The claims examiner said she thought the single visit to a doctor and continued use of cardiac drugs were contrary to Vining's statement that he was in good health. At the same time, Enterprise's sales people emphasized that prospects need only be between 18 and 65 years of age to buy insurance. Company manuals said nothing about health or about salespeople gathering health information. Enterprise's practices were highly profitable. The normal loss ratio in the life insurance industry is about 50 percent, a level required by regulations in several states.
Insurance companies have a legal duty to deal fairly and in good faith with their policyholders.
Bad-faith claims focus on the unreasonableness of the company's conduct. Nevertheless, an insurance company can litigate a claim when there is a legitimate dispute about coverage or amount of the claim. Enterprise wanted appellate judges to rule that its dispute in the Vining case was legitimate. Judges refused to agree. Billie, said the court, established a deliberate and willful pattern of abuse by Enterprise as it handled claims under its policies.