Court Finds That McKennon Law Group PC’s Client Is Entitled to Long-Term Disability Benefits; Rejects Guardian Insurance Company’s Application of Pre-Existing Condition Exclusion

On May 9, 2024, in the matter of Jason Kim v. The Guardian Life Insurance Company of America, 8:23-cv-01579, 2024 WL 2106240 (C.D. Cal. May 9, 2024), the Honorable David O. Carter of the Central District of California ruled in favor of McKennon Law Group PC’s client, Jason Kim, ruling that our client was entitled to long-term disability (“LTD”) benefits under a group disability policy (the “Policy”) governed by ERISA. The insurer, Guardian Life Insurance Company of America (“Guardian”), had denied the claim based on a pre-existing condition exclusionary clause. Judge Carter ruled that Guardian had erred in denying the claim.

For greater context, pre-existing condition exclusions are portions of disability insurance policies that preclude coverage if the insured had the disabling condition, or a condition related thereto, before coverage under the policy began. These clauses are aggressively used by insurers to protect their profit margins. Of note, whereas an insured usually carries the burden of establishing entitlement to coverage under an insurance policy, if an insurer invokes a pre-existing condition exclusion, then the insurer has the burden of establishing that the exclusion applies.

Here, the insurer invoked the clause when it simply did not apply. Before obtaining coverage under the Policy, our client suffered from mild depression, anxiety, and attention deficit hyperactivity disorder (“ADHD”). Of note, these conditions were sufficiently mild that they were borderline subclinical. In January 2021, however, everything changed. Our client developed COVID-19. Shortly thereafter, he developed a wide array of serious symptoms. These included brain fog, cognitive impairments, extreme pacing (our client wore out a pair of shoes in a couple of days), fever, chills, insomnia, panic attacks, restlessness, agitation, “pressure in the head,” loss of the ability to communicate, short-term memory damage, psychosis, and damage to the ability to process information. He was prescribed the medication Zyprexa. Unfortunately, he had a severe reaction to the medication. He developed tardive dyskinesia (“TD”) and tardive akathisia (“TA”). These are severe and disabling neurological/movement disorders.

Our client submitted a claim for LTD benefits under the Policy. Guardian denied the claim. It insisted that our client’s anxiety, depression, and ADHD were pre-existing conditions for the myriad of symptoms he developed in January 2021. Of note, virtually everyone who had knowledge of the claim insisted that the pre-existing condition exclusion did not apply. Even the insurance broker who sold the Policy insisted that the clause did not apply. Guardian, however, refused to listen. It denied the claim.

We sued Guardian for the outstanding benefits under the Policy. The case ultimately went to trial. The parties submitted extensive briefing and the 6,000-page administrative record to the Court. The Court heard over two days’ worth of oral argument and then requested a second round of briefing. Ultimately, on May 9, 2024, the Court ruled in our client’s favor.

Guardian’s case relied almost entirely on a few medical records related Mr. Kim’s prescription of Zyprexa. In particular, the medical records stated that Mr. Kim was prescribed the medication for anxiety and depression. Guardian reasoned that, therefore, ALL of Mr. Kim’s symptoms were related to anxiety and depression, the pre-existing conditions. We, in turn, explained that, per the medical records, his then-treating physician had only spoken to Mr. Kim for five minutes over the phone before prescribing the medication. He had not physically examined Mr. Kim or administered any tests. We also explained to the Court that all of Mr. Kim’s subsequent treating physicians agreed that he was not suffering from common anxiety and depression in January 2021. They attributed his symptoms to COVID-19 or psychosis. The Court concluded that a five-minute phone call was insufficient evidence to rely on. It stated:

Guardian focuses on the fact that the records from Dr. Moldawsky reference pre-existing anxiety and depression. However, medical diagnoses often change over time as symptoms develop and emerge. That Dr. Moldawsky believed at the onset of Plaintiff’s severe symptoms that pre-existing anxiety and depression may have been reasonable at the time, even though it later became clear that Plaintiff’s condition was substantially different. Guardian’s insistence that Plaintiff’s psychosis was simply a more severe form of his prior anxiety and depression is not consistent with the facts or evidence. (Id. at *8)

Other evidence revealed how unreasonable Guardian’s position was. Not only did the agent who sold the Policy argue against the exclusion’s applicability, but even one of Guardian’s own peer review doctors specifically explained that there was no connection between Mr. Kim’s disability and his pre-existing conditions. See id. at *6.

We argued that COVID-19 caused Mr. Kim’s symptoms. Multiple treating physicians had reached that conclusion. However, although Guardian and its physician rejected this conclusion, as the Court explained:

Plaintiff’s medical records demonstrate that COVID-19 has been shown to cause psychosis and could potentially have caused psychosis here. Guardian’s own employee acknowledged this. It is not necessary for Plaintiff’s claim, however, to demonstrate that COVID-19 triggered his health problems in early 2021. Plaintiff must demonstrate that what rendered Plaintiff disabled was not caused or substantially contributed to by a pre-existing condition or its treatment. The prior identified mental health conditions/treatments did not “cause or substantially contribute to” the disability during the lookback period. (Id. at *6)

Having concluded that the pre-existing condition exclusion did not apply, the Court then proceeded to analyze whether Mr. Kim was disabled under the Policy. See id. at *7. The Court explained that Guardian had failed to argue before the Court that Mr. Kim was not disabled. See id. at *7. It further noted that there was significant medical evidence documenting Mr. Kim’s disability. See id. It determined that, in fact, he had been disabled during the time period in question.

Our client has sufficiently recovered that he has returned to work. As such, the Court awarded our client his benefits for a closed-end period.

Insurers tend to be overly aggressive when invoking pre-existing condition exclusions. However, it is the insurer’s burden to establish that the exclusion applies. This case served as yet another example, and warning, to insurers. They cannot carelessly invoke exclusions like the one involved here.

What is the Pre-Existing Condition Exclusion in Disability Insurance Policies and How Does It Work?

Understanding How Pre-Existing Conditions Exclusions in Disability Policies Can Affect A Claim For Disability Benefits

Short- term disability and long-term disability insurance policies are designed to provide peace of mind about your future. If you are injured or become ill to such a degree that you are unable to do your job, disability insurance can help you maintain financial stability.

However, insurance companies commonly deny disability claims based on policy exclusions. After all, the insurance provider exists to make money as a business, and finding ways to avoid paying disability benefits helps their bottom line. Because of this, you may find your claim is denied for any number of reasons, including improper reasons and reasons that are allowable under your policy. One common exclusion found in most disability policies that may allow an insurance company to legitimately deny your claim is the pre-existing condition exclusion.

What Is A Pre-Existing Condition?

A pre-existing condition is defined in a disability policy and typically is defined as any injury, illness, or other health-related condition that was diagnosed and/or treated at a time prior to the policy issuance or the date disability coverage began which later caused you to become disabled. Insurance companies will often establish what is called a “look back period” to determine whether a pre-existing condition existed during that time period. Typically, the disability must occur within twelve months after coverage began in order for an insurer to rely on the exclusion.

For example, say a policy defines the look-back period as 90 days prior to the date coverage began under a disability policy. If the insured is treated for or diagnosed with any injury or illness during that 90-day period and that condition in some way caused a disability, it may be considered a pre-existing condition. It should be noted that the insurance company will interpret “treated” or “diagnosed” as broadly as possible to include even conditions discussed only in passing with your doctor during a visit.

Consider this hypothetical situation: Within the 90-day period before purchasing a disability insurance policy, you are treated by your medical providers three times. First, you are treated for an ongoing heart condition. Next, you are treated for a new complaint of back pain and diagnosed with a slipped disc. Finally, you are treated for strep throat.

Later, you make a disability claim due to a back pain issue that leaves you unable to work. Because you were diagnosed with that slipped disc during the look-back period, your claim might be denied due to a pre-existing condition.

Why Insurance Companies Include Pre-Existing Conditions

Insurance companies include pre-existing condition exclusions in their policies to alleviate risks that people will or may seek coverage under a policy soon after a disability policy is issued or coverage begins. Insurance is not designed to pay for things that have already happened, but to protect you from possible future losses.

How Disability Insurers Use Pre-Existing Condition Clauses Inappropriately

Insurance companies can misuse pre-existing condition exclusions to deny disability claims in a few ways:

Stretching the definition of pre-existing condition: Sometimes, insurers might argue that a seemingly unrelated past condition is somehow connected to the current disability. For instance, if someone with a history of anxiety files a claim for back pain, the insurer might try to link the two, even if there is no medical basis for it.
Misinterpreting the “look-back period”: This is the timeframe before your policy’s effective date that insurers examine to identify pre-existing conditions. They might extend this period beyond what is allowed by the policy.

Exaggerating the severity of past conditions: Even if a relevant past condition existed, the insurer might downplay how well-controlled it was before the disability, exaggerating its role in the current situation.
Failing to consider all evidence: Insurers might focus solely on medical records that support their denial and overlook evidence that suggests that the medical condition is not subject to the exclusion.

Here are some signs that an insurer might be improperly using the pre-existing condition exclusion:

The denial letter is vague about why the condition is considered pre-existing.
The insurer relies on weak evidence to connect a past condition to the current disability.
The insurer ignores your doctor’s opinion on the limitations caused by your disability.

In a recent case our office handled and which was decided under the Employee Retirement Income Security Act (“ERISA”), the Central District of California concluded that a long-term disability (“LTD”) policy’s pre-existing condition exclusion did not apply after the insurer initially denied a claim for benefits based on the exclusion. The insurance company determined that the claimant was disabled but that his disability was caused by pre-existing conditions. The claimant had previously been treated for anxiety and depression and had been able to continue working with those conditions. He had not been treated for his existing anxiety and depression for some time and at the time he made his LTD claim his condition had become substantially more severe than the common anxiety and depression he had previously experienced; he had developed a new onset of psychosis that left him unable to work.

The court determined that the claim was not excluded from coverage because the insurance company could not sufficiently demonstrate that the claimant’s pre-existing condition substantially contributed to his disability. This case highlights the notion that insurance companies improperly invoke exclusions, including a pre-existing condition exclusion, to deny claims. An insurance company telling you that your claim is barred because of an exclusion does not necessarily make it true.

Get Help From an Experienced Legal Team to Fight Insurance Companies

Fighting insurance companies to protect your rights and assert your valid disability claim can be daunting. It may feel like it is you against a giant corporation—and it often is. However, the right legal team can mean the difference between being paid your claim and not being paid.

At the McKennon Law Group PC, we work with clients to understand their needs and insurance policies, especially disability insurance policies. Then we fight to overcome challenges in your claims process, dispute bad-faith insurance claims decisions, and negotiate settlements with insurance companies. If you or someone you love is dealing with a disability insurance denial or claims holdup, call us for a free consultation.

Challenging a Disability Insurance Claim Denial Based on a Peer Review Report

If you suffer an illness or injury that leaves you unable to work, disability insurance can be a crucial lifeline to help you survive financially. However, insurance companies deny a substantial portion of disability claims. A common tool insurance companies use to deny claims is the peer review report, or “paper review” report completed by doctors or nurses who do not examine or talk to the claimant and either directly work for the insurance company or they work for a company that hires such doctors to give opinions for insurance companies. Almost all the income from these latter companies is derived from insurers hiring them. That means that these medical consultants are almost always biased in favor of insurers and against disability insurance claimants.

Appealing a claim denial based on a peer review report can be challenging and understanding the process can be immensely helpful for you to be able to navigate through the disability claim appeals process, and possibly litigation, so you get the benefits to which you are entitled under your policy.

Understanding the Role of Peer Review Reports

Peer review reports are commonly used by insurance companies to evaluate disability claims. These reports are typically prepared by medical consultants who review your medical records and assess the validity of the disability, commenting on medical conditions and restrictions and limitations. The insurance company will provide your medical records to what they assert are “independent” medical consultants but as noted above, they are not. These consultants will review your records and provide a report to the insurance company. Most of the time, these reports are favorable to the insurance company and will assist them in denying legitimate disability claims.

However, peer review reports can contain inaccuracies, misinterpretations, or even biases that may lead to an unfair denial of your claim. It is vital that you address these issues with the insurance company in a timely manner. In ERISA (Employee Retirement Income Security Act) appeals matters, the insurer is required to give you an opportunity to review the report and comment on it before the insurer uses it to deny your disability claim. Properly addressing these issues means you will need to:

Review Your Denial Letter

The first step in the appeals process is to carefully review the denial letter from your insurance company. This letter should outline the reasons for the denial and include a copy of the peer review report. Understanding the specific inaccuracies in the report is essential to building a strong case for your appeal.

Gather All Relevant Documentation

Compile all the relevant documentation related to your disability, including your medical records, treatment history, and any communications with your healthcare providers. This information will help you and your attorney present a clear and comprehensive case.

Consult with a Disability Insurance Attorney

Hiring an experienced disability insurance attorney is one of the most critical steps in this process. An attorney with expertise in disability insurance claims can help you navigate the complex appeal process, assess the inaccuracies in the peer review report, and build a compelling case to challenge the denial.

Request an Internal Review

Most insurance policies require claimants to first go through an appeal with the insurance company, done internally, before pursuing external remedies such as suing in court. Your attorney can help you draft a well-documented and persuasive appeal highlighting any deficiencies in the peer review report. It is essential to follow the specific guidelines and deadlines set by your insurance policy during this process.

Pursue External Remedies

If your appeal is unsuccessful, or if your policy does not require an appeal, you can sue the insurance company in court. The litigation process may provide opportunities for your case to be resolved outside of court, for example through mediation. Your disability insurance attorney will guide you through these steps and represent your interests throughout the process.

Establish the Deficiencies in the Peer Review Report

Your attorney will work to pinpoint and highlight any inaccuracies and other deficiencies in the peer review report. This may include demonstrating that the reviewing physician misinterpreted your medical records, overlooked crucial details, rendered decisions without any evaluation and in a conclusory manner, or made biased assessments concerning your restrictions and limitations. Providing alternative expert opinions and medical evidence that counter the inaccuracies is significant to your case.

Present a Strong Legal Argument

Your attorney will craft a compelling legal argument to demonstrate that the peer review report’s deficiencies were the primary basis for your claim denial. They will show how these inaccuracies directly led to an unfair decision and violated the terms of your insurance policy. Your attorney can also conduct legal research to find cases in which the same biased medical consultants hired in your matter were found to have defective reports or demonstrated clear bias.

Demonstrate Your Disability

In addition to challenging the peer review report, it is important to reaffirm your disability and its impact on your ability to work. Your attorney will work with you to provide clear and convincing evidence of your condition, including medical records, statements from your healthcare providers, and any additional documentation that supports your case. The best way to demonstrate your disability is to have your physician or other medical professional comment on the report and attack it where necessary.

Conclusion

If your disability insurance claim has been denied based on a defective and/or biased peer review report, you do not have to accept this decision as final. With the assistance of an experienced disability insurance attorney like those at McKennon Law Group PC, you can navigate the complex appeals process and build a convincing case to challenge the denial. By following the steps outlined in this article and working closely with your attorney, you can increase your chances of securing the disability benefits you rightfully deserve. Remember, when faced with a wrongful denial, seeking professional legal assistance can make all the difference in your journey toward financial security and peace of mind. Reach out to McKennon Law Group PC to discuss your disability claim denial with an experienced disability insurance attorney.

What Is a Covered “Death” and “Dismemberment” Under An Accidental Death & Dismemberment Insurance Policy?

What Is Accidental Death and Dismemberment Insurance?

Insurance policies provide peace of mind that you or your loved ones will receive compensation for certain expenses and losses you experience. For example, you pay for auto insurance so you do not have to worry about covering losses associated with a auto accident yourself. You may pay for health insurance so that you are covered in case you develop a chronic condition or serious illness or require unexpected medical treatment. Disability insurance can provide cover your lost income if you are injured or otherwise unable to work at your occupation in the future due to a covered event or condition.

Accidental death and dismemberment insurance (“AD&D”) insurance is a type of policy designed to pay benefits in the case of an accidental death or loss of a body part, or the use of a body part, the latter known as dismemberment. The key under these policies is that the loss must result from an accident. Thus, AD&D plans typically include two levels of coverage. The first is a death benefit that is paid to a person’s beneficiary if they pass away due to a covered incident as described above. The second is dismemberment insurance, which is paid out to the person who was injured and suffers from a “dismemberment.” These policies are common and can be obtained much like other types of policies. If your employer offers group insurance coverage, you may be able to elect AD&D coverage through that group plan.

What Does AD&D Insurance Cover?

AD&D insurance covers losses associated with a catastrophic accident or other incident involving a fatality or resulting in the loss of one or more body parts or the use of certain body parts.

However, simply having AD&D insurance coverage does not mean you will receive benefits if you make a claim for a death or a dismemberment. Like other insurance policies, AD&D policies are complex and typically include exclusions that impact claims payouts. On top of this, it is all too common for insurance companies to act in bad faith and deny claims that they should pay. It stands to reason that you may not know how to deal with an insurance company denying your claim based on a policy exclusion.

Understanding your policy, including what it requires for you to receive benefits and how it defines important terms (such as dismemberment) can help you determine how to address your claim and whether an attorney may be able to help you receive benefits.

What Is an Accidental Death?

AD&D plans pay out accidental death benefits only when a covered person passes away due to a covered accident. Every policy is different in how it defines accidental death, but this benefit usually applies to what are deemed exceptional circumstances—unplanned incidents that cause a fatal injury. Examples of such incidents are:

A fatal auto accident
A drowning
Falls or other traumas that are fatal
Homicides, in some cases
Death resulting from unplanned or accidental exposure to a dangerous chemical

There are many deaths that do not easily fall into the category or definition of accidental death/death by an accident. It is the “gray area” cases in which insurance companies will deny these claims. Many of the deaths that appear to be accidental are complicated by factors that were involved with the death, such as drug or alcohol use, death that involves an underlying pre-existing physical condition, etc.

How Do AD&D Policies Define a Dismemberment?

A common definition of dismemberment in an AD&D policy is the loss of an entire body part or the loss of function of an entire body part. This is a standard definition used by insurance companies, though the specific language will vary from one insurance company or policy to another. For example, if you lose an arm, leg, or eye, you may qualify for coverage. If you lose your hearing but not your actual ears or your sight but not your eyes, you should also be covered. It is important to consult the details of your policy to understand exactly how dismemberment is defined for the purposes of a qualified claim.

Does AD&D Insurance Replace Life Insurance?

In general, AD&D insurance is considered a supplement for life insurance and not a replacement for it. These two types of plans provide different coverage. Your life insurance policy offers a death benefit that pays out in cases other than accidental death, for instance. However, consulting with an experienced insurance broker or financial planner can help you ensure there are no major gaps in your insurance coverage.

Understanding AD&D Policy Exclusions

Every insurance policy has exclusions – types of incidents or losses that are specifically not covered by the policy. Common AD&D policy exclusions are:

Medical Treatment Exclusions: Coverage may be excluded if the death or injury results from a medical condition, medical treatment or surgery not related to the accident.
Injuries Resulting from Illness: AD&D policies cover accidents rather than illnesses, so injuries or death resulting from illness or natural causes are usually excluded.
Intoxication: Coverage may be denied if the death or injury occurs while under the influence of alcohol or drugs, as specified in the policy. This exclusion does not only include explicit substances; use of prescription drugs that are not taken according to a specific prescription may result in a claim denial based on this exclusion.
Pre-existing Conditions: Coverage may be excluded for injuries or death resulting from pre-existing medical conditions, particularly if they cause or substantially contribute to the accident.
Criminal Activity: Policies typically exclude coverage for injuries sustained while committing or attempting to commit a crime.
Engaging in Hazardous Activities: Coverage may be excluded if death or injury results from participating in hazardous activities such as skydiving, racing, or extreme sports.
Intentional Self-Inflicted Injuries: AD&D policies often exclude coverage for injuries or death resulting from self-inflicted harm or suicide.

War or Acts of War: Many policies exclude coverage for injuries or death resulting from participation in war, declared or undeclared, or acts of terrorism.

Participation in Active Military Duty: Some policies may exclude coverage for injuries or death sustained while on active military duty, as military service often provides its own insurance coverage.

Aviation Activities: Some policies may exclude coverage for injuries sustained while traveling in private aircraft or engaging in aviation-related activities, excluding commercial flights.

What To Do When Your AD&D Claim Is Denied

If an insurance company denies your claim based on a policy exclusion, consulting with an experienced ERISA or non-ERISA insurance lawyer can help clarify whether the insurance company’s denial of your claim was proper. If the insurance company has improperly denied your claim, including based on a policy exclusion, having the right insurance/ERISA attorney in your corner can be critical in submitting an effective appeal and, if necessary, handling a lawsuit against the insurance company.

If your AD&D claim has been improperly denied, the knowledgeable and experienced attorneys at McKennon Law Group PC can recover the benefits you are owed. Our team is well-versed in AD&D insurance claims, and we fight aggressively to protect your rights and ensure you are compensated according to your policy. Call McKennon Law Group PC at 949-504-5381 for a free consultation now.

Your Guide to California Insurance Bad Faith

Insurance Bad Faith and How to Deal With It

When you have health, life, disability, or long-term care insurance, or any other type of insurance policy, you expect your coverage to provide peace of mind. You pay premiums trusting that your insurance company will pay out according to the policy if you experience a covered event. However, if you have ever were involved with an insurance claim, you know that is not always the case.

Insurance companies deny claims for every reason they can attempt to justify. Sometimes the policy language can be so complicated and confusing that it can lead you to believe you have coverage that you do not actually have.

Many insurance company denials are the result of bad faith actions. Understanding whether your case involves what is known formally as a breach of the implied covenant of good faith and fair dealing, less formally known as insurance “bad faith” is vital; if your denial involves bad faith, you may have more options available for seeking compensation for your damages against your insurance company.

What Constitutes Insurance Bad Faith?

Bad faith occurs when an insurance company unreasonably or without probable cause delays payment of your policy benefits or denies your claim for policy benefits. Therefore, not every denial rises to the level of bad faith. Some examples of insurance bad faith conduct are:

Denying a valid claim, even though the policy supports the claim and appropriate appeals and documents have been submitted;
Offering a low settlement for a covered claim that does not reasonably address the benefits and/or damages associated with the claim;
Failing to process a claim according to the reasonable claims handling standards in the insurance industry or as found in state statutes;
Refusing to reasonably investigate a denial or other claims issue without providing an adequate reason for the refusal to honor its obligations under the policy.

First-Party vs. Third-Party Insurance Coverage and Bad Faith Claims

There are two main categories of insurance: first-party and third-party policy coverage.
First-party insurance provides compensation directly to the insured individual or business. For example, disability insurance is first-party coverage because it directly compensates the insured for a loss incurred under the policy. First-party bad faith occurs when the insurance company in first-party coverage situations acts in bad faith regarding your claim. For example, your disability insurer denies your claim for disability insurance benefits unreasonably or without probable cause.

Third-party insurance is a form of liability insurance that covers you when someone makes a claim against you for damages. A common example of this is auto insurance, which will pay another driver who is injured in an accident that you have caused. Another common type of third-party insurance is for property damage. Third-party bad faith occurs when the insurance company in third-party coverage situations acts in bad faith regarding your claim.

What You Have to Prove in a Bad Faith Insurance Case

The laws governing bad faith insurance situations vary by state, and California has an especially complex statutory and regulatory legal framework. To understand whether you have a good bad faith case and how to prove it, it is critical that you speak to attorneys who are very experienced in fighting insurance companies.

Typically, the initial burden of proof falls on the person filing the claim. You must demonstrate two things to succeed in a bad faith lawsuit: 1) Benefits due under the policy were withheld and 2) The reason for withholding benefits was unreasonable or without proper cause.

What Kind of Damages You Can Seek in a Bad Faith Insurance Case

It is important to understand whether you are dealing with a bad faith claim situation or not, as it will determine the types of damages that may be available to you. With a breach of insurance contract claim, you can seek the benefits due under policy. If you have a potential bad faith insurance claim, you may also be able to seek what are known as extra-contractual damages. These damages differ from state-to-state, and include:

Liability for judgments in excess of the policy limits: If your own insurance company acts in bad faith, it may be liable for amounts exceeding the policy limits.
Emotional distress: This is mental distress caused by the insurer’s bad faith actions.
Economic Loss: This involves financial losses incurred because of the insurer’s bad faith actions. For example, your disability or health insurer unreasonably denies a valid claim and his leads you to pay hefty medical bills or causes you to lose your home. You may be able to seek compensation for this type economic loss.
Statutory Penalties: These are penalties enforced by statute when an insurer acts in bad faith.
Interest: This is interest that accrues on unpaid policy benefits. In California, you can get 10% interest on past-due disability benefits.
Attorneys’ Fees: If you sue your insurer for bad faith and win, you may be able to recoup your legal fees. Attorney’s fees can become expensive, especially in complex insurance cases. California has a complicated and unique method of calculating attorneys’ fees.
Punitive Damages: These are damages awarded to punish the insurer for its bad faith behavior. In California, you can prove the insurer engage in bad faith actions and they were done with fraud, oppression or malice.

Work With an Experienced California Insurance Bad Faith Attorney

Insurance law and insurance cases are complex, and you can feel like you are caught up in a machine with very little control over what happens with your claim. You do not have to face this type of issue alone and feeling like you have no way to fight back.

The insurance bad faith attorneys at McKennon Law Group PC are well-versed in fighting insurance companies and standing up for the rights of our clients. We can review your policy and claims situation and help you understand if you have a bad faith claim. Our team of insurance bad faith lawyers also works with you throughout the process, standing up for you in court to help support a positive outcome.

Call McKennon Law Group PC at 949-504-5381 to find out more about how we can help.

Federal District Court Grants Partial Summary Judgment Under the Voluntary Payment Doctrine to Our Client, Allowing Her to Keep Over $1 Million Mistakenly Paid to Her

On March 6, 2024, in an 11-page order, the Honorable Jesus G. Bernal granted partial summary judgment in favor of McKennon Law Group PC’s client, Diane Le, ruling that American General Life Insurance Company (“AIG”) could not recover over $1 million it claimed it had mistakenly paid Ms. Le. The court granted McKennon Law Group PC’s partial motion for summary judgment based on the voluntary payment doctrine, permitting Ms. Le to retain over $1 million in life insurance benefits AIG recklessly paid her in error.

AIG paid Ms. Le the proceeds from another person’s $1 million life insurance policy and then filed an aggressive complaint against her to recover the money, even though Ms. Le had accurately submitted all requested information from AIG, and had quit her job and spent a substantial portion of the money by the time she was served.

As we discovered in the ensuing litigation, the correct beneficiary shared the same first and last name and date of birth as Ms. Le’s late husband. However, nothing else matched – the Social Security numbers for the correct policyholder and beneficiary were different from Ms. Le and her late husband; Ms. Le had different first and middle names from the correct beneficiary; the correct policy holder had a different middle name from Ms. Le’s late husband; the contact information on file was in a state where Ms. Le and her husband had never lived; and Ms. Le’s date of birth was different from the correct beneficiary’s date of birth. During the claim review process, Ms. Le even asked for a copy of the policy – which would have informed her that she was not, in fact, the correct beneficiary – but AIG refused to provide it to her.

After filing counterclaims for Ms. Le’s 18-plus months of lost wages and significant emotional damages, we ultimately moved for partial summary judgment seeking a ruling that Ms. Le was entitled to retain the $1 million she was paid under the voluntary payment doctrine defense.

The voluntary payment doctrine is an affirmative defense that bars a plaintiff from bringing an action to recover funds mistakenly paid if the payment was “voluntarily made with knowledge of the facts.” Here, AIG had knowledge of all of the relevant facts, as Ms. Le readily and accurately supplied all requested information. Moreover, the AIG claims representative who was primarily responsible for the egregious error honestly admitted (to her credit) that she did, in fact, review a number of claims documents whereby she should have been able to discover that Ms. Le was not the true beneficiary, but she failed to notice a number of significant discrepancies that should have made it clear to her that she was not the correct beneficiary.

The judge granted partial summary judgment in Ms. Le’s favor, affirming that AIG’s payment to Ms. Le was made with no “mistake of fact,” thereby absolving her of any liability to return the funds.

This is a case of first impression in California, as most insurance companies unsurprisingly have safeguards in place to prevent reckless conduct like that which occurred here. Significantly, the court cited the voluntary payment doctrine cases from the Seventh Circuit Court of Appeals that we cited in our pleadings with approval, making it easier for future litigants in California to prevail under similar circumstances.

Ms. Le is now able to keep the money she was recklessly paid by AIG, for which she is extremely grateful to McKennon Law Group PC.