In an effort to protect themselves and their families from financial hardship in the event of disability, many Americans decide to obtain long-term disability insurance. The person who obtains the policy is referred to as the “insured” and the insurance company that issues the policy is referred to as the “insurer.” This type of insurance policy is designed to pay the insured the salary, or a portion of it, that the insured would have earned if the insured had not become disabled. Insurance Company’s have an incentive to deny the largest claims. Thus, physicians (including surgeons), business executives, and other individuals with high income are subjected to bad faith practices with some frequency.
Sometimes when the insured becomes disabled the insurance company will refuse to honor its obligations under the insurance contract. Generally, the insurance company will claim that the insured is not actually disabled. If the insured proves that the insurance company is wrong, the insurance company will be liable for breach of contract. What does this mean? It simply means that the insurance company will be obligated to pay the insured the benefits it promised under the long-term disability insurance contract.
Damages for breach of contract may not be the only damages available to the insured if the insurer refused to pay in bad faith. Under Georgia law, O.C.G.A. § 13-6-11, a jury may award to the insured the expenses of litigation if the insurance company has acted in bad faith, been stubbornly litigious, or caused the insured unnecessary trouble and expense.
Additionally, the insured may have the right to bring an action against the insurance company for damages for bad faith, pursuant to O.C.G.A. § 33-4-6. For purposes of O.C.G.A. § 33-4-6, bad faith is defined as “any frivolous and unfounded refusal in law or in fact to pay according to the terms of the policy.” King v. Atlanta Cas. Ins. Co., 279 Ga. App. 554, 556 (2006). Insurance bad faith includes, but is not limited to, wrongfully denying a claim for benefits due under the insurance policy, not paying all of the benefits due under the insurance policy, failing to properly investigate a claim for benefits due under the insurance policy before denying the claim, or otherwise failing to pay the benefits due under the insurance policy without justification. For example, an insurance company could be found to have acted in bad faith if it takes the position that the insured is not disabled when the physicians who are treating the insured have indicated that the insured is disabled. Or, an insurance company might be liable for bad faith if it denies a claim for benefits due to the insured under the insurance policy on the ground that the condition that led to the disability was a “pre-existing” condition, when in fact there is no medical basis to conclude that the condition was “pre-existing.”
If the insured is successful in bringing a claim against the insurance company under O.C.G.A. § 33-4-6, the insurance company may be liable to the insured for “not more than 50 percent of the liability of the insurer for the loss or $ 5,000.00, whichever is greater, and all reasonable attorney’s fees for the prosecution of the action against the insurer.” This means that, if the insurance company refused in bad faith to pay the insured $1,000,000 in benefits due, the insurance company could be obligated to pay the insured $1,500,000 in damages, plus attorneys’ fees and the costs of bringing the action.
At The Law Offices of Wayne Grant, P.C., our dedicated Atlanta insurance bad faith lawyers can help you recover the compensation you deserve for losses you have suffered from an insurance company’s bad faith denial of your claim. Contact us today at 404-995-3955 or 866-249-5513 for a consultation.