Dallas commercial insurance attorney Steven Badger charges that some trial lawyers try to intimidate insurers into settling unjust claims, using a “scare tactic” that “can amount to insurance fraud.”
Says Badger, “Lawyers and their teams of experts will significantly increase the alleged cost to damaged items and often add entirely new damage claim components that were never part of the original claim submitted to the insurer.”
Even Houston attorney Steve Mostyn, who's made a career – and a fortune – out of suing insurers, has acknowledged the problem, calling on district attorneys to prosecute “swindlers.”
We second Mostyn's motion. It's important to note, though, that prosecuting swindlers is the third prong of an obvious three-prong solution, the first being a willingness on the part of defendants to fight back against fraud, and the second being a determination among judges to reject unreasonable claims.
Once it becomes clear that defendants won't roll over, and that judges hearing the cases won't tolerate fast-and-loose tactics, the number of would-be swindlers is likely to drop.
Two recent cases of claim inflation – both against State Farm, both involving 2012 hail damage, and both handled by the same law firm – show how to stifle bad practices.
Last November, State Farm defeated an attempt by some Hidalgo County homeowners to inflate their claim after they had accepted payment.
“State Farm paid Plaintiffs Armando Martinez and Aurora Martinez full replacement cost benefits for agreed upon repairs to their dwelling,” the company said. “The Martinezes made no claim under the Policy that State Farm did not pay.”
Just this month, State Farm triumphed over plaintiff Juanita Arvizu, who went back to the well after accepting compensation for damage to her Dallas County home.
“Plaintiffs accepted the final payment,” the company responded, “and did not indicate at any time during the adjustment of their claim that they had suffered any additional damage or disagreed with the amount of the loss. . . .”
The firm handling both inflated claims? Steve Mostyn's.