Court penalizes auto insurers for settlement conduct

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By Kirsten McMahon, Managing Editor

Recent examples of auto insurers providing inadequate settlement efforts and using aggressive surveillance techniques are “concerning” for personal injury plaintiffs, but Easy Legal Finance Inc. president and CEO Larry Herscu says adjudicators are taking notice.

He points to a Supreme Court of British Columbia costs decision where the Insurance Corporation of British Columbia (ICBC) was penalized for its unreasonable refusal to accept a plaintiff’s settlement offer.

“The court hit the ICBC with a double awards cost for not adequately trying to settle this case with the injured individual,” says Herscu.

In that matter, the plaintiff was involved in “a horrific motor vehicle accident” which caused injuries to his left arm and shoulder, neck and back, as well as headaches, anxiety and post-traumatic stress disorder (PTSD).

At a mediation, the plaintiff made an offer totalling more than $561,000 and later made a formal offer of $300,000, which the court found was a considerable reduction. The defendant provided a counter-offer of $100,000, which the judge said reflected “more of a ‘nuisance’ offer as opposed to an honest assessment of the risk of a much higher judgment.”

Herscu says the surveillance practices of insurers have also come under the microscope.

“In another case out of British Columbia, the court found the violation of a plaintiff’s privacy and the conduct of private investigators was quite troublesome,” he says.

In that matter, the plaintiff was awarded $850,000 in damages, and the B.C. court established a new legal precedent, setting out an analysis on what constitutes an unreasonable and intrusive level of investigation on behalf of insurance companies.

A recent Toronto Sun column details the lengths one insurance company went to prevent having to pay benefits to a teen with a catastrophic injury.

A 17-year-old’s vehicle was rear-ended in a 2010 collision, and the Sun reports the insurance company was determined to play hardball with her.

“The insurance company had [her] followed for months as well as hired an investigator to mine her social media for incriminating photos to prove she was faking and wasn’t ‘catastrophically impaired’ at all,” the Sun reports.

At one point, the insurance company’s lawyers suggested she “looked too pretty to be sick,” the article states.

“Their tactics were so heavy-handed that the arbitrator denounced the insurer’s conduct as ‘borderline harassment … rarely ever seen’ while ruling in favour of [the plaintiff],” the newspaper states.

Herscu says a big part of Easy Legal’s business is offering financial support to those who have been hurt in an accident to help them pay bills while their lawyer fights for a fair settlement.

“If an investigator mines a plaintiff’s social media posts and finds pictures that show them smiling and having a good time, it’s not necessarily indicative of their mental state,” he says. “A picture may capture a plaintiff smiling at somebody’s wedding but what that photograph doesn’t show is they may have lost their job and ability to earn wages as a result of a motor vehicle accident.”

Herscu notes it’s not unusual for personal injury claims to take years to settle.

“Sometimes it can take 10 years to settle a case,” he says. “In some cases, the only reason why they haven’t settled a claim is that the insurance companies are fighting about how to divvy up the costs.

“Meanwhile, the poor individual stuck in the middle is wondering how to make ends meet while getting the treatment and care they need,” Herscu says. “Without funding, many people are forced to ignore their injuries or, in some cases, face financial ruin because there is no income stream to help them.”

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