Life Insurance Company of North America Found to Have Acted in Bad Faith by U.S. District Court

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Federal Judge rules insurance company’s claim denial of accidental death policy was a bad faith breach of contract. They are ordered to pay the claim in full in case of Jody Lynn Scanlon v. Life Insurance Company of North America.

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“This is a perfect example of insurance bad faith conduct and the modus operandi of insurance companies today. It was ‘deny, delay and defend’ to a ridiculous extreme.”

Jody Lynn Scanlon of Vashon Island, Wash. purchased $500,000 accidental death insurance coverage for her husband Michael through her employer, King County starting in Oct. 2003. Michael Scanlon died Nov. 2, 2006 from a subdural hematoma suffered in an accidental fall. Accoriding to court documents, Life Insurance Company of North America (LINA) refused to pay the claim.

The opinion of the insurance company’s in-house doctor was that Mr. Scanlon’s death was caused by a heart attack. However, as detailed in court documents, the conclusion of those who treated Mr. Scanlon at Harborview Medical Center and the autopsy report from the King County Coroner’s agreed he died from a subdural hematoma suffered because of an accidental fall.

Mrs. Scanlon’s attorney, Michael E. Nelson of Nelson Langer Engle requested that LINA reconsider their denial. Nelson presented conclusive medical evidence that Mr. Scanlon did not suffer a heart attack. LINA again denied the claim, according to court documents, forcing Jodi Scanlon to file a lawsuit in Feb. 2008. The suit alleged that the insurance company’s refusal to pay the claim was a bad faith breach of the life insurance contract. Mrs. Scanlon also sought compensation and damages for emotional distress resulting from LINA’s denial and her attorney’s fees, costs and interest.

“It was a shame that Jodi had to go to court to recover life insurance proceeds that were obviously owed,” said Michael Nelson. “This is a perfect example of insurance bad faith conduct and the modus operandi of insurance companies today. It was ‘deny, delay and defend’ to a ridiculous extreme.”

The case (C08-0256-JCC) was heard before the Honorable John C. Coughenour, U.S. District Court, Western District of Washington. Judge Coughnehour ruled Mr. Scanlon’s death was accidental and covered by the policy and there was no evidence he had suffered a heart attack. He further determined that LINA’s reliance on their in-house doctor constituted a bad faith denial and breach of contract. He ordered LINA to pay the proceeds of the accidental death policy, plus attorney’s fees, court costs and interest. Judge Coughenour also ordered Mrs. Scanlon’s claim for emotional distress damages to proceed to a jury.

“The court responded by ordering the full amount of the insurance policy, plus attorney fees, court costs and interest to be paid and found that the insurance company had acted in bad faith,” Nelson continued. “Subsequently the parties settled the emotional distress damages prior to trial. Although Mrs. Scanlon is happy to put this emotional and stressful ordeal behind her, the life insurance company should have never denied her claim. Its fraudulent conduct caused her considerable distress. Thankfully, we have courts that can hold insurance companies accountable.”

About Nelson Langer Engle
Nelson Langer Engle attorneys, for more than 30 years, have helped victims who have been seriously injured. They are experts in personal injury and insurance law. The firm filed the first lawsuit in the nation against Farmers Insurance Company complaining that Farmers’ use of “colossus,” a computer program used to evaluate pain and suffering, unfairly devalued injury claims against the company’s own insureds. For more information visit http://www.nlelaw.com.

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Hamilton McCulloh

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