Maryland Defense Counsel, Inc. Promoting justice. Providing solutions

Spring 2014
Download pdf here »

The Defense Line: Spring 2014

Featured Articles



box top

Membership Criteria

Membership is open to practicing attorneys who devote the majority of their litigation-related time to the defense of civil litigation. The cost is $150.

Join MDC

(Volume discounts for law firms and reduced rates for government attorneys. Click here for information.)

box bottom

Get Adobe Reader

The Defense Line: A Publication From The Maryland Defense Counsel, Inc.

Macro Look at MIA Bad Faith Cases

Robert L. SiemsYosef KupermanRobert L. Siems and Yosef Kuperman

Under Maryland’s Insurance Code, §27-1001 et seq., insureds bring first party bad faith claims with the Maryland Insurance Administration (“MIA”). From there, the parties can choose to appeal to the Office of Administrative Hearings or the local Circuit Court.

About half of bad faith cases in any given year settle. Of those cases that reach a merits decision, the insurer usually wins. In 2013, the worst year for insurers so far, the insurers won 75% of merits decisions.

We pulled all the data in this article from the MIA’s annual reports. The annual reports cover 2007-2008 until 2013. The 2007–2008 report covers two years for administrative reasons. We treat the data from the report as a single unit for reasons of convenience.

MIA Cases Filed

The MIA’s workload has steadily declined since it started the reports. 2012 saw approximately less than half of the total cases in 2007-2008. But numbers climbed for the first time in 2013.

MIA Cases Excluding Those Without Jurisdiction

If you exclude cases dismissed for lack of jurisdiction (see data summarized below), the graph looks slightly different. The decline in cases prior to 2013 becomes far more pronounced.

MIA Cases Decided On Merits

When you narrow it down to how many cases were decided on the merits in any year, excluding both improperly filed cases and settled cases, the numbers still show the same basic trend.

MIA Cases by Line of Business

The MIA Reports classify their cases by line of business. In the first year, they listed what percent of all cases filed came from what line of business. In later years, they listed what percent of all cases decided on the merits came from what line of business.

Misc. includes “miscellaneous”, “commercial”, and “trademark”. In 2007–2008, the report used “Auto” instead of UM, but later reports switched to UM. “Home” includes “Renters.”

MIA’s caseload originally overwhelmingly consisted of UM / Auto cases, but the proportion has decreased as the number of cases has declined. 2013 was the first year that Auto/UM did not constitute a majority of the cases involved.

Reasons for Grievance

The MIA also reported the reason for cases in the first two reports.

MIA Case Dispositions

The MIA Report tracks what happened to cases. Both the number and the percentage appear on the chart.

Two things stand out:

  • First, Insurers usually win merits based decisions. The MIA has not found an absence of good faith more than four times in a year.
  • Second, between a third to a half of all cases are Settled, Withdrawn, or Dismissed. We do not know what happened to those cases.

Office of Administrative Hearings Appeals

Circuit Court Appeals

Lessons Learned

Claim Handling Mistakes

  • Taking enormous amounts of time to make simple determinations.
  • Making low-ball offers, including offers for less than the insured’s quantifiable damages.
  • Making offers to settle a case without any basis in the facts, especially if made before gathering the facts.
  • Making offers to settle a case based on highly selective readings of the facts, especially if you base the offer on ignoring your own staff’s repeated recommendations and your own doctor’s report.
  • Sending the insured a barrage of offers (especially low-ball offers), one after another, in a short period of time.
  • Sending a low-ball offer to “fish” for counter-offers or sound out an insured’s position.
  • Changing claim handlers midway through handling the case (especially if done several times) and losing continuity between the different claim handlers during the process (especially if you make the claim handlers reevaluate each other’s work or recant on their predecessor’s positions without a good reason.)
  • Not communicating with other claim handlers handling related claims at the same company.

Lawyering Mistakes

  • Not filing all required documents. Not filing a complete claims file, for example, is apparently a procedural default. (That said, the MIA will proceed to find the facts on the record showing bad faith anyway.)
  • Making spurious legal arguments that ignore precedent. The MIA notices.
  • Refusing to pay despite known and obvious legal obligations to do so.
  • For plaintiffs, not submitting an detailed bill for legal fees showing how you earned them. In 2013, the MIA denied two plaintiffs their attorney’s fees for failure to show how those fees will earned.

Robert L. Siems is principal in the Law Offices of Robert L. Siems, P.A. His practice is primarily first and third party coverage litigation, extra contractual insurance claims, insurance bad faith, insurance defense, complex litigation, and ADR. He is certified as a chartered property casualty underwriter. Mr. Siems previously has spoken for various professional groups on his areas of practice. He is a member of the Maryland State Bar Association, Inc., American Bar Association, Maryland Defense Counsel, Inc. and the Defense Research Institute. Mr. Siems earned his B.A. degree from the University of Miami, his J.D. degree from the University of Baltimore and his M.B.A. degree from Loyola College.

Yosef Kuperman is a recent graduate of the University of Baltimore School of Law, Class of 2014. He has worked as a law clerk for the Law Offices of Robert L. Siems, and he plans to take the July 2014 Bar Exam. He hopes to practice civil litigation in Baltimore.

Maryland Defense Counsel, Inc.
1218 Broadway Rd.
Lutherville, MD 21093
Phone 410-560-3895
Fax 443-705-0217