Archive for the 'PA – Claims Handling Procedures' Category

NOVEMBER 2014 BAD FAITH CASES: INSURER EXPOSED TO BAD FAITH CLAIM BY USING INSURED IN CLAIMS HANDLING PROCESS INSTEAD OF PAYING FOR THIRD PARTY TO DO THE WORK (WHERE INSURED FELL THROUGH A ROOF) (Western District)

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In Selmek v. State Farm Fire & Cas. Co. the insurance adjuster had asked for some assistance from the insured in inspecting a damaged roof and securing it from further damage, as a result of which the insured fell through the roof.  The insured brought claims for negligence and bad faith.  The Court found that the insurer had a contractual duty of good faith to inform the insured that under the policy the insurer had to pay for a third party contractor to take on these sorts of risks in securing the property.  The insured alleged that the insurer had the insured take on these tasks to improperly save money by not hiring a contractor, as required under the policy.  This sufficiently stated a statutory bad faith claim.

Date of Decision:  September 20, 2014

Selmek v. State Farm Fire & Cas. Co., No. 14-388, 2014 U.S. Dist. LEXIS 162294 (W.D. Pa. Sept. 20, 2014) (Fischer, J.)

NOVEMBER 2014 BAD FAITH CASES: INSURED FAILED TO PLEAD SUFFICIENT FACTS TO MAKE OUT BAD FAITH CLAIM WHERE PARTIAL PAYMENT MADE BY CARRIER, BUT LEAVE TO AMEND GRANTED (Middle District)

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In Stephens v. State Farm Fire & Cas. Co., a husband and wife brought suit against their homeowners’ insurance carrier alleging breach of contract, statutory bad faith, and a claim under Pennsylvania’s Unfair Trade Practices and Consumer Protection Law.  Plaintiffs alleged they suffered concurrent losses to their home via theft, vandalism, and water damage.  An adjuster visited the property to view the damages and evaluate the claimed losses, and, based on that evaluation, the carrier paid some benefits toward the claimed losses.   Plaintiffs then filed suit against the insurer.

Plaintiffs initially brought their action pro se, however, four days prior to the statute of limitations, they moved for leave to amend and filed an amended complaint.  In the bad faith count of the amended complaint, Plaintiffs alleged the insurer only paid them partial benefits on their claim, and that the claims had been given three different claim numbers despite being related to concurrent loss events.  The carrier opposed the motion for leave, arguing the amended complaint was untimely and futile since the claims raised by the plaintiffs failed as a matter of law.

The Magistrate Judge’s Report and Recommendation, later adopted by the District Court, denied the carrier’s motion as to lack of timely filing because Plaintiffs filed their motion and amended complaint prior the deadline, albeit four days prior.  It did, however, grant the motion with respect to futility on the bad faith count.  The court found two key problems with plaintiffs’ bad faith claim.  First, it faced a “threshold factual hurdle,” as Plaintiffs received a partial payment of their claim under the policy, which the court found to be inconsistent with a claim of complete bad faith on the part of the insurer.  Secondly, the claim failed as a matter of law, because Plaintiffs merely made conclusory allegations that the partial payment constituted a breach of the contract, and therefore the carrier had engaged in bad faith conduct.  The court determined that without a factual basis to support the claim, established case law required the complaint be dismissed.

The district court judge adopted the magistrate’s opinion, and dismissed the claim without prejudice, allowing Plaintiffs the opportunity to further amend the claim and articulate a factual basis to support the bad faith allegations against the carrier.

Date of Decision: September 12, 2014

Stephens v. State Farm & Cas. Co., Civil Action No. 1:14-CV-160, 2014 U.S. Dist. LEXIS 147953 (M.D.Pa. Sept. 12, 2014) (Carlson, U.S.M.J.)

Adopted in Stephens v. State Farm Fire & Cas. Co., NO. 1:14-CV-160,2014 U.S. Dist. LEXIS 147180 (M.D. Pa., Oct. 16, 2014) (Conner, J.)

NOVEMBER 2014 BAD FAITH CASES: CARRIER’S INVESTIGATION AND DENIAL OF UIM BENEFITS FOLLOWING PAYMENT OF FIRST PARTY MEDICAL CLAIM NOT BAD FAITH; NEITHER LENGTH OF INVESTIGATION ALONE NOR DISPUTING CAUSATION AFTER NOT MAKING IT AN ISSUE IN ORIGINAL CLAIM CREATE BAD FAITH PER SE (Middle District)

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In Shaffer v. State Farm Mut. Auto. Ins. Co., plaintiff and his wife brought a bad faith claim against their carrier after being denied UIM coverage, following payment of medical coverage on a first party claim.  The claim resulted from a motor vehicle accident in which the other driver was primarily at fault.  After the collision, the carrier conducted an internal arbitration, but declined to award to damages to either party.  At that time, Plaintiff sought conservative medical treatment under his policy, but declined to file a UIM claim.  Over the next year, the carrier repeatedly requested documentation from Plaintiff regarding his medical treatment, including a completed application for benefits, and medical record authorizations, but Plaintiff failed to return the application, authorization, or any medical records to the carrier.

Eventually, Plaintiff’s counsel informed the carrier Plaintiff required back surgery, and indicated the carrier would be sent a copy of the bill for the surgery, and requested he be advised if Plaintiff’s medical coverage was close to being exhausted.  Shortly after the surgery, Plaintiff’s counsel and the carrier discussed the possibility of a UIM claim for the first time, but Plaintiffs’ counsel merely indicated he would contact the carrier in the future if he felt a UIM claim was necessary.  The carrier received a final treatment bill, and medical records indicating the back surgery’s success; thus, having received no contact in over six months from Plaintiff or his counsel, the carrier closed the file.

Five months later, Plaintiff settled his claim against the other driver for $72,500 of the driver’s $100,000 policy limit, and then filed a claim for UIM coverage under his own policy.  Plaintiffs’ auto policy provided coverage for medical payments and $100,000 in UIM coverage, and allowed for “stacked” UIM coverage, yielding $200,000 in total UIM coverage.  Plaintiff presented the carrier with over 800 pages of medical records to the carrier both pre-dating and post-dating his treatment for the injuries related to the accident, and then provided the carrier with a $250,000 demand, requesting the carrier tender $100,000, the amount of one of the policy limits.

Two months later, plaintiff gave his statement under oath and finally provided all signed medical authorizations.  The carrier then began collecting the medical records, which took another ten months, due in part to Plaintiff’s withdrawal of his initial demand to add additional injuries to his claim.  After compiling all the records, the carrier had its orthopedic expert review the records and write a report evaluating the claim.  The expert concluded most of the injuries were chronic, and not materially or substantially changed by the accident, and that Plaintiff would have eventually needed the back surgery regardless of the crash.

Based on this report, the carrier set a reserve range of $0 to $40,000, and offered Plaintiff $10,000 to settle the claim.  Plaintiff rejected the offer, and one year later filed a lawsuit alleging the carrier violated Pennsylvania’s bad faith statue through its delay in investigating and evaluating the UIM claim.

The court found Plaintiffs’ bad faith claim without merit and dismissed it on summary judgment.  Although the carrier closed the file in December of 2010, it did not become aware of Plaintiffs’ intention to file a UIM claim until April of 2011.  After receiving the claim, a UIM adjuster was immediately assigned, and the carrier spent two years collecting medical records, obtaining plaintiff’s statement under oath, and arranging for review of Plaintiff’s medical records by its expert.  The court conceded that two years was a long time for claim investigation, but noted a long investigation period does not in and of itself constitute bad faith, absent obfuscation, dishonesty, or malice on the part of the carrier. Plaintiff also argued the carrier’s questioning of causation in the UIM claim was improper because it did not question causation in the first party claim; however, case law has established payment of first party benefits does not constitute an admission of causation in subsequent claims.  Therefore, the carrier was free to investigate causation of the UIM claim.

Finally, no evidence existed that the carrier did not conduct its investigation in a reasonable manner, even if the carrier did not move as quickly as Plaintiffs would have liked, or anticipate the UIM claim even before Plaintiffs’ counsel notified the carrier of the claim.

Date of Decision: Oct. 20, 2014

Shaffer v. State Farm Mut. Auto. Ins. Co., Civil Action No. 1:13-cv-01837, 2014 U.S. Dist. LEXIS 149095 (M.D.Pa. Oct. 20, 2014) (Rambo, J.).

OCTOBER 2014 BAD FAITH CASES: NO BAD FAITH IN UIM CASE WHERE INSURER CORRECTLY DETERMINED COVERAGE BASED ON INSUREDS’ CONTRACTUAL CHOICE TO LIMIT UIM AMOUNTS, AND WHERE NO OTHER FORM OF BAD FAITH ASIDE FROM COVERAGE DENIAL WAS PLEADED (Philadelphia Federal)

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In Davis v. Allstate Property & Casualty Company, the UIM plaintiff brought claims for breach of contract and bad faith, based upon an alleged failure to pay $600,000 in connection with a fatal car accident.  The court found, however, that the insureds had complied with all the requirements necessary under Pennsylvania’s Motor Vehicle Financial Responsibility Act to reduce their policy’s underinsured motorist coverage to $15,000 per person and $30,000 per accident, and thus the insurer correctly denied claims in excess of the contractually agreed upon coverage amount.  The claim for breach of an implied covenant of good faith and fair dealing was likewise dismissed, because Pennsylvania law precludes that claim from proceeding independently of the contract claim on which it is based.

Further, there could be no statutory bad faith for denying coverage in these circumstances.  The court stated:  “When an insurer makes a correct determination of the amount owed under a policy, it has a reasonable basis for denying an insured’s claims for a higher amount,” and “plaintiff’s bad faith claim fails as a matter of law because a correct determination of coverage precludes a bad faith claim predicated on a theory that the insurer unreasonably denied coverage.”

Nor, was any other form of bad faith pleaded. The court stated that “Pennsylvania law does not limit bad faith claims to unreasonable denials of coverage. A bad faith [claim] can have various other bases, including an insurer’s lack of investigation, lack of adequate legal research concerning coverage, or failure to communicate with the insured.” However, no factual averments were pleaded to support even the inference that the insurer did not conduct an investigation, failed to conduct adequate legal research, or did not communicate with the insured.

That being said, the bad faith claims were dismissed without prejudice for plaintiff to file a second amended complaint which adequately sets forth her bad faith claims.

Comment:  This latter point raises the debated issue of whether a poor claims handling practice that may even be a violation of the UIPA, but which in no way results in, or is connected to, the actual delay or denial of a benefit because no benefit is owed under the policy, can constitute statutory bad faith.  See, e.g., Berks Mut. Leasing Corp. v. Travelers Prop. Cas., NO. 01-CV-6784,2002 U.S. Dist. LEXIS 23749, footnote 8 (E.D. Pa.  Dec. 9, 2002) (Yohn, J.) (“Accordingly, I find plaintiff’s interpretation of the statute unpersuasive. Instead, I conclude that Section 8371   is limited to causes of actions arising out of the bad faith handling or payment of claims and does not apply to conduct unrelated to the denial of a claim. In so holding, I join other courts that have expressly embraced this interpretation of Section 8371.”); Focht v. State Farm (“In this regard, it is relevant that the District Court for the Eastern District of Pennsylvania has held that, in determining whether a defendant had a “reasonable basis” for denying an insurance claim, the test elucidated in Terletsky “is an objective one” and that as long as “a” reasonable basis exists to deny the claim, “there cannot, as a matter of law, be bad faith.”); but see Shannon v. New York Cent. Mut. Ins. Co. (“Given the remedial purpose underpinning the Bad Faith Statute, we are not persuaded that permitting an insurer to evade its statutory obligation due to some fortuitous fact to which it was oblivious is consistent with the legislature’s intent.”).

Date of Decision: September 30, 2014

Davis v. Allstate Prop. & Cas. Co., Civil Action No. 13-cv-07038, 2014 U.S. Dist. LEXIS 138022 (E.D. Pa. September 30, 2014) (Knoll Gardner, J.)

OCTOBER 2014 BAD FAITH CASES: COURT FINDS “LACK-OF-FORTUITY” EXCLUSION IMPLIED IN EVERY ALL RISK INSURANCE POLICY, AND NO BAD FAITH WHERE DENIAL HAD A REASONABLE BASIS (Philadelphia Federal)

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In Fry v. Phoenix Insurance Company, the insured homeowners suffered a wall collapse, after a long history of issues with the wall. There were various expert reports on problems with the wall that led the court to conclude that the insureds had knowledge of both potential problems causing the collapse, and that they failed to timely act to prevent the collapse after having been specifically warned it would occur absent certain actions.

First, coverage was properly denied because the policy only covered collapses if the causes were hidden from the insured, and such was not the case here.

Second, and of significant interest, is the court’s then finding that there was no coverage because the collapse was not the result of chance or accident, i.e., it was not fortuitous. The court specifically found that “under Pennsylvania law, a lack-of-fortuity exclusion is implied in every all-risk policy, such as the Policy at issue here.”

The court ruled that Third Circuit precedent established this principle, citing support from appellate case law: “there is an implied exclusion in every all-risk insurance policy for losses that are not fortuitous”; the “Supreme Court of Pennsylvania would recognize a ‘judicially created “fortuity” exclusion from coverage’ based on the generally accepted principle that ‘every “all risk” contract of insurance contains an unnamed exclusion — the loss must be fortuitous in nature’”; “The fortuity requirement is based on ‘[p]ublic policy considerations and the general nature of insurance,’ preventing an insurance policy ‘from providing coverage for a policyholder’s losses unless those losses are fortuitous.’”; “[W]e predict that the Pennsylvania Supreme Court would place on the insurer the burden of proving that the circumstances of the loss were such that coverage would be inconsistent with that public policy.”

The court then addressed what the Third Circuit meant by “fortuity”. “A fortuitous event … is an event which so far as the parties to the contract are aware, is dependent on chance.” “Such an event ‘may be beyond the power of any human being to bring the event to pass; it may be within control of third persons, provided that the fact is unknown to the parties. The thrust of the definition is that the occurrence be unplanned and unintentional in nature.’” “’In essence, the doctrine precludes coverage from losses that are certain to occur.’” “’Typically, the inherent fortuity doctrines preclude coverage based on what the insured knew or should have known about its potential liability at the inception date of the insurance policy at issue….”

Moreover, the court ruled that the determination of whether a claimed loss is fortuitous is a question of law for the court. Although the court indicated the determination of fortuity was solely a legal issue, the court concluded its analysis that the loss in this case was not fortuitous because no reasonable jury could find the loss fortuitous, thus indicating there may be some role for the jury on the issue.

As to the specific record, independent of the precise cause, all of the experts had told the insureds the wall would collapse unless they took certain actions, they did not, and the wall collapsed, i.e., no fortuity.

Thus summary judgment was granted on the breach of contract claims, and the bad faith claim was dismissed as the court’s analysis demonstrated denial was reasonable.

Date of Decision:  September 19, 2014

Fry v. Phoenix Ins. Co., CIVIL ACTION NO. 12-4914, 2014 U.S. Dist. LEXIS 131504 (E.D. Pa. September 19, 2014) (Stengel, J.)

OCTOBER 2014 BAD FAITH CASES: NO BAD FAITH CLAIM WHERE INSURER CARRIED OUT REASONABLE INSPECTION AND CAME TO CONCLUSION THAT RESULT OF THE INSPECTION FELL WITHIN AN EXCLUSION, & INSUREDS DID NOT OFFER MATERIAL FACTS TO SHOW, EVEN IF WRONG, THAT POSITION WAS UNREASONABLE OR THE RESULT OF INTENT SUFFICIENT TO MEET THE BAD FAITH STANDARD (Middle District)

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In Focht v. State Farm Fire & Casualty Company, the homeowner insureds brought breach of contract and bad faith claims centering on a water based loss.  The coverage issue centered on whether the damage at issue was caused by flood damage arising up inside the house, or water penetrating the house during a storm and causing damage from above.  The former was not covered.  The insurer investigated and found that the storm damage in the upper part of the house did not correlate with water damage, but the water damage was consistent with flooding.  The insured’s public adjuster found evidence to support that the water did infiltrate from above.

The court ruled that while a reasonable jury could find for the insureds, there was no evidence to support a bad faith claim.  The insureds’ allegations at most added up to negligence or bad judgment, not bad faith.  That the insurer covered a water damage claim 8 years earlier that was arguably excluded, did not help the insureds make out a case.  Even if the exclusion had applied and the insurer paid anyway, “all that could mean is that Plaintiffs received money … to which they were not entitled.”  Such an oversight by the carrier 8 years earlier could not be evidence of bad faith in a separate claim, “when Plaintiffs’ policy specifically excludes the damage that [the insurer] determined was at issue [8 years later] and when there is no evidence in the record that that determination was motivated by dishonesty or a breach of known duty as would be required to establish bad-faith liability under Terletsky.”

In addressing the factual assertions the insureds made to defend against summary judgment, it was significant to the court that a number of facts or issues raised were not actually relevant to the coverage dispute actually at issue, particular observing that the dispute over surface vs. subsurface water was immaterial as neither was covered.  The court also found that the length of time the insurer’s inspector took with the property, 25-30 minutes, did not create an issue where there was no other evidence to indicate it should have taken longer.

Date of Decision:  September 5, 2014

Focht v. State Farm Fire & Cas. Co., 3:12-CV-01199, 2014 U.S. Dist. LEXIS 124561 (M.D. Pa. September 5, 2014) (Mariani, J.)

 

OCTOBER 2014 BAD FAITH CASES: (1) STATUTORY BAD FAITH CLAIM SUFFICIENTLY PLEADED BECAUSE PLAINTIFF ALLEGED BASIS FOR UNREASONABLE CANCELLATION; (2) NO STATUTORY BAD FAITH ACTIONABLE AGAINST A BROKER WHO IS NOT AN INSURER; (3) NO BREACH OF FIDUCIARY DUTY CLAIM PLEADED THAT GOES BEYOND CONTRACT CLAIM FOR DUTY OF GOOD FAITH AND FAIR DEALING (Philadelphia Federal)

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In Kofsky v. Unum Life Insurance Company of America, the insured purchased a disability insurance policy.  He alleged that the defendants, the insurer and the insured’s broker, unilaterally cancelled his insurance policy without prior notice. Thereafter, the insured claimed that he still forwarded payment under the policy, and that he fulfilled his duties under the policy, but the defendants refused to reinstate the policy. He brought claims for statutory bad faith, among others, against both the insurer and the broker, each of which sought to dismiss those claims.

The insurer’s motion to dismiss was denied. Although the complaint lacked details, it provided enough factual allegations to sufficiently state a bad faith claim. The insured alleged that the carrier unilaterally cancelled the policy even though the insured had fulfilled his obligations under the policy. This was enough to allege the carrier lacked a reasonable basis for cancellation, which can be the basis of a bad faith claim, and that there were issues of fact that remained.

The insurance broker was successful, however, because the bad faith statute only applies to insurers, not entities like brokers which do not issue policies, collect premiums, or assume risks or contractual obligations.

The court dismissed the breach of fiduciary duty claim against the insurer.  There were no allegations that some action was taken or agreement made that would take the insurer beyond its contractual obligations as an insurer, which did not automatically create a fiduciary duty; rather, this appeared to be akin to a claim for breach of the contractual duty of good faith and fair dealing, which is subsumed in the breach of contract claim.

Date of Decision:  September 2, 2014

Kofsky v. Unum Life Ins. Co. of Am., CIVIL ACTION NO. 13-5647, 2014 U.S. Dist. LEXIS 122220 (E.D. Pa. September 2, 2014) (Surrick, J.)

SEPTEMBER 2014 BAD FAITH CASES: WHERE INSURED GAVE MATERIALLY INACCURATE WRITTEN INFORMATION IN INSURANCE APPLICATION, EVEN IF SHE GAVE CORRECT INFORMATION ORALLY TO INSURER’S AGENT, INSURER HAD A REASONABLE BASIS TO DECLINE COVERAGE, AND SO THERE COULD BE NO VIABLE BAD FAITH CLAIM (Western District)

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In Jones v. State Farm Fire & Casualty Company, the insured suffered a fire to a home.  At the time, the home was not her primary residence, and it was being renovated.  The insured claimed that prior to obtaining the insurance policy at issue, she informed the insurer’s agent of this fact, and further that she had a previous fire.  However, her insurance application expressly stated that this home was her primary residence and that she had not suffered any previous losses in the last five years.  The carrier sought rescission of the policy based on these alleged misrepresentations.  The insured brought a bad faith claim, among other causes of action.

The court stated that the existence of a reasonable basis for denial will defeat a bad faith claim.  Further, “[i]n the specific context of a plaintiff challenging the denial of a claim, the insurer can demonstrate its reasonableness by highlighting material misrepresentations on a plaintiff’s application.”  The court also stated: “Because insurers are permitted under Pennsylvania law to rescind insurance contracts that contain material misrepresentations, denial on that basis is inherently ‘reasonable’ for purposes of the § 8371 cause of action.”

The court found that even if the insured had made oral representations to the insurer’s agent about the fact that she was not living in the home and that there had been an earlier fire loss, her stating contrary facts in the application contradicted those statements, and gave the insurer a reasonable basis for its decision to deny the claim.  “As [the insurer] correctly argues, even accepting as true that [the insured] told [the insurer’s agent’s] employee she had previously had a fire and that the dwelling was not her primary residence, and accepting that [the insurer] knew or should have learned of those statements, [the insurer] nonetheless was confronted with conflicting information. [The insured] intentionally or unintentionally provided untrue information on the rate quote and insurance application forms on which [the insurer] relied.” This provided a reasonable basis for the insurer’s decision, and the bad faith claim was dismissed.

Date of Decision:  September 9, 2014

Jones v. State Farm Fire & Casualty Co., Civil No. JFM-14-00185, 2014 U.S. Dist. LEXIS 125601 (W.D. Pa. September 9, 2014) (Motz, J.) (Judge Motz is a Senior Judge of the United States District Court for the District of Maryland)

SEPTEMBER 2014 BAD FAITH CASES: IN THIS SUPERSTORM SANDY CASE, INSURED ALLOWED TO PROCEED ON BAD FAITH CLAIM WHERE INSURER REFUSED TO ENGAGE IN APPRAISAL PROCESS, BUT COURT DISMISSES BAD FAITH CLAIM BASED UPON ALLEGED UNDUE INFLUENCE ON INSURED’S ROOFING CONTRACTOR (Philadelphia Federal)

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Currie v. State Farm Fire & Casualty Co., involved damage to the insured’s home from Superstorm Sandy, and a dispute over the homeowner insurer’s payment obligation. The matter was before the court on summary judgment. After finding summary judgment could not be granted on the breach of contract claim, the court then addressed the carrier’s motion for summary judgment on the insured’s two bad faith claims.

First, the insured claimed bad faith for the insurer’s failure to engage in the appraisal process. The insurer’s position was that appraisal was only required where the coverage obligation was agreed upon, but the amount of loss was not; and that the carrier disputed coverage. The court found that the carrier’s position was not actually over coverage differences but over the loss sustained, and allowed the bad faith claim to proceed on that basis.

It granted summary judgment on the second bad faith claim, however. The insured claimed that the carrier had unduly influenced the insured’s roofer to lower its repair estimate. However, the evidence presented on the motion did not support that position. The court also stated that the insureds did not submit “any support for their claim that negotiations regarding the amount of construction repair costs and services to be provided constitutes bad faith conduct on the part of an insurer.”

Date of Decision: August 19, 2014

Currie v. State Farm Fire & Cas. Co., CIVIL ACTION No. 13-6713, 2014 U.S. Dist. LEXIS 117970 (E.D. Pa. August 19, 2014) (Kelly, J.)

SEPTEMBER 2014 BAD FAITH CASES: NO BAD FAITH UNDER PENNSYLVANIA LAW WHERE INSURED FAILED TO DISCLOSE FACTS TO DISABILITY INSURER; NO BREACH OF FIDUCIARY DUTY UNDER NEW JERSEY LAW FOR SAME REASON (Philadelphia Federal)

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In Hayes v. American International Group, a case involving a disability insurance claim, the Magistrate Judge concluded in her Report and Recommendation that there could be no statutory bad faith under Pennsylvania law where the carrier paid total disability benefits for over four years until it learned that the insured had been working over the entire period. Further, a subsequent investigation of the insured, his work-related activities and his earned income, as well as his failure to provide relevant financial information, led to the insurer’s decision to terminate benefits. The insured did not present sufficient evidence to support that the insurer lacked a reasonable basis for denying total or residual disability benefits, or that the insurer disregarded a lack of a reasonable basis for doing so.

The insured also brought a claim for breach of fiduciary duty. The court observed that there was a difference in Pennsylvania and New Jersey law, with Pennsylvania law recognizing only a very limited fiduciary duty in insurers, and New Jersey law recognizing a broader fiduciary duty from insurers to insureds in the processing of first party claims. The court did a conflict of laws analysis, setting out, however, that both parties to the insurance contract owe a fiduciary duty to the other under New Jersey law. In light of that, New Jersey law was not contrary to Pennsylvania’s governmental interests, the conflict was false, and New Jersey law applied.

For the reasons set out above, there could be no breach of fiduciary duty. The insured had repeatedly and consistently reported his lack of income and inability to perform anything but sedentary activities to the insurer. Thus, the court stated that “it cannot be said that [the insurer] exercised bad faith in discontinuing benefits when confronted by evidence that Plaintiff was earning more from his private practice than he was earning before he allegedly became disabled.”

Date of Decision: July 29, 2014

Hayes v. Am. Int’l Group, CIVIL ACTION NO. 09-2874, 2014 U.S. Dist. LEXIS 103564 (E.D.Pa. July 29, 2014) (Hey, U.S.M.J.) (Report and Recommendation)