Think robbers would want to turn over their secret plans and motives so their victims could discuss how they were ripped off and figure out among themselves what they could do to obtain justice from the robbers?
The Colorado Supreme Court upheld an Order that American Family should turn over claims procedure manuals and other internal documents which allows other policyholder attorneys and claimants to review the discovery.1 I filed an amicus brief on behalf of United Policyholders supporting the disclosure and made the following argument:
Insurers. . . .seek non-sharing protective orders to maintain advantages over their customers who do not have the same financial resources. Often, they seek to prevent policyholders from sharing the documents with attorneys who represent others in cases against them with similar allegations. Keeping such attorneys isolated from each other means they may not realize that their clients have viable claims. When they do file suit, their attempts to obtain discovery remain relatively ineffective, their discovery costs remain high, their ability to vet matters is hampered, and judges repeatedly must rule on the same objections about the same evidence and discovery. Insurers may seek protective orders to force plaintiffs to expend substantial costs during litigation and keep similarly situated counsel from sharing analysis and information gleaned from similar discovery procedures. In the uneven playing field of financial resources, higher litigation costs have a more detrimental impact on policyholder plaintiffs.
The truth is that courts should start recognizing that policyholders have as much interest in how their insurance carriers carry out claims decisions as insurance claims departments have in hiding practices. After all, if insurance claims managers are acting honestly and in good faith, why shouldn’t insurance companies turn it all over? What do they have to hide?
Instead, insurance companies allow their attorneys to hide the truth anyway they can. The most common method is through arguments that these claims practices and claims programs are "trade secrets." Why should the incentive plans to lower claims payments be "trade secrets?" Why should the law allow dishonest players required to act in good faith to claim that wrongful methods of competition should ever be hidden? If we allow insurance companies to engage in this behavior and then hide it legally, it promotes the absurd position of public policy encouraging dishonest behavior by insurance companies.
The question posed at the top of this post is "why aren’t insurance companies proud to turn over these documents and publicly show them if they help their customers?"
Claims processes are not like the secret recipe for Coke, Kentucky Fried Chicken, or the trick play that my Tampa Bay Bucs will probably blow this Sunday. I would suggest that every claims manager that turns these over does so because he knows they rip-off their customer.
If the rule were that internal claims programs and incentives to pay more or less of claims employees are routinely turned over as much as claims files are turned over in most states, a lot of the bad practices would become transparent and stop. Why shouldn’t the law reflect this public policy?
How about the insurance defense attorneys who read this blog respond with a defense or objection to this public policy?
…probably because you agree but are paid to argue the alternative.
Positive Thought of the Day
Truth never damages a cause that is just.
1 In Re Rumnock v. Anschutz, No. 16SA38, 2016 CO 77 (Colo. Dec. 5, 2016).