Taking bad faith to a whole new level

This bad faith insurance lawsuit involves conduct which most people would say takes bad faith to a whole new level. According to news reports, Teri Powell was a high school teacher in Rapid City, South Dakota for over 25 years. She became very ill in 2002 – developing rheumatoid arthritis, osteoarthritis, progressive joint disease, spinal scoliosis and other ailments – and was forced to retire from teaching.

Although she had disability insurance with CUNA Mutual Insurance Society, she tried to support herself by pet sitting and doing other odd jobs which didn't interfere with her disability as much. She found out that she had cancer in 2005 and finally filed a claim with CUNA. However, CUNA denied her claim by saying that it needed to investigate whether she was disabled – and then did nothing. Even though Powell continually followed up, CUNA continually ignored her requests – up until the day she died in 2006.

$6.2 million verdict

Powell's estate sued CUNA for bad faith and a jury recently awarded it $6.2 million in damages – some of that constituting punitive damages against the insurer. At the trial, her bad faith insurance attorney discovered that CUNA was treating other policyholders the same way and exposed a long history of fraudulent claims practices.

Unfortunately, Powell's estate may not get that money right away. CUNA is appealing the verdict because it feels that the judge erred by letting the jury see evidence that 1) the company allegedly denied thousands of claims, 2) the company created spreadsheets tracking the amount of money involved in each denial and 3) court documents in which CUNA initially claimed the spreadsheets didn't exist. In the meantime, legal experts say that the company is doing anything it can to settle claims and avoid further lawsuits.