Shernoff Bidart Echeverria on the Ins and Outs of Insurance Law

"Insurance companies have all the resources, they draft the policies the way they want them and give them to consumers on a take-it-or-leave-it basis." -- Michael J. Bidart

Michael J. Bidart and William M. Shernoff of Shernoff Bidart Echeverria (November 21, 2010)

Think about the last time you purchased an insurance policy. Did you read it thoroughly and negotiate with the insurance company to get a policy that met your needs?

“No one does,” says Michael J. Bidart, senior and managing partner of Shernoff Bidart Echeverria LLP. “You get insurance because you have to. You fill out the paperwork, send in your money and then they send you a policy. You put it away and pray to God that you never have to use it.”

When most people purchase a product, they intend to consume it or obtain some benefit from it. But the opposite is true for insurance. Bidart believes that no industry exists where the playing field is more uneven for consumers than in the world of insurance.

“Insurance companies have all the resources, they draft the policies the way they want them and give them to consumers on a take-it-or-leave-it basis,” he says.

Insurance is supposed to give you peace of mind that you will be protected when things go wrong—but sometimes the unthinkable happens.

A mother was horrified to find out that her son, a Little League coach, abused a minor in her home when she was not present. As if the revelation of the allegations wasn’t devastating enough, counsel for the plaintiff argued that the acts occurred as a result of woman’s negligent supervision.

The woman’s homeowner’s insurance included liability coverage to defend her for personal injury or property damages arising from occurrences at her home, but the company denied her coverage in relation to the case. Bidart represented the woman in court.

The court opined that the mother would have reasonably expected her insurance policy to cover her separately for her independent acts or omissions causing injury or damage. The insurance company had to honor the policy that the woman purchased.

“We prevailed for the mother who was the insured; she didn’t have anything to do with the harming of the child,” Bidart says. “Lack of insurance coverage for something like this deprives innocent victims of a source of recovery.”

William M. Shernoff, the founding senior partner of Shernoff Bidart Echeverria is known as the “pioneer” of bad faith law. A bulk of his practice involves rescission cases in which insurers cancel policyholders’ coverage after they become injured, sick or hospitalized.

One day after a woman underwent a gallbladder surgery, she had to return to the hospital due to a collapsed lung. The woman’s insurance provider rescinded her policy and refused to pay her medical bills, saying that she did not provide complete and accurate information on her application. Shernoff represented the woman in her complaint against the insurance company. The court ruled that the insurance company failed to conduct a reasonable underwriting investigation and was still obligated to honor her policy.

“If they rescind the policy, the companies get out of paying not only those bills, but also ongoing treatment the policyholder may need,” Shernoff says

He has achieved positive results for his clients in cases involving bad faith health and insurance cases, and now “junk” insurance cases, in which consumers purchase what they believe to be comprehensive health insurance, but is really just a bare bones policy. In addition, Shernoff has tackled cases involving insurance companies that overrule treating physicians’ decisions regarding necessary medical procedures.

– Ashley Cisneros Copyright © 2010, Los Angeles Times

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Bang Lin, a 37-year-old Irvine business owner, died in 2006 of stomach cancer, leaving a wife and two school-age children. Had Lin died three weeks later, the two-year "contestibility" period would have been over. His family would have collected $1 million. Instead, Metropolitan Life, the nation's largest life insurance company with $8.6 billion in annual sales, rescinded the policy, alleging misrepresentation. The issue was not the cancer; that had been diagnosed 15 months after he took out the policy. Rather, the company alleged Lin had failed to mention in his application that he had been successfully treated years before for hepatitis B, a condition unrelated to his death. Jean Lin sued. She said the agent had filled out the application, not her husband, and that she never asked about hepatitis. In any case, Jean Lin said the information was in her husband's medical records and the firm could easily have ordered a hepatitis B test. Read the rest of this entry »

Rescission is a factor not just in health policies, but in life coverage too. As if the insurance industry didn’t have enough bad press, it’s just gotten more. An article in the Sunday Los Angeles Timesis taking a look at the practice of rescission—canceling insurance coverage after a policy has been issued—as it’s playing out in the cases of some beneficiaries who were denied benefits when the policy owners died... William Shernoff, an attorney acting on behalf of one of the beneficiaries denied benefits by another company, said in the report, "You don't wait until a guy dies to determine insurability. That's not fair." Read the rest of this entry »

Los Angeles / Claremont, CA attorneys take on Blue Shield of California in insurance rescission lawsuit. ONTARIO - Of all the concerns facing the Simoes family in 2004, health insurance wasn't one of them. Ana Simoes' health insurance company had authorized her gall-bladder surgery. Her families' thoughts mostly centered on getting through the procedure. Read the rest of this entry »

Many insurance companies use rescission to deny their customers’ legitimate claims and rack up ever-greater profits. Now, courts across the country are calling a halt to this practice. Read the rest of this entry »