An insurer that breaches a duty to defend its insured for a lawsuit will typically be held liable for the expenses the insured “incurred in defending the suit, including reasonable attorney’s fees and court costs.” Primrose Operating Co. v. Nat’l Am. Ins. Co., 382 F.3d 546, 559-60 (5th Cir. 2004). Depending on which state’s law controls a policyholder’s right to coverage, the insured may be able to rely on a presumption that the defense costs it incurred were reasonable, leaving the insurer with the burden to rebut that presumption.
Some states apply evidentiary presumptions for paid bills
In some states, paid bills in general are presumed reasonable as a matter of evidence law. Hawaii Rule of Evidence 303(c)(16), for example, provides: “A bill for goods or services that has been paid is presumed to be authentic and to embody fair and reasonable charges for the itemized goods or services.” Illinois Rule of Evidence 803(24) similarly treats a “paid bill as ... prima facie evidence that the charge was reasonable.” The Illinois Supreme Court has explained that “[t]he prima facie reasonableness of a paid bill can be traced to the enduring principle that the free and voluntary payment of a charge for a service by a consumer is presumptive evidence of the reasonable or fair market value of that service.” Arthur v. Catour, 833 N.E.2d 847, 854 (Ill. 2005).
Such rules have been applied to deciding whether attorney fees were reasonable. In Sorenson v. Fio Rito, 413 N.E.2d 47, 54-55 (Ill. App. 1980), the court looked to the presumption of reasonableness for paid attorney bills for taxation work. In Zapfel v. Xerox Corp., No. FST-X08-CV-166030461-S, 2022 Conn. Super. LEXIS 2262, at *25 (Stamford-Norwalk Jud. Dist. Super. Ct. Oct. 18, 2022), a case that found breach of a severance...
