Bad Faith Insurance: The Art of Unfairness

New York, NYThere's something fundamentally devious about the provider of a service that refuses to deliver what you've already paid for. Such is the basis for bad faith insurance, and a bad faith insurance claim brought against AXA Equitable Life Insurance Co. of New York by a former New York chiropractor. After being snubbed by his insurer, the man had little choice but to acquire the services of an insurance bad faith attorney to get the job done.

It's just one man's story, but it is a story that is repeated time and time again after insurance providers gladly accept premiums, only to offer a balk when it comes time to pay the piper.

William Goldstein is a former chiropractor who was actively practicing his craft at the Stock Exchange Chiropractic Group in New York City, when falling debris from the New York Trade Center on September 11, 2001 rendered him disabled and no longer able to perform his duties as a hands-on chiropractor.

Following his injury, Goldstein filed a claim with his insurer, which proceeded to begin paying him $3,000 per month in disability benefits.

That all changed in 2005, when AXA Equitable abruptly stopped his payments, allegedly claiming that Goldstein was, in their view, not a hands-on chiropractor but in actual fact a businessman, and as such he was capable of working.

It is interesting to note that Goldstein was also found to be disabled by another insurer, as well as the Social Security Administration. As well, both his own doctor together with a company doctor agreed that the chiropractor was, indeed disabled due to a back injury.

And so Goldstein sued in an effort to have his benefits rightfully re-instated. For two years the lawsuit went forward, with Equitable pushing back all the way. At one point the insurer offered a $100,000 lump-sum settlement, which Goldstein refused. Considering he will, it has been reported, qualify for a total of about a million dollars in benefits over the course of his lifetime as dictated by the terms of his policy, the settlement offer was laughable. As it is, Goldstein had racked up about $85,000 in legal fees fighting his insurer over his claim, which the settlement offer would barely cover.

The upshot to all of this is that in December of last year and just before the case was to go to trial, Equitable suddenly re-instated Goldstein's benefit, without explanation or apology.

Now he's suing them to recover his $85,000 legal bill.

It should be noted that the Magistrate for the pending trial did not require Equitable to pay Goldstein's legal fees, but left the door open for Goldstein to file a lawsuit against his insurer, alleging bad faith.

"To put somebody through $75,000 worth of costs and then put the guy back on claim is problematic, and it could really serve to prevent most policyholders from pursuing their claim," US Magistrate Judge John J. Hughes said at the time.

Then there's the way in which Equitable is alleged to have pursued Goldstein in an effort to debunk his legitimate claim for benefits.

"Equitable harassed Dr. Goldstein and his family in every way imaginable," the suit said. "Equitable placed (Goldstein), his wife and children under video surveillance for years. William Goldstein was tailed by Equitable when he was in his automobile and was followed in the supermarket and malls so much so that Dr. Goldstein got to know one of the investigators hired by Equitable by name," the suit said.

Goldstein's legal counsel for the most recent lawsuit has said that she has never seen anything like the behavior of Equitable, in pursuing her client.

It is obvious that insurance companies don't relish the thought of having to pay out a claim—in this case, an estimated one million dollars over the lifetime of the insured. However, that's a risk that goes with the territory. The insurer, in accepting regular monthly payments from policyholders, accepts that risk in exchange for the possibility that there might never be a claim on the policy. Thus, the insured is out thousands of dollars without ever receiving anything in return.

But that's not true either. What the insured is paying for, is the assurance that in the event of injury, the insurer will pay. That's how the game is played. In an increasing number of bad-faith insurance claims, however, somebody is always trying to change the rules to suit their side.

Bad faith insurance attorneys are trained in the fine art of not letting them get away with it.