Insurance maze, delays try doctor’s patience

More than 11 years after a fire destroyed his million-dollar home in Hampton Falls, along with his collections of paintings, antique cars, motorcycles and other valuables, Dr. Terry Bennett is still battling with the insurance company over coverage.

“The average person would have given up long before this,” he said, yet Bennett has pressed for a hearing before the New Hampshire Insurance Department, while acknowledging that his tenacity has him “writing very large checks to lawyers.”

What he and his lawyers are claiming is that ITT Hartford (now known as The Hartford Financial Insurance Group) and its subsidiary, Twin City Fire Insurance Company, acted illegally in deleting replacement cost coverage from his homeowner policy without notifying either Bennett or his insurance agent. The Insurance Department has twice denied a hearing on the matter, though its initial denial was later overturned by the state Supreme Court. The latest request for a hearing was submitted to the department on Oct. 8.

Bennett purchased the insurance on his home about six weeks before it was destroyed in the Aug. 2, 1993, fire. Though his agent wrote a binder on the home for $1 million, Bennett also purchased, for an additional $1 premium, replacement cost coverage for the house and its contents. The agent, he said, told him the insurer would have an assessor come out to make an appraisal of the property within about two weeks. That never happened, he said.

“We have an expert builder who builds custom homes who says that house couldn’t have been built for less than $1.6 million,” Bennett said. The company eventually paid him, according to the terms of the policy, $1 million for loss of the house and an additional $700,000 (70 percent) for the contents. He also received $200,000 for living and relocation expenses. But Bennett maintains the replacement coverage he purchased entitled him to an additional $600,000 in coverage for the house and $420,000 for the contents — or $1.3 million more than he received.

“They saved themselves over a million dollars by a stroke of the pen,” he said. “If I had altered a contract that way, I’d be talking to you from prison.”

Unheld hearing

His first contact with the insurance company, he recalls, was when an investigator showed up at his Rochester clinic and informed him the company was investigating the possibility of arson.

“They were concerned about the timing of it,” Bennett said, since the fire occurred so soon after his purchase of the policy. “I wasn’t too pleased with it myself.”

An investigator for the insurance company later determined that the fire started in a clothes dryer in the basement. The insurer later informed Bennett it was planning to bring suit against the manufacturer, General Electric. The company forbade him, he said, from pursuing any investigation or legal action of his own, threatening him with loss of payment if he did.

“They said they were going to sue GE. They would collect and I would collect and everybody would be made whole.” For whatever reason, that effort never got very far. “They dropped their investigation after 10 days,” Bennett said. Though the investigators held the dryer in storage for four years, they made no effort to contact General Electric concerning the cause of the fire, according to a Supreme Court finding in April of this year. (Terry Bennett v. ITT Hartford Group Inc.)

Bennett finally did hire his own investigators and sued GE in a case that was settled out of court. He also sued the insurance company for preventing him from going after the manufacturer for three years, thereby impeding his ability to gain restitution for damages. That suit also was settled out of court.

It was when he brought a lawsuit against his agent, Mark Rowley of United Risk Management, over the dropped replacement cost coverage that Bennett discovered it was an underwriter for the insurance company who had deleted it.

The Hartford claims its underwriting guidelines prohibited it from writing the enhanced coverage on property valued at more than $750,000. The company claims it notified Bennett of the decision, though Bennett insists he received no such notice. An affidavit from Rowley states the agent was never notified of the change.

In May 2003, Bennett and his lawyers requested an Insurance Department hearing to determine if The Hartford acted illegally. A notice of hearing was issued by then-Insurance Commissioner Paula Rogers, but was later cancelled by Hearings Officer Leslie Ludtke without prejudice to the department’s right “to conduct further investigation into this matter and to take whatever further action it may deem appropriated and warranted under the statute.”

Bennett’s appeal went to the New Hampshire Supreme Court, which ruled in favor of the petitioner.

The hearings officer had withdrawn the notice because the commissioner had not stated the department had reason to believe the company’s actions had constituted an unfair and deceptive practice. (The notice issued by Commissioner Rogers stated there was reason to believe Hartford’s actions “may have” constituted an unfair trade practice.)

Ludtke also based her dismissal on the grounds that the notice did “not propose any regulatory sanction, thus raising a question as to the basis for the determination that a hearing on this matter would be in the public interest.”

The high court ruled that, since the statute does not require a proposed sanction as a necessary condition for a hearing, the hearing officer erred on that ground.

As to the wording of the notice, the court ruled that the commissioner’s words “may have” merely indicated that a violation of the statute had yet to be conclusively established. “Indeed, the purpose of the subsequent hearing would be to determine whether a violation actually occurred,” wrote Chief Justice John Broderick for a unanimous court.

The court ordered the Notice of Hearing reinstated. But in sending the case back to the Insurance Department, the justices said the opinion did not prevent “the insurance commissioner from exercising whatever discretion he may have to act upon the notice upon remand.”

The department later dismissed the notice a second time, citing a number of reasons disputed by the petitioner. The department said it had approved the underwriting guidelines, cited by Hartford, that ruled out replacement cost coverage for homes valued at more than $750,000. It also cited a letter in the insurance company’s file advising Bennett of the policy change.

Still waiting

Even as Bennett insists he never received any such letter, his attorneys, Charles Douglas III and Benjamin King of Concord, say there is no record at the Insurance Department of the company ever filing or the department ever approving the disputed underwriting guidelines.

“All we’re doing is asking for a hearing. It’s not a monumental request,” King said. “We’re asking them to follow through on their duty to police insurers in this state and to sanction unfair insurance practices where they occur. For reasons baffling to us, the Insurance Department seems to be going to extraordinary lengths to avoid doing their duty.”

Insurance Commissioner Roger Sevigny said a decision on the hearing request would be forthcoming “within a week or two, I guess.”

Sevigny said, “I’ve got my department counsel looking into it.”

The commissioner said he could not comment on the claims being made by either Bennett and his lawyers or the insurance company.

“I’d be doing a disservice if I got into that with you,” he said. “I’m not going to try this thing in the press. I’m going to be totally forthcoming and up front and do what’s appropriate.”

King said the finding by the Insurance Department of an unfair practice on the part of the company could be the basis for further litigation.

“We’re looking for Hartford to honor its agreement to pay the replacement cost to make Dr. Bennett whole for his losses,” the attorney said.

The company declined a request for an interview for this story and instead issued the following statement: “The Hartford has been fully compliant with the New Hampshire Insurance Department in this matter and we expect this complaint to be dismissed.”

But after fighting the company for 11 years, Dr. Terry Bennett does not plan to stop fighting anytime soon.

“I think the ITT Hartford management concluded a long time ago that fraud is profitable,” he said. “They made me mad and I’m a bad guy to get mad, because I’ll make them very famous. And eventually, I’ll prevail.”