Extortion is defined as the obtaining of property from another, with his consent, induced by a wrongful use of force or fear. The fear may be induced by a threat or even vague intimations to publicly accuse the individual of a crime or impute disgrace to him. Although pre-litigation demands for settlement are generally legal, there is a line at which they become extortion and actionable as abuses of the civil process.
In recent years, various auto insurance carriers have crossed this line by threatening to file federal lawsuits accusing the doctors who treat auto accident victims of criminal fraud unless the doctor immediately agrees to stop billing the insurer going forward.
We have described in previous articles how and why auto insurers have used invented accusations of fraud against treating doctors to generate billions of dollars in profit and prevent people injured in accidents from recovering fair compensation for their injuries. For over twenty years, we have fought to expose this scheme for what it is on behalf of injured victims and doctors across the country. Two recent decisions in cases we are handling against State Farm in Kentucky and Florida demonstrate that the fight is both worthy and winnable.
In State Farm v. Injury Care Chiropractic, Civ. No. 20-819 (Western District Kentucky), on September 28, 2021, the federal court granted our Motion to Dismiss State Farm’s claims for common law fraud, unjust enrichment, and declaratory judgment against a chiropractic practice in Louisville which specializes in treating auto accident patients. The Court agreed that Kentucky’s Motor Vehicle law precludes State Farm’s fraud, unjust enrichment and declaratory judgment claims in their entirety.
In the wake of the Court’s order dismissing State Farm’s obviously overblown “fraud” claims, we have filed a Counterclaim against State Farm for Abuse of Process. Our Counterclaim explains that it has become State Farm’s preferred manner of attack across the country to threaten doctors with massive federal fraud lawsuits unless they sign a “Confidentiality, Tolling and Moratorium Agreement” and engage in “settlement” talks. But the only “settlement” State Farm is ever interested in with doctors who treat auto accident patients is forcing them into a “no-bill” agreement in which the doctor waives any right to payment on pending bills and promises never to bill State Farm again.
Faced with a choice between State Farm’s extortionate demands and the crippling legal expense and reputational damage caused by the mere filing of a federal fraud lawsuit, countless doctors across the country have had little practical choice but to capitulate. But because a future “no-bill” requirement is not a remedy actually available to an insurer even if their threatened lawsuit had any merit, the demand for a “no-bill” agreement under threat of litigation is a blatant abuse of the civil process. Our Counterclaim in Kentucky seeks to hold State Farm accountable for exactly this conduct against our clients there.
We are separately seeking to hold State Farm accountable for such abuse in Florida in a case captioned Abramson v. State Farm, No. 21-008844 (17th Judicial Circuit, Broward County). Unlike in the Kentucky matter, our doctor client in Florida retained us immediately upon receiving State Farm’s “Moratorium” agreement and demand for “settlement” talks. We were able to advise the doctor of the specific threat State Farm was making and the “no-bill” promise which was its true aim, and the doctor authorized us to immediately seek a declaratory judgment that the entire underlying premise of State Farm’s threat was simply made up. (We have written about this bogus premise, the “predetermined treatment protocol,” in previous articles.). On June 11, 2021, the Broward County Court entered judgment against State Farm in our clients’ favor, which judgment State Farm is still fighting to avoid.
Weaponizing accusations of fraud has been a winning strategy for insurers in their never-ending quest to avoid actually providing the coverage they promise. Because they know it works to reduce by billions of dollars the amounts they rightfully owe, insurers have developed entire claims handling models designed to paint every person who claims a personal injury as a liar or exaggerator. Accusing the doctors who treat such injured patients as also being liars or exaggerators is part and parcel of the strategy.
But the strategy only works if injured victims and their doctors let themselves be intimidated. Mark Twain was right when he said that a lie travels halfway around the world before the truth even puts on its shoes, and that was a hundred years before the internet gave the liars of the world keyboard control over every truth. But if you have been injured through no fault of your own and an insurance company is making you feel like the bad guy, or if you are a doctor who treats injured accident victims and an insurer is threatening to call you a fraud for doing so, do not give in to the intimidation.
The truth can catch up.
If you are an injured victim of negligence being treated unfairly by an insurance company, or if you are a doctor being targeted by a false accusation of fraud in the treatment of injured accident victims, please feel free to contact me directly at andrew@barattarussell.com or 215-914-2222.
