Mich. Democrats take aim at insurance denials

By DAVID EGGERT | Associated Press Writer
    5:37 PM CDT, July 13, 2009


ALAIEDON TOWNSHIP, Mich. - Insurance companies would face millions of dollars in fines, damages and attorney fees for denying or delaying valid claims under legislation a state House committee is preparing to debate.

Supporters of the bills, including several Democratic lawmakers, upset policyholders and an industry whistle-blower, met with reporters Monday to announce the legislation, which the Democratic-led House Insurance Committee is expected to approve by week's end. They say Michigan is one of four states without serious financial penalties when a court rules an insurer has not fairly settled a claim.

Democratic Gov. Jennifer Granholm's administration supports the proposed legislation, but it would likely stall in the Republican-led state Senate, which strongly supports the state's influential insurance industry.

Jo Anne Katzman, a former Allstate Insurance Co. adjuster who handled homeowner claims, told reporters at a brain injury rehabilitation center outside Lansing that employees at the company's branch in Farmington Hills were routinely told to deny claims or, if the Michigan office had spent too much in one month, delay writing checks to policyholders until the following month.

Katzman said employees were encouraged to send claims to a special investigations unit, which she said stops making payments to policyholders living elsewhere while their home is being repaired.

Workers who followed the policies were rewarded with desk refrigerators and clothing, she said.

"We were actually told that our jobs depended on it, that this office was in danger of closing if we kept our claim numbers as high as they had been in Michigan," Katzman said.

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