Insurance DOI Complaint and Bad-Faith Demand — Kansas

Insurance DOI Complaint and Bad-Faith Demand (KANSAS)

Quick-Reference Summary

Part A — DOI Complaint Cover Letter

[LAW FIRM LETTERHEAD]
[Street Address]
[City], Kansas [Zip]
Phone: [________________________________]
Email: [________________________________]
Kansas Bar No.: [________________________________]

Date: [__/__/____]

SENT VIA:

☐ Online via KID Complaint Form (https://www.insurance.kansas.gov/consumers/file-a-complaint)
☐ Email: [email protected]
☐ Fax: (785) 296-5806
☐ U.S. Mail — Kansas Insurance Department, Attn: Consumer Assistance Division, 1300 SW Arrowhead Rd., Topeka, KS 66604

TO:

Kansas Insurance Department
Attn: Consumer Assistance Division
1300 SW Arrowhead Rd.
Topeka, KS 66604

Re: Consumer Complaint — Claim No. [_____] / Policy No. [_____]

Statement of Facts

On [__/__/____], the Insured suffered a covered loss under policy no. [______] and timely reported the claim on [__/__/____]. Despite proof of loss submitted on [__/__/____], the Carrier has [denied / delayed / under-paid / failed to investigate] the claim as follows: [_______________________________________].

Statutory Basis — Kansas Uniform Trade Practices Act (K.S.A. 40-2401 et seq.)

The Carrier's conduct constitutes one or more unfair methods of competition or unfair or deceptive acts or practices defined in K.S.A. 40-2404, including (check all that apply):

• ☐ § 40-2404(1) — Misrepresentations and false advertising of insurance policies (misrepresenting benefits, terms, dividends, or financial condition);
• ☐ § 40-2404(2) — False information and advertising generally;
• ☐ § 40-2404(9) — Unfair claim settlement practices, including:
• ☐ (a) misrepresenting pertinent facts or policy provisions;
• ☐ (b) failing to acknowledge and act reasonably promptly upon communications;
• ☐ (c) failing to adopt and implement reasonable standards for prompt investigation;
• ☐ (d) refusing to pay without conducting reasonable investigation;
• ☐ (e) failing to affirm or deny coverage within a reasonable time after proof of loss;
• ☐ (f) not attempting in good faith to effectuate prompt, fair, and equitable settlement of claims in which liability has become reasonably clear;
• ☐ (g) compelling insureds to institute litigation by offering substantially less than ultimately recovered;
• ☐ (h) attempting to settle for less than the amount to which a reasonable person would believe entitled;
• ☐ Other subsection of § 40-2404(9) as applicable.

Relief Requested

1. ☐ Open a Consumer Assistance investigation under K.S.A. 40-2401 et seq.;
2. ☐ Direct the Carrier to provide a written response within 15 days;
3. ☐ Determine whether the Carrier's conduct constitutes a general business practice subject to cease-and-desist and administrative penalties under K.S.A. 40-2407;
4. ☐ Refer producer/adjuster misconduct to Producer Licensing;
5. ☐ Preserve the Insured's right to pursue breach of contract, breach of implied covenant, K.S.A. 40-256 attorney fees, and (where applicable) K.S.A. 40-908 property fees, and any third-party bad-faith remedy.

Enclosures

• ☐ Authorization (signed)
• ☐ Certified policy with all endorsements
• ☐ Proof of loss; claim correspondence; denial letters
• ☐ Demand letter to Carrier (Part B)

The Insured acknowledges that the Department cannot act as the Insured's attorney, cannot file a private action, and cannot order payment. The Insured further understands that information submitted may be released under the Kansas Open Records Act.

Respectfully,

_______________________________________________
[Attorney Name], Kansas Bar No. [_______]

Part B — Demand Letter to Carrier (Breach of Contract + K.S.A. 40-256 Attorney Fees)

[LAW FIRM LETTERHEAD]

SENT VIA:

☐ Certified Mail, Return Receipt Requested — Tracking No. [________________________________]
☐ FedEx/UPS Overnight — Tracking No. [________________________________]
☐ Service on Kansas Commissioner of Insurance as statutory agent (foreign insurer) — K.S.A. 40-218

Date: [__/__/____]

TO:

[Carrier Name]
Attn: Claims Manager / General Counsel / Registered Agent
[Street Address]
[City], [State] [Zip]
With copy to: Kansas Insurance Department, Consumer Assistance Division

Re: Demand for Payment of Full Loss and Notice of Claim for Attorney's Fees Under K.S.A. 40-256 (and, where applicable, K.S.A. 40-908)
Insured: [________________________________]
Policy No.: [________________________________]
Claim No.: [________________________________]
Date of Loss: [__/__/____]

CONFIDENTIAL SETTLEMENT COMMUNICATION — K.S.A. 60-452a

I. Introduction

This firm represents [Insured] in connection with the above claim. This letter is a formal demand for payment of all benefits due under the policy and serves as notice of the Insured's intent to pursue breach of contract, breach of the implied covenant of good faith and fair dealing, and statutory attorney's fees under K.S.A. 40-256 (and K.S.A. 40-908 for actions on certain property-insurance policies), if this matter is not resolved by the deadline below.

[Where applicable in a failure-to-settle / third-party context, add: The Insured also reserves the right to assert third-party bad faith, which Kansas continues to recognize. Spencer v. Aetna, 227 Kan. 914 (1980).]

II. Summary of Claim

III. The Carrier Has Refused to Pay the Full Loss Without Just Cause or Excuse — K.S.A. 40-256

Under K.S.A. 40-256, if judgment is rendered against an insurance company and it appears the insurer "refused without just cause or excuse to pay the full amount of such loss, the court in rendering such judgment shall allow the plaintiff a reasonable sum as an attorney's fee . . . to be recovered and collected as a part of the costs." The Carrier has no just cause or excuse for its refusal to pay because:

1. [Specific facts — undisputed coverage; unambiguous policy language; uncontradicted proof of loss; comparable claims paid; coverage admitted by adjuster] [____________]
2. [No reasonable investigation supporting denial — file-review only; no inspection; ignored documentation] [____________]
3. [Carrier's denial reasons are pretextual or contradicted by its own claim file] [____________]

The fact that a tender was made before suit is filed cuts off § 40-256 fees only if the recovery does not exceed the tender; the Carrier's [low-ball] tender of $[__________] is far below the documented loss of $[__________] and does not preclude § 40-256 recovery.

IV. Property-Insurance Fees — K.S.A. 40-908 (where applicable)

If this claim involves a property policy "insuring real or personal property against loss" within the scope of § 40-908, the Insured will also seek attorney's fees under that section upon judgment, which (unlike § 40-256) applies regardless of the carrier's just-cause defense for the categories listed.

V. Breach of Contract and Implied Covenant of Good Faith and Fair Dealing

The Insured will pursue breach of contract and breach of the implied covenant of good faith and fair dealing (tied to specific express terms of the policy — Wayman v. Amoco Oil Co., 923 F. Supp. 1322 (D. Kan. 1996)) including the Carrier's duties to:

• Investigate the claim reasonably and promptly;
• Affirm or deny coverage within a reasonable time after proof of loss;
• Pay the full amount of loss for which liability has become reasonably clear;
• Communicate with the Insured in good faith and not advance pretextual coverage defenses.

VI. Trade Practices Violations — Admissible to Show "No Just Cause"

While K.S.A. 40-2404 does not create a private right of action (Jahnke v. BCBS Kan., 51 Kan. App. 2d 678 (2015)), violations are admissible in a breach-of-contract action to show the Carrier's refusal was without just cause or excuse under § 40-256. The Carrier has violated:

• ☐ K.S.A. 40-2404(9)(a) — misrepresentation of policy provisions;
• ☐ K.S.A. 40-2404(9)(b) — failure to acknowledge and act promptly;
• ☐ K.S.A. 40-2404(9)(c) — failure to implement reasonable investigation standards;
• ☐ K.S.A. 40-2404(9)(d) — refusal to pay without reasonable investigation;
• ☐ K.S.A. 40-2404(9)(e) — failure to affirm/deny within reasonable time;
• ☐ K.S.A. 40-2404(9)(f) — failure to attempt in good faith to effectuate prompt, fair, and equitable settlement where liability is reasonably clear;
• ☐ K.S.A. 40-2404(9)(g) — compelling litigation;
• ☐ K.S.A. 40-2404(9)(h) — settling for less than reasonable.

VII. Damages

VIII. Time-Limited Settlement Demand

The Insured demands tender of $[__________] (policy limits / specified amount) on or before 5:00 p.m. Central Time on [__/__/____] (not less than 30 days from receipt). If the Carrier fails to tender the full amount of the loss, the Insured will sue for breach of contract and seek attorney's fees under K.S.A. 40-256 / § 40-908 and, after final judgment, will if necessary seek an injunction under K.S.A. 40-219 barring the Carrier from doing business in Kansas until the judgment is paid.

IX. Litigation Hold / Preservation Notice

The Carrier and its claims handlers, supervisors, vendors, IMEs, file-review providers, SIU personnel, and outside counsel are directed to preserve:

• ☐ Complete claim file (paper, electronic, claim-notes platform);
• ☐ Adjuster diaries, reserve histories, escalation memos;
• ☐ Recorded statements (Kansas is a one-party consent state);
• ☐ Communications with vendors, IMEs, peer-review providers, surveillance;
• ☐ Claim-handling manuals, training materials, bulletins for the policy period;
• ☐ Underwriting file, ISO/CLUE reports;
• ☐ ESI metadata, audit logs, system access records.

X. Reservation of Rights

The Insured expressly reserves all rights and remedies under contract, K.S.A. 40-256, K.S.A. 40-908, K.S.A. 40-219, the implied covenant of good faith and fair dealing, and third-party bad faith (where applicable).

Respectfully,

_______________________________________________
[Attorney Name], Kansas Bar No. [_______]
[Law Firm], [Address], [Phone], [Email]

Part C — Pre-Filing Checklist

• ☐ Confirm Kansas nexus (risk located in KS or policy issued in KS)
• ☐ Obtain certified policy with all endorsements
• ☐ Document the formal pre-suit demand for full loss; preserve proof of delivery
• ☐ Run SOL: 5 years for written contract (K.S.A. 60-511); 3 years for oral
• ☐ Confirm any contractual suit-limitation provision (most KS property policies use 5-year suit clause; auto/UM vary)
• ☐ Build "no just cause or excuse" record for K.S.A. 40-256 fees (carrier knew or should have known coverage was due)
• ☐ Evaluate whether claim falls under K.S.A. 40-908 (property insurance) for additional fee predicate
• ☐ Identify any third-party bad-faith failure-to-settle predicate (excess exposure, insured's written demand to settle within limits, carrier's refusal)
• ☐ Submit dual-track: KID complaint (Part A) + Carrier demand (Part B) simultaneously
• ☐ Plead breach of contract; breach of implied covenant tied to specific express term (Wayman); statutory attorney fees
• ☐ Do NOT plead first-party "tort of bad faith" — Spencer v. Aetna bars it
• ☐ Calendar 30-day demand deadline; 15-day insurer response to KID
• ☐ Issue litigation hold to client and spoliation notice to carrier
• ☐ Identify experts: claim-handling, damages, treating providers
• ☐ Preserve ability to seek K.S.A. 40-219 injunction post-judgment if Carrier refuses to pay

Sources and References

• Kansas Insurance Department — File a Complaint: https://www.insurance.kansas.gov/consumers/file-a-complaint
• KID Homepage: https://www.insurance.kansas.gov/
• KID Consumer Complaint Form (PDF): https://insurance.ks.gov/documents/department/complaint_form.pdf
• NAIC SBS Kansas Complaint Form: https://sbs.naic.org/solar-web/pages/public/onlineComplaintForm/onlineComplaintForm.jsf?state=KS
• K.S.A. 40-2404 (Unfair Methods / Unfair Deceptive Acts): https://ksrevisor.gov/statutes/chapters/ch40/040_024_0004.html
• K.S.A. 40-2407 (Cease and Desist; Penalties): https://ksrevisor.gov/statutes/chapters/ch40/040_024_0007.html
• K.S.A. 40-256 (Attorney's Fees — Refusal to Pay): https://ksrevisor.gov/statutes/chapters/ch40/040_002_0056.html
• K.S.A. 40-908 (Attorney's Fees in Property-Insurance Actions): https://ksrevisor.gov/statutes/chapters/ch40/040_009_0008.html
• K.S.A. 40-219 (Injunction; failure to pay loss within 3 months of final judgment): https://ksrevisor.gov/statutes/chapters/ch40/040_002_0019.html
• Spencer v. Aetna Life & Cas. Ins. Co., 227 Kan. 914, 611 P.2d 149 (1980): https://law.justia.com/cases/kansas/supreme-court/1980/51946-0.html
• Jahnke v. Blue Cross & Blue Shield of Kan., 51 Kan. App. 2d 678, 353 P.3d 455 (2015)
• Wayman v. Amoco Oil Co., 923 F. Supp. 1322 (D. Kan. 1996)
• Kansas Attorney General — Consumer Protection: https://ag.ks.gov/complaint-center