“Can an insurance company really do that?” is a question I am regularly asked. With some exceptions (such as employer provided disability plans) insurers are regulated by state, not federal law. In Oregon, our starting point for assessing an insurer’s practices is Oregon’s Unfair Claim Settlement Practices Act found at ORS 746.230.

To help you better understand how an insurer should not handle claims, I reprint ORS 746.230 below. If you believe an insurer has violated Oregon’s Unfair Claim Settlement Practices Act, first contact the Oregon Insurance Commissioner (A link to the commissioner can be found on this website).

If that does not yield results, call me Richard Rizk at (503) 245-5677. As a former insurance company attorney and high exposure insurance company litigation manager, I know which methods will increase the probability of efficient and equitable claim resolution. In the meantime, here is Oregon’s Unfair Claim Settlement Practices Act as of December, 2008. It reads:

 Unfair claim settlement practices.

  1. No insurer or other person shall commit or perform any of the
    following unfair claim settlement practices:
  1. Misrepresenting facts or policy provisions in settling claims;
  2. Failing to acknowledge and act promptly upon communications
    relating to claims;
  3. Failing to adopt and implement reasonable standards for the
    prompt investigation of claims;
  4. Refusing to pay claims without conducting a reasonable
    investigation based on all available information;
  5. Failing to affirm or deny coverage of claims within a reasonable
    time after completed proof of loss statements have been submitted;
  6. Not attempting, in good faith, to promptly and equitably settle
    claims in which liability has become reasonably clear;
  7. Compelling claimants to initiate litigation to recover amounts
    due by offering substantially less than amounts ultimately recovered in
    actions brought by such claimants;
  8. Attempting to settle claims for less than the amount to which a
    reasonable person would believe a reasonable person was entitled after
    referring to written or printed advertising material accompanying or
    made part of an application;
  9. Attempting to settle claims on the basis of an application
    altered without notice to or consent of the applicant;
  10. Failing, after payment of a claim, to inform insureds or
    beneficiaries, upon request by them, of the coverage under which
    payment has been made;
  11. Delaying investigation or payment of claims by requiring a
    claimant or the physician of the claimant to submit a preliminary claim
    report and then requiring subsequent submission of loss forms when both
    require essentially the same information;
  12. Failing to promptly settle claims under one coverage of a policy
    where liability has become reasonably clear in order to influence
    settlements under other coverages of the policy; or
  13. Failing to promptly provide the proper explanation of the basis
    relied on in the insurance policy in relation to the facts or
    applicable law for the denial of a claim.
  • No insurer shall refuse, without just cause, to pay or settle
    claims arising under coverages provided by its policies with such
    frequency as to indicate a general business practice in this state,
    which general business practice is evidenced by:

    1. A substantial increase in the number of complaints against the
      insurer received by the Department of Consumer and Business Services;
    2. A substantial increase in the number of lawsuits filed against
      the insurer or its insureds by claimants; or
    3. Other relevant evidence.
    1. No health maintenance organization, as defined in ORS 750.005,
      shall unreasonably withhold the granting of participating provider
      status from a class of statutorily authorized health care providers for
      services rendered within the lawful scope of practice if the health
      care providers are licensed as such and reimbursement is for services
      mandated by statute.
    2. Any health maintenance organization that fails to comply with
      paragraph (a) of this subsection shall be subject to discipline under
      ORS 746.015.
    3. This subsection does not apply to group practice health
      maintenance organizations that are federally qualified pursuant to
      Title XIII of the Health Maintenance Organization Act.”