JUST ANOTHER WAY INSURANCE COMPANIES TAKE ADVANTAGE OF THEIR INSUREDS

Amerisure Mut. Ins. Co. v. Global Reinsurance Corp of America, 399 Ill. App. 3d 610, 927 N.E.2d 740, 340 Ill. Dec. 1 (1^st Dist. 2010). 

Section 155 of the Illinois Insurance Code provides for penalties if an insurance company unreasonable delays in paying, or denies, a valid claim.  One of the most significant penalties under section 155 is forcing the insurance company to pay the insured’s attorney’s fees.  The insured is the person or party who purchases insurance and expects to be covered by the insurance.  In the Amerisure case, there was such a lengthy delay that the insured sought relief by taking the matter to arbitration, which was required by the reinsurance policy.  The reinsurance company, Global, was found to be unreasonable and the arbitrator awarded a little over 1.5 million plus interest and attorney’s fees of over $861,000.00.  Global paid the 1.5 million and interest but refused to pay the attorney’s fees.  Amerisure sued to enforce the arbitrator’s award of attorney’s fees.  The trial court found for Amerisure and ordered Global to pay approximately $861,000.00 in attorneys’ fees.  The appellate court reversed the decision, holding that arbitrators lack the authority to award attorney’s fees and that only a court could award such fees.  The Supreme Court of Illinois refused to hear the case.  So, in other words, the plaintiff in this case had to pay their attorneys over $861,000.00, which was over half of what they were entitled to receive, to force Global to honor its contractual obligations.

Here is my problem with this.  There is no incentive or reason for insurance companies to not put in their contracts that arbitration is required in all first party claims and then force all claims to go to arbitration.  Most people would give up long before then and the insurance companies would not have to pay off legitimate claims.  I do not think that all insurance companies would force their insureds to take them to arbitration before paying claims because this would lead to a backlash against the insurance industry.  It is foreseeable, though, that insurance companies may become more unreasonable in denying claims or delay in paying claims if the insured must take them to arbitration and then the insurer would only have to pay the amount they were contractually obligated to pay plus a little interest.  If attorney’s fees can be avoided, many people would say that it just cost too much to fight the insurance company and abandon legitimate claims.  Since the remedies provided by section 155 are the only remedies available to insureds making a claim on their own policy, I think that it is merely a question of when, as opposed to if, insurance companies will require all denials of first party claims to be arbitrated and then to deny all first party claims. 

I have successfully sued insurance companies for violation of section 155 and I am currently involved in cases against insurance companies.  If your insurance refuses to pay a claim which you believe is a legitimate claim, give me a call and I will be happy to take a look at it.  To see what areas of law I practice, visit my website at:  http://www.ellislawfirm.pro/.

HOW HAVING TOO MUCH CASH CAN BE A BAD THING

Amazingly, a federal appeals courts forfeited cash holding that the possessing, carrying, or transporting a large sum of cash creates a strong suspected connection to drug trafficking.  U.S. v. $124,700 in U.S. Currency, 458 F.3d 822 (8th Cir. 2006).  In the case of U.S. v. $124,700 in U.S. Currency, a Hispanic man was stopped for speeding on I-80 in Nebraska.  The $124,700 was found in a cooler in the rented vehicle the man was driving.  The trial court found that there was insufficient evidence to prove, by a preponderance standard, that the money had a substantial connection to drug trafficking.  The court found the explanation the man offered as plausible.  The appellate court reversed in part because “Possession of a large sum of cash is “strong evidence” of a connection to drug activity, …” U.S. v. $124,700 in U.S. Currency, at 826.  The dissent noted “that no drugs, drug paraphernalia, or drug records were recovered in connection with the seized money. There is no evidence claimants were ever convicted of any drug-related crime, nor is there any indication the manner in which the currency was bundled was indicative of drug use or distribution.”  U.S. v. $124,700 in U.S. Currency, 458 F.3d at 827.  The dissent went on to criticize the majority’s decision by pointing out that other decisions within the district had rejected similar forfeiture arguments when there was an insufficient nexus, or connection, between the money found and drug activity.  A police dog alerted to the presence of drugs on the currency and the exterior rear portion of the rented car.  As the dissent points out, however, this was a rental car which undoubtedly had been used by several people.  Had drugs been used near the rear of the car, there is no way to determine who used the drugs.  Additionally, it common knowledge that most currency has trace amounts of narcotics on it.  The dissent pointed out that this fact was recognized by the Justice Souter in a recent case.

            I think that this violates a person’s Fifth Amendment rights, due process rights, and possibly equal protection.  I think that the problem in this case is that the police and the appellate court looked at suspicious activity and allowed the police to forfeit the money despite insufficient evidence to connect the money to any illegal activity.  As a former prosecutor, I have heard cops talk about suspecting someone committing crimes but not being able to prove it.  That is the situation we have here but instead of the cops not being allowed to take action, the court endorses the cops to forfeit money without sufficient evidence that the money is connected to any illegal activity.  This creates an odd situation where the cops are like highway bandits who can stop you and take your money and the courts will support the cops if the amount of money is large enough.  Finally, I cannot ignore that this was a Hispanic man stopped in Nebraska.  I think that if this were a white man in his 50’s, then the forfeiture would have never occurred.  Therefore, be warned that by carrying or transporting large sums of money, you risk losing it.  To see what areas of law I practice in, visit my website at http://www.ellislawfirm.pro/.