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SC Supreme Court Says Meth is Not a Narcotic in Bad Faith Insurance Suit

In Bad Faith Insurance Ruling, Supreme Court Says Narcotics Have Legal Definition Already

According to South Carolina Code Ann. § 38-71-370(9), insurance carriers can exclude coverage in their policies if the insured is injured or dies while under the influence of alcohol or “any narcotic unless taken under the advice of a physician.” This leaves the definition of narcotic open to interpretation from the insurance company – which constitutes bad faith insurance policies, according to the South Carolina Supreme Court.

In a recent case appealed to the state’s Supreme Court, a truck driver died in a one-vehicle accident while under the influence of both amphetamines and methamphetamines. Although the death certificate named “blunt chest trauma in motor vehicle crash” as the cause of death, it did list the decedent’s illegal narcotics use as contributing to cause of death. The decedent’s insurer, Liberty Life, said that they would not award insurance money because of the narcotic use.

The policy explicitly states:  “A Benefit will not be payable under this Certificate if your Accidental Death results directly or indirectly from: (h) injury as a result of the insured being under the influence of any narcotic unless administered on the advice of a physician and taken in the dosage prescribed.”

The Court in Hutchinson reiterated South Carolina’s law governing narcotics use and insurance. However, the case was appealed to South Carolina’s Supreme Court.

The Supreme Court found that the Court of Appeal’s test for what constitutes a narcotic was in error. They held that the insurance company used the term “narcotic,” which has a well-defined legal and medical definition, instead of “unlawful drug” or “unlawful use of drug.”

Although methamphetamine is a very strong and illegal drug, S.C. Code Ann. §44-53-110 et seq. states plainly that it is a controlled substance but not a narcotic. Basically, methamphetamine is a stimulant, and “narcotic” is defined specifically as a depressant. Opioid painkillers, for example, are narcotics.

The court used rules of insurance policy construction which states that “[i]f there is any ambiguity . . . it must be construed in favor of the petitioner.”

Revising the definition of “narcotic” to something so specific helps protect policy holders and their loved ones from bad faith insurance practices. While the driver’s use of methamphetamine was still illegal, the company could not use the term “narcotic” in their policy to deny payout of the life insurance policy.

Bad Faith Insurance Disputes Are Emotionally Painful

Losing a loved one is hard, and sometimes unscrupulous life insurance companies can make it harder. Many times following the death of a loved one, a life insurance company may act in bad faith and dispute a claim. This can increase the burden on those who have just lost a family member or loved one.

Reasons why a life insurance company may dispute a claim can include:

  • Breach of contract on part of the insurance company
  • Bad faith on part of the insurance company
  • Disputes among beneficiaries
  • Undisclosed preexisting injury
  • Improper claim application
  • Long-term illness or suicide
  • Failing to complete a change in beneficiary according to the policy’s provisions
  • Distribution of proceeds by a third party without the written consent of the surviving spouse
  • Whether the policyholder was competent when the beneficiaries were designated
  • Whether an accident was the true cause of death

The Strom Law Firm Can Help with Bad Faith Insurance

Dishonest Insurance companies can take anything written on the life insurance application and try to spin in another way and deny payment, even if policyholders have been paying premiums on the policy for years. Life insurance companies may also offer you less than you deserve when trying to settle the dispute. The business litigation and bad faith insurance attorneys at the Strom Law Firm can help. We offer free consultations to discuss the facts of your case, so do not hesitate to contact us for help. 803.252.4800



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