Where would I be if insurance companies paid claims fully and promptly or if those smart insurance defense attorneys were not scheming ways to protect their clients when they failed to do so? That answer this Sunday afternoon is probably with my sailing buddies, and not editing a complaint and researching the concept of “materiality” of insurance contract performance. This question and answer also leads to where would Ali be without Frazier? Namath without the Colts? The Yankees without those loathsome Red Sox? The Parks Chastain’s of the insurance defense world without the Chip Merlin’s of the policyholder world???

Being Fair And Balanced, I first became aware that my post, Partial and Advance Payments–An Insurance Company Attorney Claims that There is No Legal Obligation to Pay Undisputed Benefits, may have been a little too harsh when my former legal assistant wrote the following comment:

According to the "Tennessee Insurance Litigation Blog" website which contains Mr. Chastain’s Resume, he certainly holds himself out to be an "expert" defense attorney in advising and representing insurance companies.

I just viewed the site for about a 1/2 hour and found it to be a very nice and informative site. One day it "gives the floor" to a defense attorney (like Mr. Chastain) to write an article and offer advice to insurance companies and the next day it "gives the floor" to a Plaintiff’s attorney (can’t recall his name) to write an article and he, in turn, offers his advice and opinions for the Plaintiffs/policyholders. I enjoyed the site.

Finally, I would venture to say that (maybe) Attorney Chastain takes this "hardnose" approach to attract insurance company clients. In #1 of his article that you cited, Chip, he says:

"1. Generally speaking, MOST insurance policies do not require the insurance carrier to make an advance…"

He’s not saying that they SHOULD NOT make an advance. He just wrote that "…MOST insurance policies do not require the insurance carrier to make an advance." Indeed, it could be that, behind closed doors, he’s advising and suggesting to the carrier that they should make an advance to help the insured during their time of need to avoid (or minimize) the potential of a bad faith lawsuit down the road.

Just my thoughts.

SHIRLEY HEFLIN

Shirley was no friend of any insurance company, its attorneys or assistants when in my employ. So, I was a little concerned when she appeared critical of my post.

Parks Chastain then responded to my post with Policyholder’s Advocate’s Blog Questioning Misconceptions on Advances Shows Extent of Misconceptions, and the Reasons Why They Are Problematic. He stated in part:

“Anyway, thanks to Chip for pointing out exactly why we needed to clear up misconceptions. His blog demonstrates my point exactly, although I really had not thought that anyone would have these misconceptions.

And, let me add this, my blog notes that some carriers do make advances and some do not. It is not a condemnation of advances, but rather an attempt to clear up misconceptions to which some policyholder attorneys contribute. These misconceptions evidenced by Chip’s posting cause a problem, when the attorney for the policyholder convinces the insured that a company is treating them unfairly by not making advances. The insured often decides to become adversarial, to the benefit of the policy holders attorney, when it is often not necessary. If attorneys would be objective in their assessments as to policy obligations, much litigation could be avoided.

I enjoy the challenge of litigating with lawyers who know the rules, and understand the issues involved. When I deal with lawyers new to coverage litigation, I find that they have many of the same misconceptions I have set forth, and perhaps those that Chip has evidenced. In many cases, the companies I have represented have made advances, but the insured claimed they were not enough. The policyholder’s attorney usually writes a letter demanding an advance, copies to his client. That creates a perception it the mind of the policyholder that an advance is required, when it may not be. Things are never the same after that, as the policyholder is convinced the carrier has failed to do something required. In most cases, nothing could be further from the truth.”

I agree with Parks on the sentences I have highlighted, especially the latter sentence. The action and risk of my job is fun, if you enjoy competition. The former needs some explanation.

For a decade, I have been teaching that public adjusters and policyholders need to be smarter and more professional about their rhetoric when confronting insurers. I did so as a result of some criticism in 1995, which pointed out that I needed the same advice. After learning from the criticism and seeing the positive results, I firmly believe that one can win and still be nice, direct, tough, gentleman-like, and a fierce advocate, without being a jerk or a lot worse. Aggressive can be accomplished in a very professional manner. Lessons like these took me from a few million dollar cases to a few hundred million dollar cases—with many in between. Giving up one’s ego in front of others may be hard to do for some of us insecure types, but if you accept Harvard educated attorney Rick Friedman’s teachings, it opens up an entire new world of positive possibilities and results.

The point I want to emphasize as I close this post, and where I disagree with Parks Chastain, is that we are not dealing with “advance” payments. The word “advance” implies that insurers are giving policyholders something to which they are not entitled. What I strongly detest is the practice of some insurers to delay payment for parts of undisputed claims owed. This is an effort to leverage the disputed portions of a claim debt downward. The insurer plays the “let’s make them suffer” game of nonpayment of partially agreed amounts to force a lower overall payment through settlement. I never use the word “advance” because that implies the wrongful insurer is doing the policyholder a favor by promptly paying "partially owed" amounts. Instead, insurers have an almost universally recognized good faith obligation to pay undisputed amounts of a claim promptly. If they do not, they should get the brunt of legal accountability.