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Deny, delay, and defend – frivolous defenses by insurance companies

Deny, delay, and defend – frivolous defenses by insurance companies
Axelrod & Associates, P.A.

What’s the purpose of auto insurance?

If your answer is, “to pay for damages if there is a car accident,” you may be in for a surprise when you are in an auto accident and make a valid claim against the at-fault driver’s insurance company.

The purpose of auto insurance is the same as the purpose of any insurance – to make as much money as possible for the insurance company and its shareholders. How do you do that? Charge the highest premiums that you can, and, when a claim is made, deny, delay, and defend.

What are some of the more common frivolous defenses that insurance companies make, and how can we limit frivolous defenses?


The insurance industry embarked long ago on a campaign to convince America that we have a problem with “frivolous lawsuits.” Is there a problem with frivolous claims? Or is there a problem with disinformation spread by business interests in our country? What about the routine frivolous defenses that are made by insurance defense attorneys?

Frivolous Claims

Pouring millions of dollars into marketing, lobbying, and online disinformation campaigns, the relentless “tort reform” movement has:

  • Invented fake lawsuits to create outrage;
  • Twisted the facts of legitimate verdicts to create outrage;
  • Persuaded lawmakers to make the manufactured lawsuit abuse crisis a priority on the campaign trail; and
  • Successfully lobbied for the passage of laws across the nation that protect business interests at the expense of ordinary people.

Why pour so much money into “tort reform” efforts?

Every dollar spent on disinformation and lobbying for the passage of laws to limit liability is an investment that keeps more money in the accounts of businesses and insurance companies…

About that McDonald’s Case…

But, what about that McDonald’s case? Seized upon by tort reform advocates, misreported, exaggerated, and the subject of outright lies by tort reform advocates, the infamous “McDonald’s case” was never what the insurance lobby claimed it was:

Mrs. Liebeck offered to settle the case for $20,000 to cover her medical expenses and lost income. But McDonald’s never offered more than $800, so the case went to trial. The jury found Mrs. Liebeck to be partially at fault for her injuries, reducing the compensation for her injuries accordingly. But the jury’s punitive damages award made headlines – upset by McDonald’s unwillingness to correct a policy despite hundreds of people suffering injuries, they awarded Liebeck the equivalent of two days’ worth of revenue from coffee sales for the restaurant chain. That wasn’t, however, the end of it. The original punitive damage award was ultimately reduced by more than 80 percent by the judge. And, to avoid what likely would have been years of appeals, Mrs. Liebeck and McDonald’s later reached a confidential settlement.

There’s also a documentary detailing the facts of the case and how it was distorted by “tort reform” advocates.

Enter the Stella Awards

But, what about the “Stella Awards?” Like the manufactured and false hype surrounding the McDonald’s case, “tort reform” advocates then began circulating a list of the most outrageous verdicts, calling them the “Stella Awards” after Stella Liebeck, the elderly plaintiff in the McDonald’s case.

The list of six, sometimes, seven, ridiculous examples of a tort system gone haywire included outrageous verdicts for:

  • A woman who tripped over a toddler in a furniture store;
  • A man who hurt his hand while stealing the defendant’s hubcap;
  • A man who was trapped in a garage for eight days, of a house he had just robbed;
  • A man who was bitten by his neighbors’ dog after he shot it repeatedly with a pellet gun;
  • A woman who slipped on a drink she had just thrown at her boyfriend; and
  • A woman who hurt herself trying to sneak in a club’s bathroom window to avoid paying the cover charge.

The list of horribles was often captioned, “And you wonder what’s wrong with the world today?” The real problem? And, ironically, what is wrong with the world today?

None of the cases are real. Fake plaintiffs, fake lawsuits, fake verdicts, even fake law firms associated with the cases – although a simple online search would have revealed that none of the cases were legit, many people believed it anyway.


Deny, delay, and defend.

Insurance is a trillion dollar a year industry – how does that happen? Lowball offers and hardball litigation.

The American Associate for Justice issued a report titled, “The Ten Worst Insurance Companies in America: How They Raise Premiums, Deny Claims, and Refuse Insurance to Those Who Need It Most,” which found that:

  • The US insurance industry takes in over $1 trillion each year in premiums;
  • The US insurance industry has over $3.8 trillion in assets;
  • Combined profits from property, life, and health insurance averages $60 billion each year;
  • The CEO’s of the top insurance companies earn around $9 million a year; and
  • The cash compensation for the average insurance industry CEO is $1.6 million a year.

The report details how companies like Allstate (you’re in good hands with Allstate…) use unethical tactics to deny claims, to delay payment of claims, and to defend against claims:

In cases like these, and countless others, the name of the game is deny, delay, defend-do anything, in fact, to avoid paying claims. For companies like Allstate, there are corporate training manuals explaining how to avoid payments, portable fridges awarded to adjusters who deny the most claims, and pizza for parties to shred documents.

What are Common Defenses Insurance Companies Use to Deny or Delay Claims?

Insurance companies routinely deny, lowball, and delay the payment of claims until the eve of trial. Why?

They want you to take their lowball offer – they know you might be hurting for money and the medical bills are piling up while they drag their feet. At some point, they expect you to give up and accept less than your case is worth.

Why else? The money that the insurance company is going to pay you is making money for the insurance company while they delay paying you… Your money and the money of tens of thousands of other claimants can earn how much profit each month if it is invested wisely?

What are some of the most common frivolous defenses we hear?

  • The accident was your fault – even when the evidence is clear that the accident was the other driver’s fault, the defense may claim that you were at fault or that you were partially at fault which may reduce or prevent your recovery under the comparative negligence rule;
  • Your injuries were not caused by the accident – you had a pre-existing injury, or you were somehow injured after the accident; or
  • You are faking your injuries – the insurance company may claim that you were not injured at all or that you are exaggerating your injuries.

Once you have filed a lawsuit, litigated your case for a year or two, taken depositions of every witness, fought with the defense over discovery materials, and gone through mediation, the insurance company will often then attempt to settle your case on the eve of trial – a sudden change of heart about their airtight defenses?

Tort Reform – How do We Put an End to Frivolous Defenses by Insurance Companies?

Legislation making insurance companies additionally liable for presenting frivolous defenses would discourage them from making baseless claims for purposes of denying or delaying payment of claims.

Legislatures nationwide have passed increasingly harsh legislation limiting potential recovery for people who are injured and putting caps on punitive damage awards, but where is the legislation to force insurance companies to pay legitimate claims and to punish them for frivolous defenses?

SC’s rules allow for sanctions in the court’s discretion for frivolous claims or defenses, but it is extremely rare for a SC court to sanction an insurance defendant for making frivolous defenses in an auto accident case.

Consider the outcome of this auto wreck trial in Georgia: The insurance company denied the plaintiff’s injuries and initially offered $40,000 at mediation. Just before trial, they increased their offer to $400,000, which was refused by the plaintiff.

At the outset of the trial, the defense suddenly acknowledged the plaintiff’s injuries – a common tactic, and the trial was now just about the amount of damages. The jurors returned a $1.2 million verdict to compensate the plaintiff for her injuries – but, the day after the verdict, the jury returned to consider damages for the frivolous defenses put forward by the insurance company up until the start of trial.

The jurors added $506,000 in additional damages to compensate the plaintiff for having to litigate the insurance company’s frivolous defenses through the start of the trial.

If similar sanctions became commonplace, in SC and across the country, do you think more legitimate claims would be paid without frivolous delays by insurance companies?


If you or someone you know has been injured in a car accident in Myrtle Beach, SC, do not delay – talk with a Myrtle Beach auto accident lawyer on the Axelrod team. Call now at 843-916-9300 or email us through our website for a free consultation about your case today.

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