, Inc., et al., USDC, S.D. Ind., Case No. 1:05-cv-01908. Status: Case settled for $90 million (2013).  Berger Montague, together with co-class counsel, prosecuted this class action against Anthem, Inc. (now known as WellPoint, Inc.) and Anthem Insurance Companies, Inc. on behalf of over 700,000 class members, each of whom was a former policyholder-member of Anthem Insurance Companies, a health benefits mutual insurer. The litigation arose out of the conversion of Anthem Insurance Companies from a mutual insurer to a publicly-owned stock insurance company in November 2001 (a process known as “demutualization”), and the related initial public offering (“IPO”) of stock in its parent, Anthem, Inc. The plaintiffs, all of whom received cash compensation from the IPO in exchange for the extinguishment of their owner-membership interests in the converted mutual company, claimed that they should have received a greater amount of cash; and in particular, that defendants had breached their fiduciary duties and were negligent in setting the price of the IPO shares, which price determined the amount of cash received by the policyholder-members. The case settled on the eve of trial.

Spencer, et al. v. The Hartford Financial Services Group, et al., USDC, D. Conn., Case No. 3:05-cv-1681. Status: Case settled for $72.5 million (2012). Berger Montague, together with co-class counsel, prosecuted this national class action against The Hartford Financial Services Group, Inc. and its affiliates on behalf of approximately 22,000 claimants, each of whom entered into individual structured settlements with Hartford property and casualty insurers to settle personal injury and workers’ compensation claims.  The class of claimants alleged that defendants violated the civil RICO statute and committed common law fraud in connection with the funding of these structured settlements through the insurers’ purchase of annuities from their affiliate, Hartford Life. By purchasing the annuity from Hartford Life, The Hartford insurers allegedly were able to retain up to 15% of the structured amount used to fund each claimant’s individual settlement in the form of undisclosed costs, commissions and profit – all of which was concealed from the settling claimants.  The case settled on the eve of trial.

Smith v. Collinsworth and United American, Circuit Court of Saline County, Arkansas, Case No. CV2004-72-2. Status: Case settled for $30 million (2012). Berger Montague, together with co-class counsel, prosecuted this multi-state class action against United American Insurance Company, Farm & Ranch Healthcare, Inc. and Heartland Alliance of America Association concerning the allegedly fraudulent and deceptive sale of United American health insurance policies, packaged with other products. This class action was brought on behalf of current and former United American policyholders in Arkansas, California, Georgia, Louisiana and Texas alleging that they were sold limited benefits health policies falsely marketed as the equivalent of major medical coverage, which were bundled with other products, including memberships in preferred provider organizations and term life insurance, that were represented as free but which carried hidden charges. The action sought to recover the losses suffered by policyholders resulting from defendants’ allegedly deceptive marketing practices, as well as injunctive relief.

Nationwide Mutual Insurance Company v. O’Dell, et al., Circuit Court of Roane County, W. Va. Case No. 00-C-37. Status: Case settled for $75 million (2009). Berger Montague, together with co-class counsel, prosecuted this class action against Nationwide Mutual Insurance Company on behalf of current and former West Virginia automobile insurance policyholders, for its failure, dating back to 1993, to offer policyholders the ability to purchase statutorily-required optional levels of underinsured (“UIM”) and uninsured (“UM”) motorist coverage in accordance with West Virginia Code 33-6-31. The class of automobile policyholders alleged that the failure to offer these optional levels of coverage, and the failure to provide increased first party benefits to personal injury claimants, breached Nationwide’s insurance policies and its duty of good faith and fair dealing, and violated the West Virginia Unfair Trade Practices Act. The court issued final approval of a settlement that provided a minimum estimated value of $75 million to Nationwide auto policyholders and their passengers who were injured in an accident or who suffered property damage, and should have had these UIM and UM coverages in place to cover their losses.

Bergonzi v. Central States Health and Life Company of Omaha, USDC, D. S.D., Case No. C2-4096. Status: Case settled for $20 million (2003). Berger Montague, together with co-class counsel, prosecuted this national class action against Central States Health And Life Company of Omaha (CSO) concerning CSO Cancer Policies.  Plaintiffs alleged that CSO breached the terms of the policies in that it underpaid or denied policyholders’ cancer claims based on an improper interpretation of the insurer’s chemotherapy and radiation benefit provisions, and that such denials and underpayments by CSO were in bad faith.

Pet Food Express Ltd., et al. v. Applied Underwriters, Inc., et al., USDC, E.D. Cal., Case No. 2:16 cv-01211, and, National Convention Services, LLC, et al. v. Applied Underwriters, Inc., et al., USDC, S.D. NY., Case No. 15-cv-07063. Status: Currently pending. Berger Montague, together with co-counsel, is representing proposed classes of California and New York employers who purchased Applied Underwriter Inc.’s EquityComp or SolutionOne workers compensation insurance at any time between January 1, 2006 and the present.  These proposed class actions each allege a highly sophisticated scheme by defendant and its affiliated companies to unlawfully profit by selling unfiled and unapproved workers’ compensation insurance policies to small and mid-size employers—each of whom were deceived into paying excessive premiums and other types of built-in overcharges that were never fully and fairly disclosed in advance of purchase, and further, would never have been permitted by the state’s insurance authority if properly subjected to regulatory scrutiny in advance of issuance as required.

South Peninsula Hospital, et al. v. Xerox State Healthcare, LLC, USDC, D. Alaska, Case No. 3:15-cv-00177. Status: Case currently pending.  Berger Montague is representing a proposed class of more than 22,000 Alaska enrolled Medicaid healthcare providers in connection the roll out on October 1, 2013 of a new, replacement Medicaid Management Information System (MMIS) that was designed to timely process and pay providers’ claims for reimbursement.   The MMIS was years in development and the proposed class alleges that providers experienced serious Medicaid payment disruptions for nearly two years from the system’s launch date because of Xerox’s misconduct in causing the State of Alaska to implement the new system before it was ready to perform up to operational standards.

What Qualities Set Our Insurance Practice Group Apart From Other Class Action Firms?

Berger Montague’s Insurance Practice Group has a proven track record of achieving outstanding results in this area of the law.  These results are the product of a combination factors which set us apart from the competition.

Berger Montague has a 45-plus year history and is one of the largest class action firms in the country.  During that time, our firm has tried and won multiple class action jury trials—which is real world experience and team know-how that is unique amongst class action firms.   Having a deep bench of attorneys with technical trial skills helps us litigate from a position of strength, and achieve meaningful settlements when possible at earlier stages of the litigation.

The Insurance Practice Group also excels in analyzing the unique circumstances of each potential matter in order to develop creative solutions for overcoming difficult problems in getting cases certified as class actions in this complex area of the law.  This strategic focus on innovative ideas and methods to achieve success rests on a comprehensive knowledge of both the insurance field and class action law.

Judicial Praise Regarding Berger Montague’s Insurance Class Cases

Judge Tanya Walton Pratt of the U.S. District Court of the Southern District of Indiana praised the result of our Insurance Practice Group in achieving a $90 million settlement in 2012 in the case Ormond v. Anthem (the details of which are summarized above). Among other things, Judge Pratt found “that the risk undertaken by Class counsel was significant, especially considering the lack of similar cases, complex legal theories, and vigorous defense”; and further, that “Class Counsel’s performance in this case was outstanding as is reflected by the result achieved.” See Ormond v. Anthem, No. 1:05-cv-01908, Dkt. # 781 at pages 7-8.

Judge Janet C. Hall of the U.S. District Court of the District of Connecticut praised the result of our Insurance Practice Group in achieving a $72.5 million settlement in 2010 in the case of Spencer v. The Hartford Financial Services Group, Inc. (the detail of which are summarized above).  Among other things, Judge Hall found that “but for counsel’s outstanding work in this case and substantial effort over five years, no member of the class would have recovered a penny….[I]t was an extremely complex and substantial class and case.” See Spencer v. The Hartford Financial Services Group, Inc., No. 3:05-cv-1681, Dkt. 268 at 71:15 to 73:5 (transcript of final settlement approval hearing on Sept. 21, 2010).

No Fees Without Recovery

Our insurance class actions are brought on a contingent fee basis.  That means plaintiffs and the class do not pay out-of-pocket attorneys’ fees or litigation costs.  Attorneys’ fees and costs are paid from the recovery obtained for the class, subject to court approval.

Contact Us to Inquire About an Insurance Class Action

We invite you to contact us about a potential case.  Please fill out the contact form to the right. You may also contact our Insurance Practice Group attorneys directly.  The Insurance Practice Group chair, Peter Kahana, can be reached at pkahana@bm.net or (215) 875-4629.  Shareholder Glen Abramson can be reached at gabramson@bm.net or (215) 875-4683 and associate Y. Michael Twersky can be reached at mitwersky@bm.net or (215) 875-3052.