In an opinion predicting Pennsylvania state law, the Third Circuit Federal Court of Appeals ruled that punitive damages awarded against an insured in a personal injury suit are not recoverable in a later breach of contract or bad faith suit against the insurer. In Wolfe v. Allstate, the Court examined Pennsylvania’s long-standing public policy regarding the uninsurability of punitive damages and predicted that the Pennsylvania Supreme Court would conclude that, in a bad faith action against an insurer, an insured may not collect as compensatory damages the punitive damages awarded against the insured in the underlying suit. In this case,
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Archives for Insurance Bad Faith
NJ Court Denies Insured’s Attempt to Reform Policy Post-Accident to Increase UI/UIM Benefits
In Drysten v. Chiesa and USAA, the Appellate Division of the New Jersey Superior Court found that the insurer was immune from suit under the New Jersey statute governing immunity for insurers based on the insured’s election of motor vehicle coverages. While the insured attempted to gain additional benefits by having the policy reformed post-accident, the court determined that the insurer’s strict compliance with the statutory requirements and the insured’s breach of her duty to read insurance documents and alert the insurer as to any inconsistencies in coverage, resulted in a finding of immunity for the insurer. Plaintiff was injured
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Federal Court In Kentucky Refuses to Allow Insurer to Assert Reverse Bad Faith Claim
This week the United States Sixth Circuit Court of Appeals declined to allow State Auto Property & Casualty Co. to assert a reverse bad faith claim against a policyholder who admitted to submitting a fraudulent insurance claim after conspiring to burn her own house down. The federal appellate court concluded that Kentucky law does not recognize an action by an insurer against an insured for reverse bad faith. Fortunetly for insurers, many other states and jurisdiction (such as Pennsylvania for example) do recognize a reverse bad faith cause of action action, which allow insurers to recover their costs and expenses,
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New York Appellate Court Enforces Insured’s Duty to Submit to Examination Under Oath
Metro Psychological Servs., P.C. v. 21st Century N. Am. Ins. Co., 2015 NY Slip Op 50470, decided April 7, 2015, involved an action by a provider to recover assigned first-party no-fault benefits. The defendant insurer moved for summary judgment on the grounds that it timely denied plaintiff’s claim based on its failure to appear at a scheduled examination under oath (EUO). The insurer presented evidence that it mailed the EUO scheduling letters, the date, place and time of the EUOs were not unreasonable and that plaintiff failed to appear. Plaintiff opposed the motion on the grounds that there was no
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Pennsylvania Superior Court Upholds $2 Million Insurance Bad Faith Verdict
The Pennsylvania Superior Court has upheld a verdict of over $2 million against a title insurer for bad faith claims handling. Davis v. Fidelity Nat. Title Ins. Co. concerned the purchase of property for construction of a housing development. After another individual claimed to be the owner of the property, the purchaser filed a claim under his title insurance policy. Nearly two years later, the insurer acknowledged a problem with the title and promised resolution of the matter. Over three years later (and nearly five years after the claim was filed), the insurer resolved the claim by purchasing the property
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New Jersey Supreme Court Issues Two Notable Insurance Bad Faith Opinions
The New Jersey Supreme Court has released two significant insurance bad faith opinions, both in the context of uninsured motorist claims. In Badiali v. New Jersey Manufacturers Ins. Co., the Court acknowledged that an insurer’s reliance upon unpublished appellate decisions does not constitute bad faith. In Wadeer v. New Jersey Manufacturers Ins. Co., the Court recognized that res judicata precludes a claimant from pursuing a bad faith action when the insurer’s alleged bad faith was at issue in a prior coverage action. In both decisions, the Court upheld the well-established “fairly debatable” standard for determining whether an insurer’s claims handling
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New Jersey Supreme Court Analyzes Right to Jury Trial in Statutory Insurance Fraud Cases
On Monday, January 5, the New Jersey Supreme Court heard oral argument in a matter raising the question of whether a defendant in a civil action brought under the state’s Insurance Fraud Prevention Act (“IFPA”) has the right to a jury trial. Allstate New Jersey ins. Co. v. Lajara concerns allegations that the defendants owned and operated several chiropractic facilities that engaged in an ongoing pattern of fraud, including staging automobile accidents and paying kickbacks for referrals. The plaintiffs seek restitution of $8.2 million in personal injury protection benefits paid as a result of the alleged fraud, as well as
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Pennsylvania Supreme Court Authorizes Assignment of Statutory Bad Faith Claims to Third Parties
In a landmark decision, the Pennsylvania Supreme Court has held that claims under the Pennsylvania insurance bad faith statute may be assigned to third parties. This decision will enable plaintiffs who have obtained an excess verdict against a policyholder to not only pursue a common-law bad faith claim against the liability insurer for the excess verdict, but also pursue a statutory bad faith claim for punitive damages, attorney’s fees, interest, and costs. The Supreme Court’s decision in Allstate Prop. and Cas. Co. v. Wolfe answered a question certified by the United States Court of Appeals for the Third Circuit in
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