Insult To injury

Insurance, Fraud, and the Big Business of Bad Faith

Ray Bourhis (Author)

Publication date: 06/01/2009

Insult To injury
  • A compelling personal story that exposes how insurance companies get away with denying valid claims, terminating benefits, and destroying people's lives
  • UnumProvident, the main company profiled in the book, has 25 million policyholders--over one out of ten people in the United States holds an Unum policy
  • Recommends how to reform this corrupt and unjust system

Joan Hangarter bought a disability policy in 1990 to protect her should she ever become seriously ill. She dutifully paid her annual premiums for nearly a decade. But when she became disabled, she and her children found themselves homeless and bankrupt when her insurer--UnumProvident--stopped paying her benefits. With the help of attorneys Ray Bourhis and Alice Wolfson, Hangarter won a landmark $7.7 million jury verdict against Unum.

Through the compelling stories of ordinary people who have been driven to bankruptcy--or worse--when tragedy struck, Bourhis shows how the insurance industry runs roughshod over the very people it is paid to protect. He shows how the industry has become so insulated from accountability that neither lawsuits, punitive damage awards, federal court injunctions, newspaper headlines, nor television exposure can derail their determined efforts to turn a profit at any cost.

Bourhis, a national champion of policyholder rights, walks readers through both Joan Hangarter's heart-wrenching case and the stories of Susan McGregor, Stuart Gluck, John Tedesco, Laurie Hindiyeh, Eugene Molfino, Julie Guyton, Michael Baldwin, Margaret Santana, and numerous other claimants--real people with heart disease, AIDS, spinal injuries, brain damage, Parkinson's disease, and other disabilities whose benefits were cut off just when they needed them most. Bourhis shows how the world's largest disability carrier, UnumProvident, has relied on a host of shady practices--from surveillance to one-sided medical evaluations to policy re-interpretations-to target and terminate benefit payments.

Through these cautionary tales, he shines a spotlight on widespread bad faith double-dealing by insurance providers and details the key regulatory failures that enable these practices to continue unchecked.

  • Find out more at www.book-insulttoinjury.com
  • A compelling personal story that exposes how insurance companies get away with denying valid claims, terminating benefits, and destroying people's lives
  • UnumProvident, the main company profiled in the book, has 25 million policyholders--over one out of ten people in the United States holds an Unum policy
  • Recommends how to reform this corrupt and unjust system

Read more and meet author below

Read An Excerpt


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Overview

  • A compelling personal story that exposes how insurance companies get away with denying valid claims, terminating benefits, and destroying people's lives
  • UnumProvident, the main company profiled in the book, has 25 million policyholders--over one out of ten people in the United States holds an Unum policy
  • Recommends how to reform this corrupt and unjust system

Joan Hangarter bought a disability policy in 1990 to protect her should she ever become seriously ill. She dutifully paid her annual premiums for nearly a decade. But when she became disabled, she and her children found themselves homeless and bankrupt when her insurer--UnumProvident--stopped paying her benefits. With the help of attorneys Ray Bourhis and Alice Wolfson, Hangarter won a landmark $7.7 million jury verdict against Unum.

Through the compelling stories of ordinary people who have been driven to bankruptcy--or worse--when tragedy struck, Bourhis shows how the insurance industry runs roughshod over the very people it is paid to protect. He shows how the industry has become so insulated from accountability that neither lawsuits, punitive damage awards, federal court injunctions, newspaper headlines, nor television exposure can derail their determined efforts to turn a profit at any cost.

Bourhis, a national champion of policyholder rights, walks readers through both Joan Hangarter's heart-wrenching case and the stories of Susan McGregor, Stuart Gluck, John Tedesco, Laurie Hindiyeh, Eugene Molfino, Julie Guyton, Michael Baldwin, Margaret Santana, and numerous other claimants--real people with heart disease, AIDS, spinal injuries, brain damage, Parkinson's disease, and other disabilities whose benefits were cut off just when they needed them most. Bourhis shows how the world's largest disability carrier, UnumProvident, has relied on a host of shady practices--from surveillance to one-sided medical evaluations to policy re-interpretations-to target and terminate benefit payments.

Through these cautionary tales, he shines a spotlight on widespread bad faith double-dealing by insurance providers and details the key regulatory failures that enable these practices to continue unchecked.

  • Find out more at www.book-insulttoinjury.com
  • A compelling personal story that exposes how insurance companies get away with denying valid claims, terminating benefits, and destroying people's lives
  • UnumProvident, the main company profiled in the book, has 25 million policyholders--over one out of ten people in the United States holds an Unum policy
  • Recommends how to reform this corrupt and unjust system

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Meet the Author


Visit Author Page - Ray Bourhis

Ray Bourhis is a partner with the law firm of Bourhis & Wolfson in San Francisco, California, specializing in insurance bad-faith litigation. A graduate of Boalt Hall at the University of California, Berkeley, Bourhis has been a court-appointed Special Master overseeing reforms in the California Department of Insurance and was appointed by U.S. Senator Barbara Boxer to her Federal Judicial Selection Advisory Committee. He was recently profiled by Ed Bradley in a 60 Minutes report concerning fraudulent insurance practices. Born and raised in Elmhurst, Queens, Bourhis credits an attempt by gang members to throw him into a blazing bonfire at the age of twelve with helping him develop the survival skills needed to deal with insurance companies. He lives with his family in Kentfield, California.

To learn more about Ray, his work, and the book, visit his website here"

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Table of Contents



Chapter 1: False Profits

Chapter 2: Licensed to Steal

Chapter 3: So Sue Me

Chapter 4: Go Figure

Chapter 5: The Seventh Amendment

Chapter 6: Open Fire

Chapter 7: So Help Me God

Chapter 8: Pinpricks and Pretexts

Chapter 9: Customer Care

Chapter 10: Fact or Fiction

Chapter 11: ...Some with a Fountain Pen

Chapter 12: A Message

Chapter 13: Liar's Dice

Chapter 14: Friends in High Places

Chapter 15: Kick in the Assets

Conclusion: Claims Games

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Excerpt

INSULT TO INJURY

INTRODUCTION

xiii

ONE SCHOOL OF THOUGHT SAYS THAT LAWYERS SHOULD BE ABOVE the fray, maintaining an almost clinical detachment from their cases—that they should be “dispassionate.” I never would have graduated from that school. I’m outraged by the growing element of corporate America that knowingly sells defective products that maim and kill, that creates dangerous blackouts through artificial energy crises, that uses fraudulent tactics to steal retirement benefits from employees, that deploys lobbyists to buy votes and neutralize regulators, and that reduces ethical considerations to a cost-benefit analysis.

Author and filmmaker Michael Moore reported that after he’d produced Roger and Me, his scathing documentary on General Motors, businessmen invariably asked him what he had against profits. Companies, they said, have responsibilities to shareholders to make as much money as possible. “It’s about the shareholders, Mike! That’s our system!” Moore’s answer was, “You know what? That’s not our system… You don’t see a single thing in the United States Constitution about shareholders. Our responsibility as citizens is not to make the shareholders as much money as we can for them. The word you find in the Constitution is People. Ours is a Nation ‘of, by, and for the people.’ That’s there. Not the shareholders.”

I’ve got nothing against profits, but they are not supposed to be made by lying, cheating, and defrauding people—by destroying their lives.

What this country has become in the twenty-first century is not the America my father immigrated to. If what you are is a sum of where you came from and what you’ve experienced, I’d like to think that there’s some of my father, Frank, in me. He was, by far, the most worldly wise influence in my early life.

My dad came from a large family that for generations farmed a parcel of a few hundred acres in south-central Brittany in France. When he was sixteen, his brother, Yves, received a conscription notice from the French military. Yves, who was older, bigger, and stronger than my dad, was needed on the farm. So my father, pretending to be his older brother, signed up with the French navy, was dispatched to Brest, and was assigned to a training ship called the Jeanne d’Arc. For someone who had never before seen the ocean—although it was only forty-three kilometers west of his Coray farm—to suddenly be finding himself taking shore leaves in ports from Equatorial Africa to South America and from Indochina to Polynesia was eye-opening, to put it mildly.

xiv

When he was discharged, Dad returned to France just in time to receive his own conscription notice. Back he went to Brest. Surely the French navy had more than one ship, but again he was assigned to the Jeanne d’Arc. He promptly ran into some of the same sailors he’d met the first time around. To a man, they were shocked at his remarkable resemblance to his older brother, Yves.

Spending years racing around the globe from one port to the next left my father with attitudes that stuck with him for the rest of his life. It gave him a worldview, rather than one of “my country, right or wrong.” He always felt different from those who had never traveled. They seemed somehow narrow, ethnocentric, and superficial to him.

When I was a kid, my dad talked to me about how narrow-minded many people were. He got me to question things and pay attention to what was going on beyond the obvious.

Despite his worldliness, voracious reading habits, and boundless thirst for knowledge, Dad felt inferior because of his limited formal education. His son was going to be given opportunities that he’d never had. He was going to go to college and to graduate school. He was going to be a doctor, lawyer, or engineer.


Although my mother, Louise, was also from a Brittany farm family, she didn’t meet my father until 1933 when they were both attending a party in New York City. A year and a half later, they married and moved to a one-bedroom apartment on the third floor of a six-story building in Elmhurst, Queens.

I was born nine years later. Raised as a true Queens New Yorker, I learned to walk in Flushing Meadows, ride my bike at the local playground, hitch rides on passenger buses during snowstorms by hanging onto their rear bumpers, and love the Yankees.

xv

When the time came for me to begin school, I was sent, strangely enough, to a place with the same name as my father’s training ship. St. Joan of Arc Grammar School was run by nuns and priests who were serious about education, serious about discipline, and serious about religion. When we were not being drilled in our studies or forced to smack ourselves on the knuckles with rulers, we were out pounding the streets of Queens selling raffle tickets to strangers for Father Reilly’s Educational Fund. The competition between grades, classes, and individuals to raise the most money was fierce. Running tallies were posted daily announcing who had sold what.

Even though none of us knew anything about Father Reilly, the fund-raising campaigns were always wildly successful. In addition to raising cash, this effort taught us some important survival skills. We learned to engage complete strangers in conversation, be persistent without being obnoxious, never be defeated by rejection, get people to do what we wanted them to do, and compete with peers without attacking them personally—perfect lawyering skills, as it turned out.

Beyond the fund-raising, the nuns also had us out converting non-Catholics. This was very important, they explained, because although Protestants, Jews, and others could go to heaven, they could not go to as high a heaven as Catholics. Besides, other religions didn’t have the sacrament of confession to bail members out of trouble, erasing mortal sins from their souls.

Mortal sins were serious business. They included offenses such as armed robbery, murder, and missing Mass on a Sunday or a holy day of obligation. There were other offenses as well, some of which were explained, by blushing nuns, only vaguely.

In any event, if you committed a mortal sin and then died before going to confession, the penalty was severe. You would be damned to the fires of hell, tortured endlessly, forever.

“You know what it’s like to singe your finger with a match,” the nuns would say. “Imagine if you couldn’t pull your finger away. Imagine if it wasn’t just your finger but your whole body that was being burned. Imagine if it never stopped. Imagine if the pain never let up. Never.”

xvi

You had to be damn careful in those days. I can still remember going to bed at night picturing the devil hovering above my headboard, waiting for me to die in my sleep so he could grab me by the hair and drag me to hell, cackling all the way.

Even though, like many people brought up in a world of black-and-white absolutes, I later completely rebelled against all of this religious indoctrination, I think it probably had some lasting effects on my basic attitudes relating to what life is supposed to be about. That’s simply because in addition to the hocus-pocus aspect of this training, there was a lot of talk about helping the poor, assisting the less fortunate, and fighting for what’s right. If you think about it, Catholic heroes in those days, in addition to Notre Dame football players, were people who stood up against the establishment. The guy on whose teachings the whole religion was based did things like feed the hungry and fight the powerful. Never mind that popes were corrupt, women were discriminated against, and weirdos who heard voices in their heads and talked to birdies were canonized—it was the other part of my training that left its mark on my soul.

Years later, I wound up assisting migrant farmworkers, joining the domestic Peace Corps, and fighting the Bureau of Indian Affairs on behalf of Native Americans. One thing led to another, and when all was said and done, I woke up one day holding a law degree from the University of California, Berkeley’s Boalt Hall. Even as a law student I couldn’t help myself. Instead of opting for courses in tax law or in oil and gas law, I started a student-funded public interest law group that ultimately became CALPIRG, the California Public Interest Research Group.

When the time came to choose an area of specialization, I had little difficulty deciding. Years earlier, my mother had been refused desperately needed medical treatment by her insurance company. Suffering from severe angina and disabled with coronary artery disease, she needed treatment by a specialist in cardiovascular disease. Instead, she was denied her policy benefits. And suffice it to say that although the consequences were severe, my parents, like most people, were not equipped to fight back and had no one to fight back for them. My practice was going to be devoted to suing insurance companies that cheated people.

xvii

As comprehensive as the training is, law school doesn’t prepare you for the world of litigation. A savvy insurance company with its battalions of lawyers can run a young practitioner into the ground. Demurs, motions, interrogatories, subpoenas, marathon depositions, double and triple teaming, more motions, continuances—all of these are time-consuming and very expensive. The same insurer that will scrimp to save fifty cents defending its policyholder will break the bank fighting off a bad-faith suit against itself.

But if you stay with it, you learn. And after thirty years of litigating bad-faith cases against all the major companies—Allstate, State Farm, AIG, Kaiser, Farmers, TransAmerica, New York Life, and dozens of others—my partner, Alice Wolfson, associates, David Lilienstein and Jenn Prusak, and I felt that we had a pretty comprehensive idea of what was going on within the industry and of what to expect when a litigation battle began.

That was what we thought until we encountered the company with the strange-sounding name of UnumProvident.

image

GORDON GECKO CLAIMS, “GREED IS GOOD” AND “IT’S JUST PART OF capitalism.”

Whether it was Ken Lay or Bernie Ebbers, Dennis Koslowski or Frank Quattrone, Andrew Fastow or John Rigas or Marc Swartz, in the last year you couldn’t pick up a newspaper without reading about some bigwig from a Fortune 500 securities organization, investment bank, accounting firm, energy conglomerate, product manufacturer, pharmaceutical corporation, clothing retailer, or defense contractor who had cheated, defrauded, bribed, child labored, or stolen every dime he could get his corrupt, greedy hands on. And these guys were just the top layer: the Oscar winners, the Best in Show, the crookedest of the crooks.

This isn’t a little deal anymore. Corporate hotshots aren’t stealing thousands and hundreds of thousands of dollars; its millions and hundreds of millions. And they’re not stealing from the rich and giving to the poor. They’re stealing from the poor and stuffing it in their tailored pockets. Guys are doing thirty to life for simple bank robbery while the real crooks are going to political fund-raisers and swapping rooster jokes with the leader of the free world. Sometimes it seems like everybody who’s anybody must be doing it, prowling relentlessly for the fast buck.

xviii

Given this climate, it shouldn’t surprise anyone that an industry as large as insurance—in the United States alone, we spend more than $2,000 for every man, woman, and child per year on premiums—would be ripe for corporate shenanigans in the name of profit and greed.

Why are so many corporate role models stealing from their own customers and employees? How do they get away with it? Why do our institutions tolerate it? Can anything be done to stop it?

Read on. Perhaps the story of the only company in America that has ever given a “Hungry Vulture Award” (see exhibit 1) to “deserving employees” can shed a little light on the dismal state of corporate America.

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Endorsements



"Ray Bourhis continues his strong commitment to justice by successfully taking on the insurance industry and criminal fraud in this compelling case study. He makes clear that we need to do much more to end the shameful abuses of the current system and guarantee honorable insurance coverage for every American."

—Senator Edward M. Kennedy

"What has happened to Joan Hangarter-and so many others like her-is a grave injustice.... Readers of this book should urge their congressional representatives to force the big insurance companies to honor their obligations just as the holders of those policies honor theirs."

—John Garamendi, Insurance Commissioner, State of California

"Painstakingly documented, hilarious, and insightful. A seething indictment of the out-of-control insurance industry and its friends in Congress and on the U.S. Supreme Court who have given it a green light to defraud Americans."

—Amy Bach, Executive Director, United Policyholders

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