CUNA Mutual seeks new trial after $6.2M verdict

CUNA Mutual says court committed foul by letting jury see internal documents

RAPID CITY, S.D. (allCUnews.com) – A Wisconsin-based insurance company filed a motion Aug. 6, 2009, requesting a new trial after a federal jury returned a $6.2 million verdict against the company for failing to pay a dying woman's insurance claim.

TERI POWELL'S ATTORNEYS: Mike Abourezk and Alicia Garcia, Rapid City, South Dakota, (605) 342-0097; mike@abourezk.comThis e-mail address is being protected from spam bots, you need JavaScript enabled to view it

CUNA MUTUAL INSURANCE SOCIETY: James Hofert and Jennifer Gust, Chicago, (312) 704-3775

ATTACHMENT: CUNA Mutual's brief seeking new trial, filed at 5:33 PM CST Thursday

RAPID CITY, S.D. – A Wisconsin-based insurance company filed a motion Aug. 6, 2009, requesting a new trial after a federal jury returned a $6.2 million verdict against the company for failing to pay a dying woman's insurance claim.

On June 12, 2009, a 12-member federal jury from the Western District of South Dakota returned the $6.2 million verdict against CUNA Mutual Insurance Society for bad faith, a verdict that included punitive damages that required proof of malice, fraud or oppressive conduct.

Teri Powell died shortly after filing her case in 2006, but her attorneys Mike Abourezk and Alicia Garcia presented her case June 1, 2009, arguing CUNA Mutual rejected Powell's claim for disability coverage, even after learning she was dying of cancer. The jury also heard evidence of 18 other policyholders whose claims fit the same pattern as Powell's claim, Abourezk said.

"CUNA created a program to deny thousands of claims based on an exclusion that didn't really exist," Abourezk said. "If someone started getting too close to the secret, CUNA usually offered a quick out-of-court settlement. We discovered the secret but turned down the settlement. Now it's public record."

CUNA Mutual – based in Madison, Wis., and with offices in Waverly, Iowa, and Dallas and Fort Worth, Texas – filed its brief late Thursday afternoon arguing for a new trial with the Federal District Court in Western South Dakota. In the 37-page document, the company says federal judge Karen E. Schrier unfairly allowed the jury to see evidence of how the company denied thousands of other claims, and to see CUNA's spreadsheets tracking the amount of money involved in each denial.

The company also says it was unfair to allow the jury to see court documents in which CUNA initially claimed the spreadsheets didn't exist.

Now the company – which bills itself as a leading provider of financial services to cooperatives and credit unions with reported 2008 assets of $13.2 billion – is trying to sweep the South Dakota jury's verdict under the carpet, Abourezk said.

"As a result of this trial, CUNA is scrambling to go back and pay claims it earlier rejected, but CUNA Mutual isn’t giving its customers the full story behind the sudden change of heart," Abourezk said. "The company got caught and is now trying to give the money back before policyholders figure it out and start suing the company."

In 2002, Teri Powell retired from teaching high school Spanish in Rapid City, S.D., where she had worked for 27 years. She retired due to rheumatoid arthritis, osteoarthritis, progressive joint disease, spinal scoliosis, hypertension, PTSD and auto immune disease.

Despite her condition, Powell tried unsuccessfully to support herself through pet sitting and selling handmade hats. In 2005, she learned she had cancer and had surgery to remove a tumor. A few months later, she filed a claim under her disability insurance with CUNA Mutual.

CUNA Mutual denied the claim, saying it needed to investigate whether she was disabled. Meanwhile, Powell received news her cancer had returned, and she was terminal. On July 24, 2006, CUNA Mutual again denied Powell's claim after learning her cancer had returned.

Dying of cancer and rejected by CUNA Mutual, Powell looked into a camera two years ago and explained why she was suing her insurance company.

"If they are doing this to me, they are doing it to a lot of people, maybe some that are even worse off than me," she said. "So if I can do something to help, this is my chance.

"Just how sick do I have to be, to be disabled under CUNA?"

During her testimony, CUNA Mutual's lawyers asked her if she couldn't still work as a pet sitter or sell handmade hats. After her testimony, the company still refused to pay. Powell died 30 days later.

Two weeks after she died, CUNA sent a letter to Powell's home, thanking her for choosing CUNA insurance protection and saying it had accepted her claim for disability benefits.

Before her death, Powell's friend, Sharon McElgunn, promised Teri she would continue her case.

She kept her promise, even though it took three years to do it.

TERI POWELL’S VIDEO TESTIMONY: http://www.abourezklaw.com/headlines-14.html
NEWS ARTICLE ON VERDICT: http://www.rapidcityjournal.com/articles/2009/06/12/news/top/doc4a332cf8...