I recently learned of an insurance industry “holiday” — “lawsuit abuse week” — in a letter to this newspaper. As I read, I found it quite insensitive that this “holiday” comes at the end of hurricane season. Particularly this year when so many Louisianans are recovering from severe storms.
While the letter writer was attacking attorneys, those same attorneys were being called for help by the people in Southwest Louisiana as they recovered from Hurricane Laura and prepared for Delta. In the destructive wake of these storms, insurance companies are refusing to pay out to families that desperately need help. Families who have dutifully paid their insurance premiums for years are now being turned away.
Unfortunately, there will always be those who will take advantage of any system. But most of the abuse is by the insurance companies and big corporations. According to the FBI, the most common form of insurance fraud is premium embezzlement, which is committed by insurance companies and their agents, not policyholders. In the last six months Insurance Commissioner Jim Donelon has issued six cease-and-desist orders to insurance companies and agents.
The recent staged accident investigation in New Orleans proves that there are laws on the books to prevent bad actors from abusing the legal system on the plaintiff side. The people involved in that alleged scheme have been charged with crimes and are rightfully facing serious consequences. Every lawyer I know thinks someone who stages accidents should be prosecuted to the fullest extent of the law. Even Donelon, who has made it no secret that he is not a fan of lawyers, said “there’s not many lawyers willing to” sign onto suspect lawsuits.
There are very few consequences for insurance companies who take advantage of working people. Last year, Donelon (responding to a consumer complaint) found that State Farm was improperly forcing Louisianans to pay a costly hurricane deductible after Barry. But of course no criminal charges were filed against State Farm. And State Farm finished 2019 with $5.6 billion in profits.
The number of people who have retained me and have told me that they never wanted to hire a lawyer or file a lawsuit is countless. My typical client comes to me because the insurance company does not do what they are paid to do: pay the claim fairly.
Nothing harms legitimate claims and good lawyers more than illegitimate claims and bad lawyers. We all suffer for that. Unfortunately, the recent letter was nothing more than a scare tactic to consumers in an effort to protect insurance companies and big business. The hardworking citizens of Louisiana should be offended that this underhanded deterrent is being used to insult their intelligence, unfairly increase their rates, and limit their recovery.
STEPHANIE M. POSSA