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Doug Landau
Doug Landau
Attorney • (866) 735-1102 Ext 610

Can insurance companies and their lawyers be penalized for "frivolous defenses ?"

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In the past, we have explored some of the underhanded tactics that insurance companies employ to avoid paying a claim following an auto accident. Tactics such as computerized claims analysis and lawsuit abuse to delay settlement are frustrating to injured car accident victims and raise serious questions about the legal and ethical obligations that auto insurance companies have towards their consumers. The injured victims and their families expect good faith insurance claims handling, not delay tactics, computer generated settlement offers, superfluous paperwork and invasions of their (and their family’s) privacy.

Abuse of the legal system through the filing of frivolous claims and defense is one of the most concerning trends, as it infringes on the victim’s ability to seek timely redress against the auto insurance company. It is also concerning because it indicates that insurance defense attorneys are sometimes involved with the company’s stalling techniques. Faced with this troubling situation, what options does a judge have at their disposal to prevent this practice from happening and remedy it when it does occur?

As we have talked about in other contexts, anyone who files a lawsuit or is being sued is subject to the same basic rules of procedure. These are the rules of ‘fair play’ in a court of law, that are in place to make sure that the parties—in this case the insurance company—and their attorneys are behaving appropriately at every step of the trial. Some of these rules of procedure address the issue of truthfulness when filing any document in court. In Virginia, when an attorney submits a document on behalf of a client, that attorney must sign the document. The attorneys signature acts as a testament that the document is “grounded in fact” and “warranted by existing law.” The signature also indicates that the document is not being submitted “for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation.”

These rules of fair play, then, seek to prevent precisely the type of behavior that insurance companies and their attorneys are displaying when filing frivolous claims and defenses. To enforce these rules, a trial judge has the option of imposing sanctions on the attorney who signed the document. Those sanctions can require the insurance company to reimburse the other side for the amount of money spent—including attorneys fees—in relation to the frivolous claim.The judges are well aware that "two wrongs do not make a right." In other words, when a negligent driver causes permanent injury, and then this Defendant’s insurance defense lawyers stall and obfuscate to hide the truth and delay fair reimbursement for the harms and losses caused by the insured’s unsafe decisions and actions, the result is two wrongs perpetrated against the innocent victim.