Thursday, May 26, 2005

CBS Sportsline Owes United of Omaha an Apology

For this article, and especially the headline link on that takes you to the article. It reads "Insurer scams Earnhardt's widow."

The basic point of the story is that there is an ongoing civil suit between Dale Earnhardt's widow and race team and one of his insurers, United of Omaha. The disputed question is whether the $3.7 million insurance policy covering the type of accident that resulted in Mr. Earnhardt's unfortunate death ever came into effect. The insurance company argues that it did not, because Mr. Earnhardt failed to take the required physical before the accident. Mr. Earnhardt's racing team is pursuing the claim against the insurer on behalf of Mr. Earnhardt's widow that the denial of coverage was improper (full disclosure: I spend a significant chunk of my professional time defending insurance companies from cases like these, although United of Omaha is not, to my knowledge, a client of my firm).

From the facts presented in the story, it is impossible to tell if the insurance company was correct to deny coverage in this case. Undoubtedly, it was a poor public relations move, but for $3.7 million, I'm sure the company is willing to take a little heat. In my experience, insurance companies are pretty strict in their interpretation of their policies, and do sometimes get a little overzealous in their denial of coverage. However, their major concern is almost always getting whether or not to provide coverage right, and they spend a lot of money on legal fees to make the correct determination. The quote in the story from the racing team's lawyer is curious: that an insurance company "has a duty to find out why a claim should've been paid." Um, no. If the physical was a precondition of coverage (which will be a matter of policy interpretation), then Mr. Earnhardt's not getting it done meant that the insurance company was correct in not paying. There is no obligation for insurance companies to find reasons why they should pay a claim if there are cut and dried reasons for it not to be paid.

I included the above discussion to emphasize the point that there appears to be a legitimate dispute here, but that there is a good chance that the insurance company was correct to deny coverage. Getting back to the headline for the sportsline story then, does it sound like the insurer "scammed" Mr. Earnhardt's widow? No. This appears to be a fairly run of the mill insurance coverage case, made more sensational by the identities of the parties and the sad factual background. Using that kind of headline for this kind of case is muckraking, pure and simple.

There was no "scam" here, and even worse, the headline makes it sound like there already was a verdict or judgment against United of Omaha, when in fact the case is merely in the opening argument stages. Way to prejudge the case, folks. I wonder if the reporter on the story has analyzed the insurance policy? Somehow I doubt it.

I think that sporstline should post a correction to clarify that there is an ongoing civil, not criminal, suit against United of Omaha, and should apologize to United of Omaha for the implication that it "scammed" Mr. Earnhardt's widow. I am emailing this post to sportsline, and to the reporter if I can find the address, and I will post any reply I get.


Anonymous Dave said...

Definitely one of those situations where the wire article begins with an inflammatory statement from one party's counsel and the headline writer states it as fact without attributing it as a quote.

4:06 PM  

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