Insurance Tactics: Deny, delay and pay up?

Wednesday, April 10, 2013

Earlier this week, a Canadian judge awarded Luciano Branco nearly 5 million dollars in damages, the largest insurance settlement ever handed out by a Canadian court. In his decision, Justice Murray Acton said he hoped the ruling would “gain the attention of the insurance industry” and added that “the industry must recognize the destruction and devastation that their actions cause.”

 Lawyer who represents Luciano Branco, Alex Kotkas

On Christmas Day in 1999, Luciana Branco's father was working a 12-hour shift as a welder in Kyrgyzstan when he accidentally dropped a steel plate on his foot. Even though he first thought he might have cut off his toes, Luciano Branco packed his wounded foot in snow and finished his shift.

Three months later, he was injured again and doctors ruled that he was permanently disabled. Luciano Branco is Canadian and he had work benefits through two insurance companies — AIG and Zurich. But both companies resisted paying him those benefits and he was left in dire straights.

Luciano Branco eventually took AIG and Zurich to court.

Earlier this week, a Canadian judge awarded him nearly 5-million-dollars in damages, the largest insurance settlement ever handed out by a Canadian court. Mr. Justice Murray Acton called the companies “calculated,” “abhorrent,” and “reprehensible.” He said they repeatedly, and in his words “maliciously” tried to thwart Mr. Branco's claim.

And Justice Acton didn't stop there. In his decision, he said he hoped the ruling would “gain the attention of the insurance industry” … and added that “the industry must recognize the destruction and devastation that their actions cause.”

Alex Kotkas is the lawyer who represented Luciano Branco. He was in Calgary this morning.

We requested an interview with AIG and Zurich. No one was available. We did however speak to with Frank Swedlove, the president of the Canadian Life and Health Insurance Association. Here is a transcript of the clip we aired:

Well its always very hard to draw any conclusions about broad industry behaviour from one or two cases and again I won't comment on the specific details of this case. But there are so many cases where the life and health insurance industry provides security to Canadians when they need it the most. We pay out over 1.2 billion dollars a week in claims to Canadians. The vast majority of claims are paid without any question whatsover. In some claims particularly in disability cases they tend to be more complicated and sometimes the review process needs to make sure everything is appropriate. But even in the case of disability claims we pay out over 6.2 billions dollars a year in disability claims.

Author of Delay, Deny, Defend, Jay M. Feinman

Joanne Doroshow is the co-founder of Americans for Insurance Reform and she says Luciano Branco's case is just one example of a larger problem that's present across Canada and the United States. We aired a clip.

Jay Feinman is a professor of law at Rutgers University and the author of Delay, Deny, Defend: Why Insurance Companies Don't Pay Claims and What You Can Do About It. He was in Camden, New Jersey.

This segment was produced by The Current's Dawna Dingwall, Josh Bloch and Shannon Higgins.