But remember, it’s the evil government that we have to protect these companies from…

Nob Akimoto

Nob Akimoto is a policy analyst and part-time dungeon master. When not talking endlessly about matters of public policy, he is a dungeon master on the NWN World of Avlis

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155 Responses

  1. Mr. Blue says:

    It’s awesome how in the second case a liberal insurance company screws somebody over in a Democratic state, and this exposes how terrible conservatives are.Report

    • Nob Akimoto in reply to Mr. Blue says:

      Yes, because clearly, unfettered self-regulation of insurance markets is a vital plank in the liberal agenda…Report

      • Mr. Blue in reply to Nob Akimoto says:

        Well, apparently we can’t trust liberal companies and liberal states to uphold liberal values.

        Anyway, in what universe are we talking about an “unfettered self-regulation of insurance markets”?

        Can we blame the laws in Maryland on Republicans? That seems unlikely. Can we blame Republicans for the actions of this liberal insurance company?Report

        • Nob Akimoto in reply to Mr. Blue says:

          In the universe where we’re continually told that if only we got those terrible regulators out of the way, costs for insurance would magically go down.

          And I for one, certainly don’t trust an insurance company to live up to any sort of values whatsoever. Their business model kind of depends on shafting most of their customers.

          I’m not entirely sure, either, where the notion that Progressive is a “liberal” company comes from anyway. The only thing I can recall that comes remotely close to it is the brouhaha over their ads during the Glenn Beck show, and that evidently turns out to not have been one about politics at all.Report

          • Mr. Blue in reply to Nob Akimoto says:

            Then I guess it’s a good thing we have a regulatory state that protects us from these things. Well, we would have one if it weren’t for those bastard Maryland Republicans.

            Seriously, though, I’m not one of those “unfettered insurance markets” people, but this reads more to me like the limits of what regulation can do instead of the pressing need for them.

            The Aetna case is a little bit stronger, but only a little. The funny thing about that one is that I understand where they’re coming from on this, while they’ve actually been guilty of a lot worse on other occasions.Report

          • BobbyC in reply to Nob Akimoto says:

            Just for clarity, insurance as a business model makes sense. It’s really just a private form of socializing risk. Given the complexity of the contracts, it often makes no sense to buy insurance from a for-profit company. Consumers who buy insurance from for-profit companies are probably making the mistake that buying an identical contract from a non-profit and a for-profit insurance company is of equal value; that is incorrect, if understandable.

            As the Fisher case shows, you don’t want an insurance company to be maximizing profits.Report

    • Mr. Blue in reply to Mr. Blue says:

      Tries to screw someone over, should say, since the guy won. We should also add that it’s one side of the story and that Progressive (a) deny that they actually paid for the defense and (b) have questions-of-fact. That second thing may be foot-dragging and bad faith, but right-wing Maryland doesn’t appear to have bad faith laws in effect to cover that sort of thing. If there was bad faith, which there may not have been. There may have been genuine questions of fact here that are not represented in the side we’ve heard so far.

      Maybe they’re just bastards.

      What’s kind of twisted about the whole thing is that Progressive has conflicting interests. Their original settlement with Nationwide was in their customer’s best interest, but not theirs since they were on the hook for the difference between the original settlement and whatever the policy determination was. So if they’d really been competent bastards, they would not have settled. Either they were incompetent or they were not bastards.

      This is all hopelessly complicated. We should probably just stick with PROGRESSIVE BAD! Wait, that didn’t come out right. INSURANCE COMPANIES BAD! There we go.Report

    • Rod in reply to Mr. Blue says:

      Are you inferring that the insurance company is “liberal” because it’s named “Progressive?”

      Really? Is it possible to construct a more shallow argument?Report

    • The Left in reply to Mr. Blue says:

      wtf is a “liberal” company?Report

      • Rufus F. in reply to The Left says:

        I just figured a liberal insurance company is one that insures in case of fire, theft, or seriously bad vibes.Report

      • Burt Likko in reply to The Left says:

        One that does something Bill O’Reilly doesn’t like.Report

        • Mr. Blue in reply to Burt Likko says:

          Naw. One that puts it’s philosophy in its name and is run by a guy who donates millions and millions of dollars to liberal organizations.Report

          • Tom Van Dyke in reply to Mr. Blue says:

            I thought Mr Blue was kidding about “Progressive.” But lefty owner Peter Lewis is allied with George Soros. And Katie Fisher’s brother works for Soros arch-enemy Glenn Beck!

            I am. Not kidding.



            “What you might not know is that the chairman of Progressive is Peter Lewis, one of the largest funders of the left in America . He’s your typical rich spoiled kid who took over the company from his father and apparently feels “guilty” for his success and now dedicates himself to making it impossible for anyone else to become wealthy.

            Between 2001 and 2003, Lewis funneled $15 million to the ACLU, the group most responsible for destroying what’s left of America’s Judeo-Christian heritage. Indeed, Lewis is himself an ACLU member. One of the ACLU projects he earmarked his funds for was an effort to sue school districts who have drug testing policies. In other words, this idiot wants teachers to be able to use drugs without fear of exposure. I wonder what he would think if all his own employees came to work drugged out every day.

            Lewis also gave $12.5 million to MoveOn.org and American Coming Together, two key components of the socialist left. The former group is perhaps the main group used by the Obama forces to organize their activists; the latter group is a 527 political action group that essentially served as a front for the SEIU union thugs who ran ACORN. His funding for these groups was conditional on matching contributions from George Soros, the international socialist who finances much of the Obama political network.”

            • Chris in reply to Tom Van Dyke says:

              Wait, he donates to the ACLU? He is pure evil!

              But answer me this, how can he be a leftist and own a company? Leftists don’t believe in private property, right? Surely he’s really a right winger donating money to left wing causes merely to gain access and spy for his business cronies. This is so obvious!Report

            • Liberty60 in reply to Tom Van Dyke says:

              The fact that the owner of the company donates to liberal causes makes my heart go pitter pat, but as the libertarians will be quick to remind us, companies do not have principles, they only have interests.

              And in this case their interest appears to have been opposed to the interest of their customer and they behaved accordingly.Report

              • Tom Van Dyke in reply to Liberty60 says:

                FTR, it was the Glenn Beck angle I found most interesting. I passed up the “typical lefty scum” angle, like when Ben & Jerry stiffed the union*. Heh.

                BTW, back to the Fischer suit, from the net [comments]:

                “defending the killer” was forced on them by the State’s insurance structure.

                (” The nutshell is this: if the at-fault driver either does not have insurance or has low levels of coverage, your own insurance company will step in and basically take the place of the insurance company for the at-fault driver, including paying any settlement or judgment but also defending the case against your personal injury claim.
                Why does your insurance company pay you for your personal injuries when the at-fault driver is uninsured or underinsured? Your insurance company must pay on your personal injury claim because they have a contractual obligation to you to pay out the damages you would have recovered had the negligent driver had the same insurance policy that you have. So the claim is actually a breach of contract claim against your insurance company for the failure to pay what you and your accident lawyers believe is the fair value of your case. ”

                … and they don’t “just pay” because then you could make a bullshit claim and soak them. Defending their interests in court helps keep rates low by making it hard to scam them.)”




              • Roger in reply to Tom Van Dyke says:

                There you go actually trying to educate people, Tom. They were having so much fun just making stuff up. And it’s not just the liberals. The idiots at Beck’s site are even worse.Report

              • Tom Van Dyke in reply to Roger says:

                Silly me, Rog. And stipulated about commenters in general, although most would be appalled at any equivalency with Beck’s. Even if true.


              • Useful info, Tom. It actually clarifies for me, though, the part of Progressive’s actions that seem to make this case different, and that’s been really bugging me. It’s not that they intervened – as both you and Roger have suggested, the relationship at this point between insurer and insured is inherently adversarial. However, it should only be adversarial as to damages, not as to liability.

                Put it this way – had the accident been a one car accident, in which the deceased was solely at fault (and no evidence existed of something that would cancel her coverage), Progressive would still have been liable to her estate for the full amount of the claim; if she had been severely injured rather than killed in this hypothetical one-car accident, they’d still be liable for payment, but would have every right to fight over the amount of the payout.

                But here, they’re trying to have things both ways, attempting to argue that she was contributorily negligent such that the other driver should be found free of liability (and thus no payout under the UIM coverage), while also seemingly saying that they’re not on the hook under the primary coverage since the other driver was primarily negligent.

                Simply put, their contractual obligation under the primary policy is to defend the estate against claims that the deceased was negligent, an obligation that does not disappear just because the other driver was underinsured. Given that it appears the other driver was otherwise unrepresented after his policy was paid out, that Progressive was arguing that the deceased was in fact negligent (and not merely challenging the extent of the estate’s damages claim), it was de facto acting as the representative of the other driver.

                Ordinarily, this would present a huge conflict of interest issue as well – in arguing that the deceased was herself negligent, Progressive created an opportunity for the other driver to file a counterclaim against the estate, a counterclaim on which Progressive would have been obligated to defend the estate.Report

              • had the accident been a one car accident, in which the deceased was solely at fault (and no evidence existed of something that would cancel her coverage), Progressive would still have been liable to her estate for the full amount of the claim;

                Wait, this is different than my understanding. My understanding is that it was simply an “underinsurance” policy and not a life/injury policy per se. So fault would matter.

                I do get the “having it both ways” argument, though it seems to me that if accepting the liability of the other driver ceases to be in their best interest, they might fight that rather than accept the initial money, which is unquestionably in their client’s best interest.

                That seems to be the rub here. They are simultaneously in an adversarial and representative relationship with their customer. I’m not sure the extent to which we want to say that by representing their customer’s interests here, they are obliged not to question it later. But I don’t like the both-ways, either.

                (Back home, there is an issue with home insurance. You couldn’t get flood and storm insurance with the same company partly for this reason. As long as it wasn’t from the same source, the flood insurance people could say it was the rain and the storm insurance people could say that it was rising water that damaged the home.)Report

              • Kazzy in reply to Will Truman says:

                With all this in mind, is it wise to even bother paying for un- or under-insured coverage with your primary auto insurance company? If the defacto result of making a claim is the clusterfuck of positioning it puts people in, it seems like possibly less than a wise decision.Report

              • Argh – you’re right about the lack of a life/injury policy, though my point about the conflict of interest presumably remains (I’m assuming that her UIM and Liability insurance are through the same provider). Really sloppy thinking by me nonetheless.Report

              • Roger in reply to Will Truman says:

                As someone who has led the design and pricing of insurance contracts for millions all I will say is that I never bought more uninsured or underinsured motorist coverage than was required by law. I insured myself and my family for risk and avoided duplicate coverages to reduce costs. My choice might have been different if I transported lots of nonfamily members though.Report

              • Tod Kelly in reply to Will Truman says:

                Kazz – It depends on the policy. Auto liability will cover injuries to you if you are hit by an uninsured motorists. But in most cases, it does not cover damage to your vehicle if you are hit by an uninsured motorist.Report

              • Kazzy in reply to Will Truman says:


                So if I get into an accident that is someone else’s fault and that person lacks proper insurance, my insurance won’t cover the difference between what he can cover and the cost of the damage? Are there types of policies that cover you no matter who caused the damage? If not, what stops me from saying I caused the accident and, thus, my insurance should pay out? I suppose that could have a negative impact on my premiums but the system does seem to create perverse incentives all around, no?Report

              • Tod Kelly in reply to Will Truman says:

                Remember that all basic auto insurance policies cover only what the state requires.

                You have two kinds of required coverage for your car, collision and liability. Liability is for damamges you cause to others. Collision is coverage for you if you hit something. Everyone in all 50 states is required to carry auto insurance of on limit kind or another (depending on the state) so the theory (state law theory , not insurance company theory) is that that covers everything – the state doesn’t want to force you to buy a coverage that you shouldn’t need.

                So insuring against non-insured or under-insured isn’t covered in the cheapest policies, because the cheapest policies are just what you are required to have by law – and you’re allowed to roll the dice on the uninsured guy hitting you, because it’s your car. The same thing applise to comprehensive coverage – which is for is for the no fault stuff, like a tree falling on your car in the drive way, or a rock chipping your windshield.

                The reason you don’t want to claim you were at fault is because it will affect your rates and insurability, you might actually be admitting that you committed a crime (depending on the incident), and the insurer might very well catch you – they’re really, really good and knowing what happened and who’s at fault – and then they do not have to pay any damages, even those covered, because you don’t have to pay a fraudulent claim.Report

              • Kazzy in reply to Will Truman says:

                That makes sense about the insurability and premium impacts. It still just seems a bit odd. Not illegal or immoral or unethical. Just… odd. Again, it seems to create some strange incentives.

                However, if it is indeed true that “they’re really, really good [at] knowing what happened and who’s at fault”, then it is a bit problematic when they go out of their way to argue about possible alternative scenarios, such as it seems they are doing in this case. I realize there is a difference between saying, “We know it happened this way but let’s pretend it happened another way because that is advantageous to us,” and “It almost assuredly happened this way but a particular reading of the evidence makes it possible it happened another way, which is more advantageous to us,” at least from a legal standpoint, but it still seems problematic.

                Again, it just seems so one-sided… They can deny a claim that they are almost certain they ought to pay because of the chance that maybe they shouldn’t but I sure as hell can’t file a claim that I’m almost certain I shouldn’t file because of a chance that I might be able to make it work.Report

              • BobbyC in reply to Will Truman says:

                Roger – is there risk here that regulators say that Progressive and others have been selling insurance to people that they don’t need and cannot collect on? There were similar actions and fines in mortgages where consumers were sold insurance that they did not need.Report

              • Roger in reply to Will Truman says:


                Companies and agents can get into trouble selling too much or too little coverage. This is very unlikely with UIM coverage though IMO.Report

              • Thx, MarkT. A link @ DaTchGuy to a plaintiff’s firm explained the perversity of Maryland law, but I bailed b/c there was no universal lesson there.


                I question whether I’m following correctly, but an uninsured [or underinsured] motorist claim is actually a Breach of Contract suit against your own company, making Progressive the defendant here along with the driver of the killer car. Or something like that.


                It does seem to me that the leftist scum at Progressive could have looked at the evidence, determined Katie Fischer was not at fault, and just paid off.

                BTW, sent you an email but it’s moot now.Report

              • Hmm…according to that link, there doesn’t seem to be any prohibition on bringing suit directly against the insurer – it’s just a straight-up breach of contract claim. If that’s the case, then the analysis here changes dramatically, to the point where it seems that the original account seems to be pretty unreliable.

                Increasingly, I’m convinced that Progressive probably acted appropriately here, at least with respect to the main complaints being raised against it (there are some side issues that I still find very questionable, and that press release is just idiotic).Report

              • Tod Kelly in reply to Tom Van Dyke says:

                I tend to agree, from a legal and contractual basis. On the PR side, however…

                I mean, compare the two stories Nob linked to, and how each company handled a potential PR nightmare. Night and day, man, night and day.Report

              • Yup, the PR difference is staggering. It’s as if Progressive has no concept of how this whole internet thing works; Aetna, on the other hand, totally gets it.Report

              • Yes, MarkT, our problems remain…well, you know. Heh heh. Or as they used to say, a lie is halfway around the world before the truth has its boots on. In the internet age, it’s more like twice around the world.

                And for Progressive to try to explain—even if in the right—just digs the hole deeper. Makes me feel almost sorry for those corporate commie bastards.Report

              • Roger in reply to Tom Van Dyke says:

                So, basically Nob took the equivalent of an internet rumor, slapped on a totally misleading label and passed it on? Frenzy ensued.

                May I suggest a gentlemanly editorial clarification?Report

            • Tod Kelly in reply to Tom Van Dyke says:

              My favorite part of this comment was this:

              “the ACLU, the group most responsible for destroying what’s left of America’s Judeo-Christian heritage”Report

            • Nob Akimoto in reply to Tom Van Dyke says:

              Peter Lewis also hasn’t been an active part of the company’s management since…2000.Report

      • NewDealer in reply to The Left says:

        Semi-Serious but not really answer:

        1. One that uses some forward leaning term like “progressive”

        2. One involved in the “cool” industries usually design, fashion, coffee (Starbucks and Peet’s). There needs to be some kind of vague sophistication being sold. Think Design within Reach or Room and Board over Big Bill’s Furniture Barn.

        3. A company with cool employees or ads that feature young and vaguely hipsterish people.

        4. A mythical strawmen conjured by libertarians and conservatives so they can jump up and down and say “See! See! Liberals have Big Corporations too”Report

    • DensityDuck in reply to Mr. Blue says:

      Also, the reason this went to court in the first place was due to Maryland law, which states that if one party in an accident is found negligent–at all, by any amount, even one percent–then they aren’t entitled to recover ANY damages from the other party.Report

  2. Kazzy says:

    Here is something I’ve been thinking about a lot in terms of contract law…

    If contracts have contradictory language, why does the side that drafted the contract get to choose which language ought to be considered the real language? You see this everywhere from informal contracts, such as advertising and labeling, to formal contracts.

    For instance, I always get special offers from credit cards. In big, bold lettering they say, “ABSOLUTELY NO FEES OR EXPENSES TO YOU FOR ONE YEAR!” There is always an asterisk or a footnote which points to tiny print that says, “Except for all these fees and expenses.” Well, which is it? No fees or yes fees? If I were to miss the fine print, accept the offer, get slammed with fees, they would argue and likely win on the basis of, “Hey, it said right there in plain English that there were fees,” even if I point out that, “Hey, it said right there in plain English that there were no fees.”

    This seems to be the case in many an insurance brouhaha. While I can’t speak to the specifics of this case, as I don’t have the contract and policy itself, it wouldn’t shock me if there was the same contradictory language that have caused me problems with my own various insurance plans. Page 1 says X and Page 2 says Not-X and whichever is more convenient for the company is the side they take up as what the contract really says.

    Is there something about contract law I don’t understand? It seems increasingly absurd that this is the way business is done. From things as small to coupons that say “Take 10% of ANY* store purchase… *Except all these types of purchases which means our use of the word “any” is wrong, inaccurate, and deliberately misleading” to major things like insurance policies or mortgages you see this same crap. Perhaps we need some sort of equation that looks at the size and color of the various fonts used and the proximity of the language to the front/top of the document to determine which of two contradictory clauses out to be win out. If that were the case, there’d be a whole hell of a lot less fine print.Report

    • DensityDuck in reply to Kazzy says:

      The fact that you didn’t read the entirety of the contract doesn’t render the contract invalid.

      If you want to make the case that certain significant parts of the contract weren’t made available for you to read, you would have a point, and there have in fact been court cases about that. Which is why fine print exists in the first place, in fact.Report

      • Kazzy in reply to DensityDuck says:

        I understand that.

        But if Page 1 says X is covered and Page 2 says X is not covered, why should we defer to Page 2 instead of Page 1?Report

        • DensityDuck in reply to Kazzy says:

          …because Page 2 is just as much a part of the contract as Page 1? Why are you even asking this question?Report

          • Kazzy in reply to DensityDuck says:

            So the company points to Page 2 and says, “It states clearly here that X is not covered.”
            I point to Page 1 and say, “It states clearly here that X is covered.”

            How ought this be settled? Both folks are correct, no?Report

            • DensityDuck in reply to Kazzy says:

              Are you still arguing about whether fine print is valid, or have you gone to a different example that’s genuinely contradictory and just not actually told me you were doing that?Report

              • Kazzy in reply to DensityDuck says:

                I have been consistent throughout, in that I find it highly problematic when contracts contain contradictory language, be it in the fine print or elsewhere.

                I don’t object to a company saying, “Get two free round trip flights when you join our mileage program” and then having fine print that details exactly what is entailed in joining the mileage program.

                I do object to a company saying, “EVERYTHING IS HALF OFF!” and then having fine print that says, “Well, not everything… only these things.” To me, that is contradictory. It is either true that EVERYTHING is half off or not-everything is half off. If they had said “EVERYTHING FROM THESE CATEGORIES”… no problemo. But they don’t say that. They say “EVERYTHING!!!!!!” In giant 42-point font that is red and glittery.

                So, to answer your question, I do not object to fine print so long as it does not directly contradict what is written elsewhere.Report

              • trizzlor in reply to Kazzy says:

                This is an interesting inflection point. A contract contains contradictory language: which signatory should get the benefit of the doubt? It appears to me that DensityDuck is arguing the right of the business to be self-evident.Report

              • DensityDuck in reply to Kazzy says:

                “I do object to a company saying, “EVERYTHING IS HALF OFF!” and then having fine print that says, “Well, not everything… only these things.” ”

                You must be totally fun to play chess with. “Wait! That pawn can’t move two spaces! That’s illegal! The rules say that pawns can only move one space.” “But there’s another rule that says–” “THAT’S CONTRADICTORY!”Report

              • BobbyC in reply to DensityDuck says:

                I think the point is that when the contract uses english, but is drafted so the english sentences mean something other than what they plainly say, why do courts enforce the legalistic tortured interpretation?

                Personally, were I a judge, I would view most of the contracts that Kazzy is referring to as invalid / unenforceable. We really need to get some of these corporate lawyers into more productive jobs, by making it impossible to use lawyering to accomplish fraud. Too much of contract law serves to allow contracts to operate as constructive frauds.Report

          • BlaiseP in reply to DensityDuck says:

            Any rule set containing contradictions creates what a ruleset guy like me would call inherent transgression. If an obligation is created in Rule 1 and repudiated in Rule 2, the RETE algorithm will never settle.Report

    • Mike Schilling in reply to Kazzy says:

      If contracts have contradictory language, why does the side that drafted the contract get to choose which language ought to be considered the real language?

      IANAL, but my understanding of the arbitration ruling that invalidated the reserve clause in baseball is that it was based on this principle: if a contract is ambiguous, the presumption is against the party that wrote it.Report

      • Kazzy in reply to Mike Schilling says:

        That seems like a far more fair thing to default to. Obviously, we could quibble over what “ambiguous” means, but directly contradictory statements that are not conditional seems pretty obvious.

        While we’re at it, I’d also do away with assumed consent. It’s crap that you can fill my mailbox with junk and should I happen to not read a particular piece that says, “Failure to respond means you have suddenly agreed to a whole new set of terms and conditions,” I get the screws put to me. I’m often tempted to send those companies my own such letters. For some reason, I doubt they’d have the same weight in court.Report

        • BobbyC in reply to Kazzy says:

          I agree – it’s up to courts to lead here, by telling lawyers that it doesn’t work. Sometimes it seems like the judicial system is willing to contemplate any amount of extra legal work to accomplish the smallest gain in legal clarity. A principle of having judges throw out reams of defenses concocted by lawyers should lead companies to give up on the idea that lawyering up can prevent bad outcomes. You’d think the mortgage mess and other such experiences would cause corporate America to GIVE UP on such tactics, but instead they seem to be going further on the path of lawyering up.Report

      • The balance of bargaining strength and sophistication of the parties comes in to play when there are abmiguities as well. The phrase you want to Google is “contract of adhesion.” An insurance policy is the classic example of an adhesive contract.Report

        • Kazzy in reply to Burt Likko says:

          If I’m reading it correctly, it seems as if that gives preference to the individual, as opposed to the insurer. Is this correct? Because that does not SEEM to be the case in practice, at least as far as I understand it.Report

        • MikeSchilling in reply to Burt Likko says:

          Actually, Burt, if you’re looking for a posting topic, I’d love to see what you think about that ruling.Report

        • Liberty60 in reply to Burt Likko says:

          I think of “contract of adhesion” when I pull into a parking garage and get that little ticket that says “THIS IS A CONTRACT- READ IT”

          So I of course put my car in Park, and spend a few minutes reading the contract, then call my attorney for legal advice, before finally proceeding into the structure.Report

  3. Sam says:


    Not to worry. As word gets out about Progressive’s bad behavior, customers will switch their insurance to other companies. When that happens, Progressive’s profit margins will dip and they’ll be forced to offer better customer service as it dawns on them what exactly they’ve done to themselves.

    That’s the magic of the market!

    (Oh, and please ignore all the people that will be screwed between now and that time in the future, because all that matters is that things will eventually get better later maybe, not what happens in real lives right now.)Report

    • David in reply to Sam says:

      Most people have insurance through their employer, they have no choice about who their insurance company is. In many states there are only one or two companies offering policies, effectively monopolizing the market. So the idea of the market controlling companies is a myth. Also have to remember that policy holders should be thought if as the product and share holders the customers. A far as the companies are concerned, we are meat.Report

    • Mark Thompson in reply to Sam says:

      Actually, as I understand it, Progressive has already lost a pretty good number of customers because of this incident (and they seemingly deserve to, as well), which, it must be emphasized, they ultimately lost. In other words, in addition to being a callous and immoral act (and in part because of being a callous and immoral act), the decision was also incredibly stupid. Given that this is something that could only arise in a state with contributory negligence rules (which are few and far between), it seems likely that the losses they’ve already incurred because of this one incident exceed any potential gain the company might have ever hoped to obtain on aggregate by implementing this as a policy over the long haul.

      I’ve dealt with enough large corporate clients (albeit not in insurance defense specifically) to know that the result of the (well-justified) outcry over this is likely going to be that the company adopts some giant one-size-fits-all directive that makes sure this specific thing never happens again, but also severely restricts their attorneys in cases that have none of the concerns present here. This policy will wind up costing the company money since the majority of cases to which the policy applies will be harmed by the added restrictions; however, this cost will be less than the expected loss of business should this continue to happen again in the future.

      That seems to me to be exactly the right result here, at least barring an optimal outcome that large corporations lack the institutional flexibility to implement: the injured party in this case was ultimately compensated; future parties in this situation will not have to worry about having this particular harm inflicted upon them; and, due to the costs associated with the inevitable one-size-fits-all policy, Progressive is going to be paying for its actions here for years to come.Report

      • BlaiseP in reply to Mark Thompson says:

        The giant one-size-fits-all directive that makes sure this specific thing never happens again will in fact be a gigantic cloud of squid ink in the water. Nothing will change at a regulatory level, on that you can bet the farm.Report

        • Mark Thompson in reply to BlaiseP says:

          I don’t think there’s anything that could change at the regulatory level. But that giant one-size-fits-all directive will be more than a cloud of ink; having dealt with my share of them, that directive will wind up being frustrating as hell for Progressive’s outside counsel and will in fact prevent them from doing all sorts of things (most of which would have otherwise been totally acceptable, but some of which would not have been).Report

          • BlaiseP in reply to Mark Thompson says:

            Oh, they’ll coordinate this PR disaster with counsel. They might be well advised to hire on Brunswick, the PR shop which handled BP’s oil spill disasters.

            BP has taken a stab at soothing angry Americans, airing a slick, multimillion-dollar national TV spot this week in which Hayward pledges: “We will make this right.” Hayward also promised BP would clean up every drop of oil and “restore the shoreline to its original state.” President Barack Obama said the money spent on the ads should have gone to cleanup and compensating devastated fisherman and small business owners.

            And even those efforts violate the company’s own prescription for damage control. Its own spill plan, filed last year with the federal government, says of public relations: “No statement shall be made containing any of the following: promises that property, ecology or anything else will be restored to normal.”

            Watch and see, it’s going to be Brunswick or someone just like them who steps into this mess. Lies will be told, are already being told, if Progressive’s flacks are being quoted correctly, saying the attorney didn’t work for them.Report

            • Mark Thompson in reply to BlaiseP says:

              Perhaps – that aspect of it is outside my area of experience. But the one-size-fits-all directive of which I speak is still going to get issued one way or another, and is still going to get enforced. I’ve had to deal with such directives far too frequently to believe otherwise.Report

              • BlaiseP in reply to Mark Thompson says:

                I’ve seen something very much along those lines, a Procrustean solution composed in response to some past incident. It annoys everyone involved, doesn’t actually solve anything, often makes things substantially worse.

                But as time goes by, the corporation lapses back into its former habitual evils.Report

      • James K in reply to Mark Thompson says:

        Given that this is something that could only arise in a state with contributory negligence rules (which are few and far between)

        And it’s a weird contributory negligence rule too. We have contributory negligence down here, but it’s proportional so if the plaintiff is 1% negligent they lose 1% of their award, not 100%.Report

      • The court doc lists the Progressive attorney only as an “interested party,” not counsel for the defense.


        My quick look suggests to me the main charge

        “My Sister Paid Progressive Insurance to Defend Her Killer In Court,”

        is bogus. Now, Progressive could have just paid up on the underinsured motorist part instead of forcing Katie Fisher’s survivors to go through with suing the driver of the other car. Now—it appears to me—they’re getting raked over the coals for something they’re innocent of, but any attempt to refute the charge at this point just brings down more crap.Report

        • Rtod in reply to Tom Van Dyke says:

          Actually, not an interested party – a party that was given the right to intervene as the defendant.

          Thats way outside of my bailywick – I’d love it if Mark could explain exactly what that means, and what it implies about the relationship to the dependent.Report

  4. Reformed Republican says:

    In Maryland, you may not sue an insurance company when they refuse to fork over your money.

    I think this is an important fact to keep in mind. It looks like the evil government is protecting Progressive here. Otherwise, the individual would have sued Progressive, and there would not be a situation where Progressive was paying to defend the other driver (if that is really what happened).Report

  5. Tod Kelly says:

    I have to say, I’m not entirely sure what the issue with the cancer case or the Baltimore case is.

    In the case of the cancer case, the person bought $300,000 worth of insurance and the insurance company paid $300,000 when a claim was submitted – yes?

    In the Baltimore case, I get that a grieving family would be upset about their daughters/sisters death, but the crime here seems to be that the insurance company defended their client who claimed to not be at fault.

    Maybe my career has made me biased, but I seriously do not get why in either case the insurance company did wrong.Report

    • David in reply to Tod Kelly says:

      point being the guy they defended wasn’t their client. He was the person found negligent in the death if their policy holder and it looks like they then tried to say their lawyer didn’t really act as council for the killer even though their council did. On a lighter note, does this mean we have to start calling Flo-bot the Terminator?Report

    • Rod in reply to Tod Kelly says:

      No, you read that wrong, Tod. In the Baltimore case, Progressive was the insurance company for the dead sister. The driver that killed her was Nationwide. Nationwide paid on its policy but the guy didn’t have much insurance and the sister’s Progressive policy had a provision to pay (X-Y) in the case of under-insured drivers, where Y is what Nationwide paid. They were effectively trying to sue their own insurance company to get them to honor the provisions of the policy they sold them.Report

    • Kazzy in reply to Tod Kelly says:

      I agree with you on the cancer case at least insofar as the fulfillment of the contract. My questions would be how upfront was the insurer about the maximum payouts and, more importantly, why did the reforms eliminate max payouts for regular plans but NOT for student plans? Aren’t students often in the worst position to pay large sums out of pocket OR to afford pricier plans without maximums?Report

      • Tod Kelly in reply to Kazzy says:

        “Aren’t students often in the worst position to pay large sums out of pocket OR to afford pricier plans without maximums?”

        That points to a fault in the system, not in the insurer.

        “My questions would be how upfront was the insurer about the maximum payouts ”

        Pretty upfront. By law, insurance quotes and policies have to have those things on the declaration page, which has to be the first page of the policy. It in not something that is buried. I can guarantee you that there was an option to buy more than $300,000 in insurance coverage. It certainly sucks for that guy that he bet the odds and lost, but he did.

        If you have $250,000 worth of stuff in your house but in an attempt to save money on premium only insure $50,000 worth of contents, does the insurer really owe you an additional $200,000 if your house burns down?

        Trust me when I say there is not an insurance company in the world – of any line of insurance – that doesn’t want to sell you more coverage if you’re willing to pay the premium.Report

        • Kazzy in reply to Tod Kelly says:

          If they were as upfront as you say they must be, the guy doesn’t have much of a case, and is fortunate that the company opted to avoid bad press, even undeserved, and pay him anyway.

          And, yes, I was indeed pointing to a fault in the system. I’m curious how that fault came to be.

          With regards to buying more insurance for a higher premium, that is not always an option when dealing with employer- or school-based insurance plans, which might only have a handful of options. Yes, I know you can go and get your own insurance, but that isn’t a realistic option for many folks. For instance, the best dental insurance plan available through my wife’s work (with whom we currently have all our coverage) has a maximum payout of $2000. That’s the BEST plan. The MOST EXPENSIVE plan. And a major procedure or two wipes that out in no time.Report

  6. Reformed Republican says:

    I did not read the cancer case story at first, but now that I have. It is definitely not a good example if you want to support the need for regulation. In this case, due to the desire to win public approval, the insurance company agreed to pay more than the policy limit. No government intervention required.Report

  7. Liberty60 says:

    This sort of tragic tale is par for the course, where we hear about a horrible abuse by, in no particular order:
    Government agencies- EPA, SS, OSHA, EEOC; or private companies- Insurance companies, banks, employers-

    I know the intent is to demonstrate how either government or private interests are inherently untrustworthy, but the one conclusion I make, is that it demonstrates only that unequal power relationships almost always result in injustice.Report

    • I agree. The problem is concentration of power, not what we call that power. In principle, the democratic government is accountable to citizens, the market accountable to consumers. When there is no accountability, who cares what it’s called. It’s broken.Report

  8. BlaiseP says:

    I could tell you tales which would make a vulture vomit, seen from within Celtic Insurance and various Blue Cross franchises. I’m not allowed to tell them to you, due to confidentiality clauses and HIPAA regs.

    That’s another great thing about the insurance industry. Nothing inside ever gets outside. If it does, you can go to jail. Those platoons of attorneys handle other sorts of cases besides this negligence case. I have seen what they do to whistle blowers and do not intend to meet the same fate.Report

  9. Roger says:

    Nob and all those convinced insurance companies are evil,

    Your responses to these cases are simply childish. Let me repeat Tod’s point. When you take out a contract that says it will pay out up to $300k in coverage, that is what you are entitled to, not a dollar more. Any more paid out is basically unfair to the other premium paying customers and in the case of publicly traded company (non mutual) the stock holders. You see the insurance company has a complicated relationship with the customer. It protects them from loss according to the terms of the contract, but in time of loss it owes the other customers the responsibility of making a fair settlement, and not a dollar above. Thus you see what starts as a cooperative relationship converts into a potentially confrontational relationship at claim time.

    If you think it will be all swell and dandy to go to an insurance company that pays unlimited payouts. Great! Please do so. Expect your premiums to be commensurate.

    I know absolutely nothing about either case other than what I read in the links, but If Aetna paid more that the contract, then they did so as a PR move at the expense of future premium payers and owners. Pragmatic perhaps, but not the socially optimal decision. Does everybody not see this?

    On the Progressive case, my reading is that the family was making a claim under underinsured motorist coverage. This is an inherently adversarial coverage. It allows a person to insure themselves against liability causedby another driver via their own insurance company. Once a claim occurs, the insured and company become adversarial. Progressive’s proper fiduciary role is to represent its other customers against the insured. Failure to do so properly means that everyone else’s UIM coverage will become less affordable.

    This is how the system works. Yes companies make mistakes and pay claims they should not (Aetna is probably making this type of mistake) and they deny claims they should pay (progressive case?). But remember they are handling millions of these claims per year. Mistakes happen, Despite the incentives for the company to minimize them.

    Again, I know NOTHING about these particular cases and I am not a fan of either company. Please understand the dynamic of insurance before weighing in.Report

    • David in reply to Roger says:

      Many, if not most, medical insurance plans cap out at two million dollars life time pay out. For a serious illness or injury, $300,000 is not very much money. One day in an ICU starts around $5000 and can easily reach $20,000 a day. Out patient chemo eighteen years ago was $24,000 a month for six months –at least that is what my bills said back when I was treated for lymphoma.Report

    • Liberty60 in reply to Roger says:

      As I mentioned upthread, companies are neither evil nor good; they simply have interests which they pursue.

      In the case of insurance companies, most of the time they are massively unequal to their customers;
      So the laws of marketplace negotiation you use with Tony’s Pizza no longer apply when “negotiating” with Aetna, Blue Cross or Progressive.

      One might as well “negotiate” with the City Council over a building permit.Report

      • Troublesome Frog in reply to Liberty60 says:

        As I mentioned upthread, companies are neither evil nor good; they simply have interests which they pursue.

        Dealing with banks is a lot easier once you figure this out. Getting angry when a bank manages to screw you out of a few bucks by being inscrutible is like getting angry when a wave knocks you over at the beach. We all do it, but we should feel a little silly about it afterward.

        What I don’t get is all of the ads implying that insurance companies and banks are warm and caring. They must be targetted at an older demographic. People my age and younger simply don’t remember a time when there was a friendly bank manager who could make things right. It’s just not part of our experience.

        For most of us, banks and insurance companies are just giant vending machines with weird keypads, whirling blades, loose wires, and severed fingers strewn around them. They’re necessary. You learn how to use them. You get cut or shocked periodically. Asking them to be reasonable is not a good use of time or energy. Portraying them as friendly characters that I can depend on simply doesn’t register with me.Report

  10. Sam Wilkinson says:

    For fun, check out Progressive’s Facebook Page. It is here right now: https://www.facebook.com/progressive More importantly, it seems to have not been scrubbed of any of the disastrous feedback the company has been getting for its decision in the Baltimore case.Report

    • Kazzy in reply to Sam Wilkinson says:

      From the Progressive blog, linked to via Facebook:
      “I’d like to take this opportunity to explain Progressive’s role in this complex case. First and foremost, our deepest sympathies go out to Kaitlynn Fisher’s family.
      To be very clear, Progressive did not serve as the attorney for the defendant in this case. He was defended by his insurance company, Nationwide.
      There was a question as to who was at fault, and a jury decided in the Fisher family’s favor just last week. We respect the verdict and now can continue to work with the Fisher family to reach a resolution.”

      Whether they are acting properly or not, this seems like pretty shitty PR handling. And if they respect the verdict, why does a resolution need to be worked out? If the other drive was found liable, doesn’t that seal the deal on what should be done? Or are they still angling to avoid paying in entirety?

      Lastly, the blog is called “Understanding Insurance” but the way in which it is formatted, it appears as if this statement is intended to better help folks understand insurance. Which I suppose it does. But not in the way Progressive probably hopes.

      • Sam Wilkinson in reply to Kazzy says:

        The man who lost his sister replied to Progressive here: http://mattfisher.tumblr.com/post/29432884849/today-in-response-to-my-blog-post-entitled-my If he’s right about what happened (and I don’t see why he’d be wrong), Progressive’s attempt to lie its way out of this is shockingly bad strategy.Report

      • Roger in reply to Kazzy says:

        You guys are all totally clueless on how insurance works. The level of commentary on this OP is pathetic.Report

        • BlaiseP in reply to Roger says:

          ROFL! I may not know every aspect of insurance, it’s a very wide sea, but I know how insurance policy is formulated. I’m the guy who writes and maintains the (currently) 415 rules which govern how Blue Cross denies health care claims and the infrastructure which deals with every single claims submission which goes through their pipelines.

          One thing I’ve learned about LoOG, it’s full of bright people who do know what they’re talking about. You can call it Pathetic if you want. The fact is, the scalpel of claims denial has been whetted to sub-micron sharpness and in Progressive’s case, seems to have stabbed the surgeon.Report

          • Roger in reply to BlaiseP says:


            Read the stream of comments. I know you, Mark and Tod are educated enough to know the role of UIM and coverage limits in insurance, and are aware of the inherently adversarial nature of insurance companies and their customers. Just about everyone else is just spewing nonsense. It’s even worse on the Glen Beck site that someone linked. Pure nonsense.Report

            • BlaiseP in reply to Roger says:

              Three things went wrong in this instance:

              Progressive saw the other insurance firm’s claim paid and summarily denied a UIM claim against itself, believing they could intimidate the estate.

              Progressive understood Maryland law well enough to know it couldn’t be sued. They must have been somewhat taken aback to see the plaintiff take action against the underinsured motorist, at which point the standard tesuji kicked in and they brought in counsel.

              By then it was probably too late to fork over the UIM cash, which would have made good on the plaintiff’s claim. Well, maybe not, they could have still paid up and gotten the case out of the system.

              It’s an odd sort of case, if you think about it. As I’m sure I don’t have to tell you, usually UIM comes into the picture when the offender doesn’t have ANY insurance. But this guy did have a little bit, just not enough to fulfill Progressive’s obligations. Progressive sees one payout, sees the negligence case, makes a few half-hearted offers and decides to risk litigation anyway.

              It was a bet Progressive lost, big time. Very few policy holders have the guts or the motivation to litigate, especially in a moment of tragedy. Progressive knew it. The motivating factor was the outstanding student loans. What Progressive had not expected was an attack via the negligence avenue, thus pulling Progressive into a jury trial it could not win under even the best of circumstances.Report

              • Tom Van Dyke in reply to BlaiseP says:

                Sounds about right from here, BP.Report

              • Mark Thompson in reply to BlaiseP says:

                Yup, this sounds right. I’d just point out that this initial miscalculation was severely compounded when, as I mentioned above, they chose to jump into that negligence suit and argue against their insured on liability grounds. That seems to be the most proximate source of anger here. If they had “quit while they were behind” once suit was filed and just made a reasonable settlement offer, they’d have been able to marginally reduce the final payout and, most importantly, would have avoided the unmitigated PR disaster this has become.Report

              • BlaiseP in reply to Mark Thompson says:

                Furthermore, once the motion for jury trial was granted, Progressive should have stepped in and settled at once.Report

              • Roger in reply to BlaiseP says:

                I know zero about this case, but if your theory proved correct I would be amazed. My guess is that Progressive had a dozen liability experts and attorneys look at a case of this nature and they agreed on a strategy that optimized their split duties between their customer base who expect them to keep premiums low and this customer. Obviously something went wrong, and they miscalculated wildly. They have hundreds of thousands of cases a year and a few bad mistakes occur.Report

              • trizzlor in reply to Roger says:

                Surely! If Progressive challenges every claim then they will be able to reduce premiums to zero for their customers (that’s us!).Report

              • Roger in reply to Roger says:

                Great example of the absurdity of short term one dimensional thinking, trizzlor

                Insurance companies have to balance customer service and protectiveness with affordable premiums within states with complex regulations selling mandated coverages that people don’t understand.

                I suggest you shop carefully for auto and health insurance. It isn’t just about the premiums. JD Powers and others routinely collect customer feedback on how well they balance these priorities. A couple of companies ALWAYS come out as exceptional. Choose wisely.Report

        • Kazzy in reply to Roger says:

          Please enlighten us. My comment here stated one thing about insurance itself, which is that Progressive should pay out what they are obligated to under the terms of the policy. A settlement should not be necessary.Report

          • Roger in reply to Kazzy says:

            See above. They should of course pay what they are obligated. This is going to require a few things though. First, we must establish negligence on the part of the underinsured driver, then we have to establish the level of damages.

            When I trained people on UM coverage, I used to say it is kinda like buying the ability to sue your own insurance company. The point is that it is an inherently adversarial coverage that leads to the types of situations you are all incensed about.

            Again I have no idea if Progressive handled the case well. Even if they did, I am 100% sure we can find cases where mistakes are made.Report

            • BlaiseP in reply to Roger says:

              I suspect, maybe you have more insight into this phenomenon, a really bigbig outfit like Progressive has a standard triage for this sort of case. Surely UIM cases must appear on the docket with some frequency in states where the law allows, as you say, cases to be brought against the insurance company.

              But in Maryland, such cases wouldn’t appear. This claim may have never gotten up to the attorneys at national headquarters. Probably didn’t. Though I can’t say for sure, it’s probably like most other insurance organisations, with dozens of subsidiary corporations. Maryland probably thought it could handle this on its own. They’d probably handled such cases going the other way, going after the underinsured party but they obviously had no experience defending one against negligence.Report

        • Rufus F. in reply to Roger says:

          Okay, so remember guys, here’s how it works: When a libertarian comes on and comments that all of the non-libertarians are clueless, you take a drink of beer. If that’s the entirety of their comment, you take a shot of whiskey.Report

      • DensityDuck in reply to Kazzy says:

        Can we really have gotten this far into the twenty-first century and have people not understand that business are sometimes required to speak in a certain way to avoid later legal complications?Report

        • BlaiseP in reply to DensityDuck says:

          Would that Progressive had called a well-connected Disaster PR outfit before this Chris Wolf character, styling himself Claims General Manager for Progressive, had issued a demonstrably false statement.

          Had Mr. Wolf dealt with this appropriately, he would have said something to the effect that Progressive is horrified by how things worked out, an investigation would be forthcoming, that sort of thing. You know, the usual platitudes and comforting truisms, that every Progressive customer is important, that policy had gone awry, people got hurt, Progressive would do its best to ensure such a situation could never arise again, (see Mark Thompson’s excellent observations above for how this works out in practice), Progressive could respond with some emotional and entirely legal judo of its own.Report

          • MikeSchilling in reply to BlaiseP says:

            Don’t send Chris Wolf when yo need Winston Wolf.Report

          • Mark Thompson in reply to BlaiseP says:

            Pretty much. At the very least, I would assume that Progressive’s got its own in-house PR department…..why in the world would you have a Claims guy issuing/signing what amounts to a press release?

            The other thing here that seems weird to me, but maybe wouldn’t be if I had more experience with insurance defense, is that the attorneys representing Progressive (and, in practice, the defendant driver) were in-house counsel rather than outside counsel. Again, maybe that’s common in insurance defense, but I’ve never seen a major corporation try to represent itself in court through in-house counsel, with the possible exception of small claims-type cases. To an extent, doing this would seem to run up against the old truism about a “client for a lawyer and a fool for a client.”

            Maybe they knew they were unlikely to win, but wanted to try to block the claim anyhow, so proceeded as cheaply as possible, ie, without retaining outside counsel? Or maybe they were having a hard time finding outside counsel willing to take the case (not unheard of: http://www.popehat.com/2010/08/10/dont/)?Report

            • BlaiseP in reply to Mark Thompson says:

              Heh. I see the worthy Mr. Likko had a small contribution worth noting in this context:

              But the fact is, you did your client good service by being the grownup here because someone needed to do it, and obviously the thing made it all the way out of the subro department with no evidence whatsoever of any adult supervision.

              I did Sears Corporate Law, many years ago. They farmed out all sorts of work to local yokels. Some little old lady has a slip and fall on the ice in front of a Sears store in Des Moines, some Des Moines firm will handle the case. The corporate lawyers would just delegate and initial the paperwork and deposit farts in their leather arm chairs. Saw a lot of interesting stuff there. Corporate PR was on the next floor up in Sears Tower, they’d handle the local papers, “Tragickal Calamity Befalls Pillar of the Community at Local Emporium!” Corporate Law worked hard to keep on top of that stuff. I did Corporate PR’s system, too.Report

  11. joey jo jo says:

    is nationwide on your side? worst case of false advertising since lionel hutz, esq’s suit against the film The Never Ending Story.Report

  12. Brandon Berg says:

    There is of course the case of the Aetna student health plan holder who had to resort to twitter to get the company to actually pay for his cancer therapy

    That’s a grossly disingenuous summary of the story. They had a contract stipulating that they would pay up to $300,000, and they fully complied with the terms of their contract. They did absolutely everything he paid them for. Yeah, in retrospect he should have gone with a plan with a higher limit. That’s not Aetna’s fault.Report

    • Brandon Berg in reply to Brandon Berg says:

      Also, that $400/month premium has to be an error. I pay $100/month for my policy, which has a $2,000,000 annual limit. The deductible is high-ish, but when I checked out quotes for Arizona, I couldn’t find anything over $235/month, regardless of deductible.

      Maybe it’s $400/quarter?Report

      • Kazzy in reply to Brandon Berg says:

        My NY-based employer, which would likely qualify as a small or medium-sized business, offers group negotiated rates for an individual HMO for about $6,000/year, which works out to $500/month. I don’t know if student plans are considerably less (I’d actually bet that they are) but given that he is 30 (far older than the typical student), $400/month doesn’t seem outlandish.Report

        • Brandon Berg in reply to Kazzy says:

          Health insurance prices in New York seem to be nuts. I also notice that the site I’m checking (ehealthinsurance.com) has far, far fewer options for New York than for Arizona, and cost more, by a factor of 2-3.

          Arizona State University has a plan with a $250 deductible and $1,000,000 annual limit for $1600/year. I don’t know whether that’s his school (probably not, if his annual limit is $300,000), but it’s probably reasonably representative. It’s possible that he has a wife and/or children included in the plan, though.

          To be clear, I’m paying $100/month on the individual market, so that is the entire cost.Report

          • Kazzy in reply to Brandon Berg says:

            “To be clear, I’m paying $100/month on the individual market, so that is the entire cost.”

            YOU RAT BASTARD!

            My wife had a brief period where she was uninsured and we looked into choices on the individual market. We were in Maryland at the time which I almost have to assume had better rates than NY given what you’ve offered above. I remember being surprised at how reasonable the rates were given all the hullaballoo about the complete lack of affordability of insurance. Closer inspection revealed that most of these plans paled in comparison to those available through employers, though I’m sure they work for at least a sizable portion of the population just as well.

            Honestly, I think part of the problem has to do with choice. Go through your employer and you might have two or three choices, which generally break down as pay more, get more. Go online and you’ll get a bevy of options, some better than others, some cheaper than others, with a great deal of difficulty in determining what’s best.Report

            • Brandon Berg in reply to Kazzy says:

              Granted, I do have a $3500 deductible and $5000 out-of-pocket maximum, meaning that I can in theory be on the hook for up to $6200/year, including the premium. I can afford to take that hit a few times, and I think I’ve spent about $1000 in medical care over the last 12 years, so I’m not terribly worried.Report