Mich. Democrats take aim at insurance denials

By DAVID EGGERT, Associated Press Writer
Associated Press
July 13, 2009

ALAIEDON TOWNSHIP, Mich. (AP) -- Insurance companies would face millions of dollars in fines, damages and attorney fees for denying or delaying valid claims under legislation a state House committee is preparing to debate.

Supporters of the bills, including several Democratic lawmakers, upset policyholders and an industry whistle-blower, met with reporters Monday to announce the legislation, which the Democratic-led House Insurance Committee is expected to approve by week's end. They say Michigan is one of four states without serious financial penalties when a court rules an insurer has not fairly settled a claim.

Democratic Gov. Jennifer Granholm's administration supports the proposed legislation, but it would likely stall in the Republican-led state Senate, which strongly supports the state's influential insurance industry.

Jo Anne Katzman, a former Allstate Insurance Co. adjuster who handled homeowner claims, told reporters at a brain injury rehabilitation center outside Lansing that employees at the company's branch in Farmington Hills were routinely told to deny claims or, if the Michigan office had spent too much in one month, delay writing checks to policyholders until the following month.

Katzman said employees were encouraged to send claims to a special investigations unit, which she said stops making payments to policyholders living elsewhere while their home is being repaired.

Workers who followed the policies were rewarded with desk refrigerators and clothing, she said.

"We were actually told that our jobs depended on it, that this office was in danger of closing if we kept our claim numbers as high as they had been in Michigan," Katzman said.

She said in one particularly galling incident, she was told by superiors to advise an elderly Detroit woman whose claim had languished for a year to shop for furniture she needed at the Salvation Army.

Katzman said she left her job in 2006 because she "just couldn't do it anymore."

Allstate declined to specifically address Katzman's allegations.

But company spokeswoman Karen Spica said performance evaluations are not based on claim payouts or denials, but rather the quality of investigations, accuracy of estimates and policyholders' satisfaction.

"Allstate's claim handling processes are sound, compliant with state laws and effective at giving customers and claimants their payments in a timely manner," she said.

Pete Kuhnmuench, who heads the Insurance Institute of Michigan, an industry umbrella group, accused Democratic legislators of holding "politically motivated news conferences to bash the 55,000 hardworking individuals who go to work every day to help policyholders when they need them."

He said most Michigan policyholders are satisfied, noting 3,551 complaints were filed in 2008 with the Office of Financial and Insurance Regulation when there are millions of policies in the state.

"If a company was unfairly denying claims, the insurance commissioner would be involved and the company would be out of business," Kuhnmuench said.

Some policyholders, though, described what they said were abusive tactics employed by insurance companies.

Kecia Milliner, whose daughter Taylor was diagnosed in 2003 with a traumatic brain injury after she was hit by an uninsured driver, said her insurer initially paid for therapy but balked after doctors recommended additional treatment.

The girl, now 11, has regressed since the insurer stopped paying for needed services more than a year ago, her mother said.

"It breaks my heart because I don't know what's going to happen to my daughter a year from now, five years from now, 10 years from now," Milliner said, trying to hold back tears. "The insurance company not only breached our contract, they lied."

The insurance denial bills are House Bills 4244, 4844, 5020, 5144-51.

Michigan Legislature: http://www.legislature.mi.gov

Democrats' site: http://www.housedems.com/wrongful-denial

Allstate: http://www.allstate.com

Insurance Institute of Michigan: http://www.iiminfo.org

Office of Financial and Insurance Regulation: http://www.michigan.gov/ofir

Coalition Protecting Auto No-Fault: http://www.protect-no-fault.com

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