The Northwestern Mutual Life Insurance Company (Northwestern Life) was recently sued by a disability lawyer for the violations of the Washington Insurance Fair Conduct Act and Washington Consumer Protection laws. In Kurt D. Bennett v The Northwestern Mutual Life Insurance Company, the plaintiff alleged that Northwestern Life in denying the plaintiff’s claims for disability benefits was in violation of the above mentioned laws and breached the terms of the disability insurance policy.
Northwestern Mutual Claim Denial History
The plaintiff was a self employed criminal defense trail attorney. While in full time practice, the plaintiff obtained two disability coverage policies from Northwestern Life. He maintained all the premiums obligations and kept his coverage in force. Both policies provided that in the event the plaintiff became partially disabled, the plaintiff will receive disability insurance benefits which are proportionate to any loss of his income resulting from the disability as long as the losses exceeded 20% of his pre-disability income. Benefits were payable whether the plaintiff was unable to perform all the duties of his regular occupation or unable to spend as much time at his regular occupation before his disability. The policies also provided for a waiver of premiums during the disability period.
On February 2007, the plaintiff developed Bell’s Palsy which paralyzed half his face causing him to suffer pain, exhaustion and made it difficult for him to speak. As a result, the plaintiff’s practice began to suffer. In order to reduce stress, the plaintiff scaled back his practice to the stage that he had to let go of his employees and moved his practice to his home. This subsequently caused the plaintiff to suffer a reduction in income exceeding 20% of his pre-disability income.
Refusal to provide copy of Records
The plaintiff then filed a claim with Northwestern Life for benefits under both policies and was denied the claims. The plaintiff made an appeal to Northwestern Life regarding its decision to deny him his claims for benefits and was informed on November 19th 2009 that his appeal was unsuccessful. On December 18th 2009, the plaintiff through his Washington disability attorney made a second appeal to Northwestern Life. In the appeal letter, the plaintiff’s disability attorney also requested Northwestern Life to provide “a complete copy of Mr. Bennett’s file.”
Northwestern Life replied on December 28th 2009 refusing to provide the plaintiff’s disability attorney any of its record regarding the plaintiff’s claim on the ground that such records were “confidential” and could not be released without a release from the plaintiff and his healthcare providers. Later, even though the plaintiff’s disability insurance lawyer obtained a signed medical authorization for the release of all records, Northwestern Life still refused to provide a copy on the ground that it was “required by law to protect the privacy of our Insureds and those third parties who supply information to us.” On the third request for the records, Northwestern Life claimed that “while those records do reference Mr. Bennett, they are the property of the providers from which we received the information.”
On April 26th 2010 and August 30th 2010, the plaintiff sent Northwestern Life the Insurance’s “Cover Sheet” which activated the 20 days notice period under the Washington Insurance Fair Claims Act. Northwestern Life however still did not alter its position regarding the denial of the plaintiff’s claim for benefits.
Violations of Insurance Fair Conduct Act & Consumers Protection Act
The plaintiff alleged in the lawsuit that Northwestern Life had:
- Failed to act reasonably in handling and denying the plaintiff’s claim for disability benefits;
- Had unreasonably denied the plaintiff’s claim for disability benefits;
- Had caused the plaintiff to suffer damages;
- Failed to handle the plaintiff’s claim in good faith;
Because of the above mentioned actions of Northwestern Life, it had violated the provisions of both the Insurance Fair Conduct Act & Consumers Protection Act.
Relief Sought by the Plaintiff
Due to the alleged actions by Northwestern Life, the plaintiff is seeking from the court the following relief:
- A declaration as to the plaintiff’s entitlement to partial disability benefits
- Damages for past due benefits
- Damages for premium paid while being disabled
- Treble Damages
- Prejudgment interest
- An award of reasonable attorney’s fees and costs
- Other relief deemed appropriate by the Court
Northwestern Life, in response, petitioned for the case to be removed and be heard in the Federal District Court for the Western District of Washington.