ABA Journal

While I can’t comment on this particular firm’s efforts, I find it ironic that the insurance company president would call the effort to collect on small amounts a “disgrace.”  Those small amounts likely add up to a large amount…  If it’s owed, and a clever attorney has found a way to advance a legitimate claim, it doesn’t seem like a disgrace to me.

Steve
http://stevecoopersmithlaw.com/

By Steve Coopersmith on 2010 05 03, 5:20 pm CST

As an employee of a very larger insurer, this is why I love working in Texas. Texas has a very difficult scheme for attorney fees in suits- the only way to get them is if they are statutorily called for, and few statutes allow them.

By Justin on 2010 05 04, 5:08 am CST

Part of the purpose for statutory attorney fees is to encourage attorneys to take these small matters since otherwise they would slip through the cracks.  If the money is owed maybe these carriers should just pay it.  There are statutory remedies available if an attorney goes forward with a matter that is truly frivolous.  The next thing you know the Insurance Companys will be complaining about Trial attorneys in other matters.

By Charles on 2010 05 04, 5:28 am CST

Anybody feel sorry for the insurance companies?  Anybody?  Hello?

By NR on 2010 05 04, 7:10 am CST

This practice is the legal profession’s equivalent of dumpster diving—but it’s well mitigated by the targets.  Next to investment banks and securities brokerages and underwriters, nobody’s pockets are more justifiably pickworthy than insurers.’

By AndytheLawyer on 2010 05 04, 7:31 am CST

Ubi jus, ubi remedium.

Without knowing more of the facts, assuming that the insurance companies (1) owed this money (>50% likely they owed it); (2) refused to pay it upon demand of those they owed it to; then I don’t have a lot of sympathy for them.

I agree it’s a waste of court resources, but what other way is there to enforce payment of genuinely owed, low amounts of debt?

By df on 2010 05 04, 8:06 am CST

I love it.  The amounts aren’t too small to warrant the insurance companies trying to cheat their way out of paying them, but they’re too small to justify the damned lawyers coming to collect.  Insuror, heal thyself!!

By B. McLeod on 2010 05 04, 8:11 am CST

Fantastically ironic.  I have no sympathy for the insurance companies and find this quite amusing, even if I wouldn’t model my practice this way.

By John on 2010 05 04, 9:43 am CST

The lawyer has found a way to legitimately collect sums owed, that are too small for most people to justify trying to collect.  Nothing wrong with that.  In fact, as someone already stated, the small sums add up to quite a bit.  These numerous little thefts are still thefts, and the insurance co’s that owe them are not victims.  Were these debts owed by a consumer, the consumer would be called a deadbeat for whining when somoene tried to collect it.  Businesses should not get a free pass on “personal responsibility,” especially since corporations want and enjoy ever increasing rights of “personhood.”

By CS on 2010 05 04, 11:04 am CST

In Ius Voco Spurious

By 9 Jim-OH 2010-05-04 15:55 −0400 on 2010 05 04, 1:56 pm CST

It’s not clear from the article but if it’s a small number of insurers he could file one class action, recovering in aggregate but mitigating fees to one case.  Since the underlying claim seems to be insurance companies not paying tiny amounts the underlying cause—probably a (lame) justification that processing costs don’t justify the payouts—is the same.  I think they should pay but I don’t like seeing the courts clogged up and meritorious cases, with actual damaged litigants, pushed back.

By Michael on 2010 05 05, 7:52 am CST

The insurance carried complains that the amount, such as $3 OR 4 dollars, are too small to justify any action. 

I want to see them accept that same position the next time one of their customers is deficient by a few bucks in his premium payments, is killed in a crash, and the estate seeks coverage.

Bet that ‘couple bucks’ will be the basis for the carriers motion for summary judgment that the policy was not in force, based on non payment.’

Insurance companies are crooks and the sooner we realize that, the faster the courts will be to put an end to their constant antics.

Patrick

By patrick on 2010 05 05, 5:51 pm CST

The insurance company could solve this problem if they just gave people the money that was rightfully theirs instead of keeping it and hoping nobody will notice.

By Bob on 2010 05 07, 2:14 am CST

Any established entity, public or private, large or small, if it is run by more than one person, will always find ways to cheat people out of large or small amounts of money whenever the people running the entity believe they can get away with it.  There are honest individuals everywhere but large entities are never completely honest. 

This article is only about insurance companies witholding money they owe law firms but law firms are arch deadbeat offenders too especially in a bad economy.  Maybe we will see an article here about that!

Anyone who has done a substantial amount of per diem legal work can tell you that some law firms drag their feet on paying per diem attorneys.  Sometimes they do it because they know a new lawyer is reluctant to begin a career by suing a law firm.  Sometimes they do it because they think the amount is too small for the attorney to bother bringing suit to collect it.  Some firms will never pay you unless you stay on them.  Maybe the big law firms that dominate the legal press coverage while employing a small minority of the lawyers won’t do this.  If that is so, they probably just don’t want to look cheap but they have other ways to dupe people out of money.  In any case,  small firms often resort to withholding money for legal work attorneys have done for them.

In the case of the law firms, the excuse is usually that “money is tight” but the same partners who withhold per diem money often overpay to wine and dine lucrative or potentially lucrative clients at over priced restaurants.  Sometimes these firms even withhold expense money from associates, to the tune of hundreds of dollars (for parking, gas, etc. on firm court appearances).  In such cases the associate is forced to make repeated requests to their employer if they ever want their expense money reimbursed.

Often both the deadbeat and the person owed the money both know that the money cannot be pursued very vigorously without rupturing the business relationship and ending any chance of continuing to get work from the law firm.  So the party owing the money takes advantage. 

At least if the debtor insurance company is still a client you can work the back channels because at least someone there is an ally.  But often the per diem attorney has no back channel at the law firm to talk to.  Then there are two options.  You can put up with the abuse if the money you do get paid far exceeds the amount withheld, or you can draw a line in the sand and demand the money while knowing that you won’t get any more work from that firm.

By steveross2851 on 2010 05 07, 3:57 am CST

Everyone likes to attack the evil insurance companies. First, insurance companies are necessary entities that provide a valuable and necessary service. The vast majority of their customers are satisfied with the services provided. Second, this article isn’t about the companies not paying their insureds what is owed, it’s about the insurer not paying clinics what they think is owed. Insurers and clinics often dispute charges- even nickel and dime charges. Gulfstream Medigroup is not a small clinic, or a poor, indigent insured. It is a large medical receivables billing company representing many clinics and hospitals. This is essentially a dispute between large corporations in which a law firm has stepped in and started sucking up the crumbs- and demanding chunks for the service.

By Justin on 2010 05 07, 4:40 am CST

And you’re upset for not thinking of it first, or what?

By B. McLeod on 2010 05 07, 6:21 am CST

I work in Palm Beach County and know Mr. LaBovick.  What he is doing is entirely justified.  United Auto is a poster child for corporate rip offs.  They routinely under pay physicians and medical facilities when adjusting PIP files, usually asserting that the physicians charges are beyond what is “usual and customary”.  They then cut the bill knowing that if the cuts are small they physician of facility will just accept the reduction.  By doing this to large number of providers over a fairly wide geographic area they obtain substantial reductions on claims.  We have had cases where a client is in an accident and within days (and before any bills are submitted) they have set the client unilaterally for a CME two counties away for the purpose of cutting off pip benefits.  When we advised United that the client can’t make the trip they threaten to cut off benefits due to a lack of cooperation.  Get ‘em Brian.

By Bernard Lebedeker on 2010 05 07, 6:24 am CST

#15—Perhaps if insurance companies routinely behaved in a manner less evil (e.g. if they did not routinely reject claims for coverage and a defense when their insureds are sued for claims alleging facts that trigger the potential for coverage and the duty to defend—solely for the purpose of riding the interest float on their insureds’ premiums as long as possible), they would be attacked less as evil.

By AndytheLawyer on 2010 05 07, 6:56 am CST

It isn’t the amount—it the fees.  This is a shakedown based upon the bad, yet undeserved, reputation of insurers who have been demonized by government, including the POTUS who, I am certain, could not define the term “insurance”.

Insurance companies, on average, pay their insureds to their satisfaction 97% of the time.

To cause an insurer to pay attorneys fees for a $2.75 claim does nothing more than make money for the lawyer and increase the cost of insurance for the insurance buyer.

Before you continue laughing about how the insurer is being hurt think about operating your practice without insurance. Would you dare to operate without fire, business interruption or E & O insurance? Are you ready to pay the extra premiums brought about by these frivolous lawsuits that could have been resolved by a simple telephone call or letter?

Although “legal” these suits are immoral and belong, if any where, in small claims court where lawyers are not allowed.

By BZ on 2010 05 07, 7:29 am CST

Yet one more example of how insurance companies keep pretending they are “victims.”  There has been a systematic effort by insurance companies to pressure plaintiff’s counsel into not taking on clients because insurance companies will refuse to settle, even when liability is clear.  They figure that if lawyers know that they will have to take every single case to trial, they will only take the largest cases, leaving everybody else with denied claims and no remedy.  I’ve represented both sides of the fence; I know.

I think insurance companies need to stop whining and be reasonable in paying claims.  Perhaps then they would not induce anyone to want to sue them in this manner.

By Melody Kramer on 2010 05 07, 7:34 am CST

Insurance was originally a risk-sharing endeavor, not a profit-making endeavor.

By RAB on 2010 05 07, 7:55 am CST

RAB, you must be kidding.  Insurance has always been a risk-sharing endeavor for a profit since the first insurance contract was carved on a clay tablet in ancient Summaria. 

If there was no profit in insurance it would not exist but would just be a government entitlement.

By bz on 2010 05 07, 7:58 am CST

When I was a kid, we used to have a saying, “Don’t make a federal case out of it.”  This attitude often seems to be lacking. 

@RAB and bz:  I don’t now how insurance “originally” worked, but the IRS takes the position that it is both a risk-sharing and a risk-shifting endeavor.  The many people who are or have been insured by mutual insurance companies would be surprised by the claim that insurance cannot exist in the absence of either profit or government entitlement.  While for-profit companies have made a move on the mutual industry especially over the last three decades, the AIG experience shows the magnification of dangers that can arise from the for-profit approach, even while for-profit insurers can often provide insurance more efficiently than mutuals.

By Dan on 2010 05 07, 8:47 am CST

Dan:

You are correct, but mutual insurance companies are also in business to make money, not for their shareholders but for their members.  When they make money they help their members by increasing available coverages or by reducing premiums.

Regardless, insurance is a contract where one person (the insurer) agrees to indemnity another (the insured) against certain described risks of contingent or unknown events.

I still cannot do the business of law without insurance and am offended when someone takes advantage to gain personal profit—like the lawyers described—not for any public good and that makes my insurance costs increase.

By BZ on 2010 05 07, 9:23 am CST

The unfortunate truth about the “don’t make a federal case out of it” approach is (1) it presupposes that those with small claims should just forfeit them; and (2) that is precisely what insurance companies have been doing for years by taking almost every PI case to trial on the hope that they might win and to instill fear in litigants and attorneys who can ill-afford the costs associated with bringing a case trial.  Yet again, little guy loses, big guy wins.  And when the big guy starts losing, they put a gun to the little guys and say “we are too big to fail - make us win again and we’ll let you survive.”  Nice.

As to the original lawsuits the are the source of the story that started this thread, it may seem silly to file suits over such small amounts of money, but it is disingenuous for the insurance companies to complain.  Seriously, if you get sued for $50, why make a “federal case out of it” and spend a dime in defending the suit?

By Melody Kramer on 2010 05 07, 9:40 am CST

Talk about insurers crying wolf.  For legitimate claims, they delay, deny and wear down the insured / claimant, knowing that their exposure is capped in many states and the claimant will give or settle for less than entitled just to get something.  Stonewalling over amounts not worth litigating is also a common practice.  I’d like to think paying these legal fees would make a difference in their practices but of course it wont.  Indifference and greed rule.

By Katy on 2010 05 07, 9:41 am CST

Assuming pre-suit demand letters have been sent, I have no sympathy for the Defendants. Pay up, regardless of amount! I’m so tired of hearing about overly-litigious people and attorneys when such suits are usually compelled by defendants refusing in bad faith to pay what is owed or negotiate in reasonable settlement discussions. ALG

By Auden L. Grumet, Esq. on 2010 05 07, 10:08 am CST

Melody Kramer is right on the money (so to speak).  Ever since the late-1980s when the trial lawyers in California cleaned their clocks in the No-Fault war, the insurance companies have been low-balling and slow-balling in order to deprive the plaintiff’s bar of funds to fight them by raising the lawyers’ costs of doing business. Now that a trial lawyer is serving them the medicine they have been dishing out for years and increasing the ICs costs of doing business, they are gushing Crock-odile tears.

By William Speizman on 2010 05 07, 10:26 am CST

The title of this article sounded to me like a Monty Python skit, but, of course, I did watch “The Life of Bryan” this weekend.  I’m sure the cost to defend one of these cases, assuming the balance is not owed, would not be worth it, so I would advise the client to pay the asserted claim for a small amount.  If it became obvious that the client was getting picked to death (death by a thousand cuts) of unwarranted claims then they would have to fight regardless of the cost.  If, however, it is clear that these amounts are owed, then the client should pay them.  I can’t control whether the client decides at that point to low ball and slow ball (first time I’ve heard of “slow ball” but I like it).  I the would have to ask myself, “do I want to represent a slow baller.”

By David on 2010 05 07, 10:42 am CST

@#19 BZ—You are so right. The U.S. probably should a rule ... Any insurer that pays at least 95% of the amount it is supposed to pay is immune from complaint or lawsuit over the amount of its payment. Such a rule would eliminate all thespesky, socially inefficient, crooked-lawyer-enriching, premium-increasing lawsuits like the ones described in the original story.

By Carlos on 2010 05 07, 11:48 am CST

Great rule, as long as anybody who has paid at least 95% of their premiums retains full coverage and can’t be canceled.

By Michael on 2010 05 07, 11:55 am CST

That is a waste of the Court Time, don’t you have something else beetter to do?

By montgomery on 2010 05 07, 1:57 pm CST

That is a waste of the Court Time, deon’t you have something better to do.

By montgomery on 2010 05 07, 1:59 pm CST

On the one hand, you don’t want insurers given a free hand to short required payments by small amounts repeatedly.  On the other hand, you don’t want litigants given the power to essentially extort money from insurers with meritless small claims, with a risk of attorney fees being awarded. 

Whatever statute is allowing fees, hopefully it is balanced in allowing either prevailing party to be awarded fees, and hopefully the courts are balanced in being equally willing to award fees to prevailing defendants as to plaintiffs.  If so, then the solution for the insurer, if the claims are mostly meritless, is to defend them and seek fee awards against the law firm and clients bringing them.  If the claims have merit on the other hand, the solution is to pay them. 

If the system either does not allow the insurer to collect its fees when it prevails, or is otherwise biased against awarding fees to prevailing insurers, then the insurers have a legitimate beef here.  Otherwise, they don’t.

By nickel and diming you on 2010 05 07, 3:00 pm CST

GREAT Comeback!! I like Mike!

Michael
May 7, 2010 12:55 PM CDT
Great rule, as long as anybody who has paid at least 95% of their premiums retains full coverage and can’t be canceled.

By speedy on 2010 05 07, 3:02 pm CST

With respect to Mr. “Nickel & Dime”, I’ve seen/read no indication or claim - even by the insurers/defendants - that these claims/sums are anything other than legitimate. And for precisely the same reason that Class Actions exists, so too, do attorney’s fees provisions; namely, to provide an incentive and relief to those who wish to pursue such claims, but would otherwise be unable or unwilling to afford to do so.

As a consumer advocate litigation attorney, I can’t tell you how many times I’ve seen consumers and the “little guy” (or even small companies) get screwed to the benefit of the large(r) company. Thus, these suits are often [perhaps not in this instance] more a matter of setting a tone/precedent and sending a message - BUT with a legitimate legal position to back it up - with a view towards thwarting or at least reducing the incentive/decision of companies to commit any kind of financial or similar harm.

The Fair Credit Reporting/Billing, Fair Debt Collection Practices and Real Estate Settlement Procedures Acts are all great examples both of how - as with the FCRA/FACTA, and the arguable lack of a private cause of action for reporters of information that has been disputed directly by the consumer [i.e. without the CRA’s being involved] - individual consumers get the raw end of the deal, and - as with the FCRA’s statutory and pseudo strict-liability and attorney’s fees provisions as to CRA’s directly - they can sometimes benefit.

In sum, the greater the downside for committing a tort or breach of contract, no matter how - and in fact precisely WHEN - the amounts are small, the better protected the majority will almost certainly be.

Auden L. Grumet, Esq.
www.atlantalawyer.org

By Auden L. Grumet, Esq. on 2010 05 07, 4:06 pm CST

Insurers are not good guys.  They are in the business to deny claims.  They should pay the claims and not nickel and dime every claimant.  What goes around…

By Pocahantas on 2010 05 07, 4:09 pm CST

Very reminiscent of the lawyers who were disbarred in CA a few years ago for filing shakedown lawsuits under the guise of B&P 17200 claims.

By JWC on 2010 05 07, 5:59 pm CST

Insurance companies have been ripping people off for years with legit claims.  They collect premiums, but don’t want to pay the claim.  Quit the complaining and write the checks, and change the policies so they are at least half way honest.

By Pay Up on 2010 05 08, 10:15 am CST

Come on, children, grow up.

The brilliantly run federal health care systems—Medicare and Medicaid—loses, according to the US, approximately $300 billion a year to fraud.  Insurance companies are not the villains, they are the victims. 

To paraphrase Willy Sutton, you sue insurance companies because that is there the money is.

Do any of you who claim that insurers just rip off the public have insurance? Would any of you do business without insurance?  If you think you are not getting your money’s worth take the premium and put it in a tax free municipal bond fund and use that money to pay your losses.

By Barry Zalma on 2010 05 10, 7:19 am CST

#38—Not so much.  The disbarred Trevor Law Group lawyers were suing small businesses under California’s unique Unfair Competition Law (Business & Professions Code Sec. 17200 et seq) for violations of technical infractions of administrative regulations that had not cause monetary harm to anyone.  Not so with these insurers, who apparently are monetarily harming large numbers of people.

#40—Insureds don’t sue insurers because “that’s where the money is.”  They sue them when they behave badly; e.g. by refusing to defend their insureds against lawsuits when there is a potential for coverage under their policies, or for denying medical care or cancelling the policy outright as soon as a large claim is made, or for refusing to make payments to Katrina victim homeowners on “non-covered floods damaged your house” grounds even when damage was patently caused by covered winds.

Your “take your money elsewhere” proposal is of little use when such misconduct is industrywide.

By AndytheLawyer on 2010 05 10, 9:49 am CST

insurance companies mickle and dime its attorneys. The expect 24hour service, 110percent effort but want to pay only 75 percent of the bill. No sympathy ....pay up

By al on 2010 05 15, 9:53 pm CST

So, either don’t work for insurers or recognize a client that gives you constant work, pays most of their bills, and keeps sending you more money is better than a chance of making big money on a contingency fee or losing your assets.

By bz on 2010 05 17, 7:20 am CST