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Risky Business

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Posted 31 January 2005 - 12:56 PM

Risky business News Staff
Sat. Apr. 17 2004 6:32 PM ET

Extended legal battles were the last thing on Tim Leonard's mind when he went to his job as a construction worker on June 14, 1996. But everything changed on that sunny day, when a safety bar gave way and Leonard plummeted 22 feet onto a concrete slab below.

"I don't even remember hitting the ground," he recalls. "I just remember the intense heat from the sun and I was laying on my back waiting for the ambulance to show up. I thought my belt somehow got underneath my back and I was laying on one of my wrenches maybe or a bolt bag or my hammer, and I was telling them, 'Get it out from underneath my back.' And there was nothing there. They cut my belt off, they cut my pants off, cut my boots off and I was still complaining about something in my back, and then I knew for sure I broke my back."

Leonard crushed his L1 vertebrae an injury that launched him into two of the biggest battles of his life.

The first was to walk again. Doctors told him he would be confined to a wheelchair for life, but Leonard was determined. "My daughter was born three months after my accident," he says. "It gave me the motivation to works towards, my goal was to walk before she did. And I did."

Leonard spent seven years working out for four hours a day. He's developed his own form of "walking," using momentum from his hips to propel his legs forward. But he has no feeling below his waist, constant chronic intestinal problems and doctors say he will eventually be confined to a wheelchair.

Most people would applaud Leonard for the strength and determination he showed by overcoming the odds to walk. But his insurance company, Mutual Life of Canada, decided that since he was back on his feet, he no longer qualified for the $60,000 he was insured for if he became a paraplegic.

Mutual Life's refusal to pay launched Leonard on his second fight to claim the money he believed he was owed under his policy.

"If I had to sit in my wheelchair, if I had to get depressed after my accident like most people do and just sit around and do nothing for 365 days I'd have my money in the bank. But because three or four months after my accident, I got up and I started doing things and I started working out and trying to get a better quality of life they started fighting me and saying, 'No, you're ambulatory. You're not a paraplegic.' And it's over $60,000. I don't understand it."

As surprising as Leonard's story may sound, insurance industry insiders say it's not an uncommon phenomenon. Canadians spend an average of $3,125 a year on personal insurance premiums and pension contributions, according to the latest figures from Statistics Canada. And while they're paying for peace of mind, like Leonard, many find insurance provided a false sense of security when it comes time to collect.

"Deny, deny, deny"

Liz Boylan, a former insurance industry insider, told W-FIVE sales reps give people the hard sell when it comes to buying into policies. "You're young and you're healthy, but you don't know if one day you might get injured in a car accident or you might fall ill, pick up a virus, whatever and they do everything to support that these are potential outcomes."

But according to Boylan who worked at three different insurance companies -- once those terrible situations actually occur, adjusters do everything in their power to avoid paying out.

At one point, Boylan says she was given a "termination ratio," a percentage of disability claims that had to be refused. "It's based on what underwriting determines is the number of files that need to be terminated in order for daily operations to be favourable," she says.

Boylan says that number worked out to one out of every two claims.

And she isn't the only one to paint that picture about the industry.

"The number of people that I see with perfectly good claims, disability claims, that aren't paid is shocking," says Larry Pierce, a Vancouver lawyer who is leading the charge against insurance companies.

"What they do is they stall and investigate and stall. People go bankrupt, they lose their homes, they starve while these insurance companies are ignoring medical evidence," he says. "They're ignoring witness accounts, they're ignoring the facts basically. Ignoring the facts should be bad faith, in my view."

"It's deny, deny, deny," says Laurie Tomlinson, a 34-year-insurance veteran. At one point, Tomlinson was a regional chair of the Insurance Bureau of Canada. Now he runs a consulting business helping people cash in on their claims.

When it comes to insurance payouts, Tomlinson says the formula works something like this: "Deny the first time, a certain percentage of people walk away because they don't want to take up the fight; stick around and they get another denial, a certain percentage more walk away; and then deny the third time because after your three denials you are down to the people who really mean business, and they're prepared to take you to task. So whatever percentage have already walked away that's what they gain."

In Canada, only about two per cent of all claims end up in court. Tomlinson says it's that tiny fraction that sets the practice for many insurance companies. "They tread a thin line in many cases with what is legally correct. And at the end of the day, they're prepared to take that gamble because the majority of people will walk away the majority of people will take much less than what they deserve if they believe that their only alternative is to turn it into a legal battle."

Shifting the balance of power

With court costs that can climb into the tens of thousands of dollars for an extended legal fight, the deterrent to going up against insurance companies is obvious. "Who's going to fight them?" says Tomlinson. "What ordinary citizen is going to take a multi-billion dollar insurance company to task on a $50,000 claim or a $25,000 claim? You'll get advice from lawyers who say it's not worth it. But the advice that lawyers should be giving is saying on the pure economics of the claim, it's not right, but if we're successful in bad faith it'll become worth it."

Tomlinson points to an eight-year battle against Pilot Insurance in Ontario that could shift the balance of power.

When the home of Keith and Daphne Whiten burned down in January 1994, the couple was confident their insurance policy would cover their losses. Initially, an adjuster and arson investigator both classified the fire as accidental and Pilot kicked in with emergency funding to cover rental housing for the Whitens. But within months, the investigator submitted a new report "reclassifying this fire as being suspicious," and Pilot refused to pay the Whitens' claim.

Unlike many people whose claims are denied, the Whitens were prepared to take their fight to court. A jury awarded the Whitens $1 million in punitive damage, in addition to their losses from the fire and court costs.

In 1999, the Ontario Court of Appeal reduced the punitive damages to $100,000, but the Whitens took their battle all the way to the Supreme Court of Canada. In February 2002, eight years after their house burned down, the Whitens' $1 million award for punitive damages was reinstated.

Tomlinson says if more people were like the Whitens willing to take their fight all the way it would send a powerful message out to insurers.

"If they know the rules have changed, that suddenly they're not just talking about denying whatever element of their claim, suddenly they could get tagged for punitive damages I think you would see a whole different mentality by insurance companies. Yes, they'll still fight claims, but they won't fight as many."

As for Tim Leonard, he took his fight to court. His trial lasted just two days, after which the judge ruled in Leonard's favour. She also had some tough words for his insurance company.

"(Mr. Leonard's) efforts ought to be applauded. It would be most discouraging for individuals who have coverage for such eventualities to find that their policies were worthless," wrote Justice Chapnik in her decision.

Mutual Life of Canada appealed the decision. They also declined W-FIVE's request for an interview to discuss the matter. But within one week of the interview request and after 18 months of waiting on Leonard's part -- they advised W-FIVE that they were dropping their appeal.

It's those examples of people who have gone up against insurance companies and won that give Larry Pierce faith that insurance companies will one day get the message.

"You can't take a five billion dollar company and hand them a $10,000 fine. They're not paying attention," he says. "You've got to hand a five billion dollar company a big fine. Then they'll notice."

#2 User is offline   MadMac 

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Posted 31 January 2005 - 04:14 PM

;) Hooray for the individual for the commitment courage to make the stand to succeed in life even with severe disabilitiesas well as deal with all the other stuff ...inspirational to read.

:wacko: sorry to the other guys...simply lost.

#3 User is offline   doppelganger 

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Posted 31 January 2005 - 06:51 PM


"If they know the rules have changed, that suddenly they're not just talking about denying whatever element of their claim, suddenly they could get tagged for punitive damages I think you would see a whole different mentality by insurance companies. Yes, they'll still fight claims, but they won't fight as many."

this will happen to ACC and punitive damages against ACc may be available if not then it should be made so that it can be brought against the employees.

#4 User is offline   hukildaspida 

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Posted 10 May 2013 - 11:19 PM

Private investigators, insurance companies taking up hunt for arsonists
Published 11, April 2013


FLINT, MI When the smoke clears after a suspicious fire in Flint, chances are pretty good that Flint police won t be the only ones looking for the arsonist.

After any given suspicious fire at an insured building, private investigators hired by insurance companies can be spotted combing for clues or knocking on neighbors doors looking for witnesses in an effort to find out how a fire started and what liabilities the insurance companies have.

Arson is a crime of opportunity, said Al Norris, owner of Providence Specialized Investigative Solutions in Diamondale. A lot of people take that opportunity to make money.

Norris said his private investigation firm specializes in finding witnesses and conducting surveillance to root out possible cases of insurance fraud.

Nearly 98 percent of his company s work is for insurance companies, including jobs in Flint where there 1,631 suspicious vacant structure fires burned from 2008 to 2012.

The city has just one full-time arson investigator looking into those fires.

Insurance companies in Michigan are taking a closer look at arson-related insurance fraud in the state, according to data from the National Insurance Crime Bureau. Questionable fire-related insurance claims in Michigan increased by more than 9 percent in 2011, the last year data was available.

Questionable claims are those forwarded to the National Insurance Crime Bureau for review and investigation because they exhibit signs of possible fraud.

State Farm insurance company filed a lawsuit in federal court against more than a dozen Flint-area residents after its special investigation unit uncovered a possible insurance fraud ring operating in Flint for nearly two decades.

The suit was filed two years ago after investigators were able to find witnesses close to those involved in the ring who were willing to share information on the alleged scam.

State Farm declined to comment on the investigation since the case is still ongoing.

No criminal charges were ever filed against those accused by the insurance company.

Kevin Pike, an investigator with the Troy-based Rehmann Corporate Investigative Services, said it s not uncommon for investigators hired by insurance companies to give more attention to particular fires than their law enforcement counterparts.

There s time constraints, said Pike. They just don t have the time.

Norris agreed.

We expend a lot more energy toward a specific claim, said Norris. We can put a lot more focus on a specific claim or group.

Pike said private insurance investigators also have more resources at their disposal when it comes to investigating cases.

While law enforcement investigators have tight budget constraints, insurance investigators are backed by large corporations that are often willing to shell out the money needed to hire the experts necessary to solve a case.

Plus, some regulations including those involving questioning potential suspects are different when it comes to private investigators.

While police would have to provide Miranda rights if they take people into custody, Norris said private investigators can freely speak with anyone they like at any time they like.

Information that is gathered by insurance investigators can be shared with law enforcement and is admissible in criminal trials, Norris said.

There s cooperation between the public sector and the private sector, said Flint police arson investigator Sgt.

David Bigelow. There s legal ways that both sides have to do to get info from the other party.

Bigelow said both sides follow specific processes when they share information so it will hold up to scrutiny in court. He says they cooperate like this all the time.

However, this close relationship is problematic for some people.

Paul Bieber, director of the Monterey College of Law s Arson Research Project, said that the relationship between public and private investigators can create bias in the outcome of the investigation.

Bieber said accounts of bias are not widespread, but when investigators who are supposed be independent begin working closely together they can influence each other s investigation.

But, Norris and Pike said they have not had trouble in court with the evidence gleaned from their investigations and that private and police investigators should have cooperative relationships.

We re all out to advance the same goals, said Norris.

Staff writer Dominic Adams contributed to this report.

Gary Ridley can be reached at 810-280-9516.

You can also follow him on Twitter @GaryRidley1 or on Facebook2.

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