Case: Insurance Bad Faith
The plaintiff was an 8th grade science teacher who developed diabetic neuropathy. Her physician told her the condition prevented her from returning to work. The school district had a disability policy in effect and the insurance company approved disability benefits for the plaintiff. Over the next month, the insurance company aggressively pursued the doctor by sending fax after fax to the doctor's office asking if the plaintiff could return to work. Each time, the doctor responded "no." Finally, the insurance company phoned the doctor and told the doctor the plaintiff wanted to return to work. Thinking her patient had improved, when in fact she had not, the doctor signed the insurance company's return to work statement and the insurance company immediately stopped paying the plaintiff her monthly benefits. The plaintiff sued the insurance company for deceiving her doctor and breaching the terms of the insurance contract by wrongfully terminating benefits. This settlement was reached after two years of intense litigation.