APRIL 2015 BAD FAITH CASES: SECTION 8371 DOES NOT PROVIDE FOR COMPENSATORY OR CONSEQUENTIAL DAMAGES; THERE IS NO PRIVATE UIPA ACTION; INDEPENDENT ADJUSTER OWED NO DUTY TO INSURED (Philadelphia Federal)

In Tippett v. Ameriprise Insurance Company, the court observed that unlike claims for breach of the contractual duty of good faith and fair dealing, the remedy for statutory bad faith under section 8371 does not allow a plaintiff to recover compensatory or consequential damages.

These plaintiffs also brought a count for violation of the Unfair Insurance Practices Act (UIPA).  They conceded that there is no private right of action under the UIPA, but argued the court could still “consider UIPA violations to determine whether an insurer acted in bad faith under Pennsylvania’s Bad Faith Statute….” The court dismissed the attempt to plead a private action, regardless of whether it could consider evidence of UIPA violations for a bad faith claim.

The court also dismissed claims against the insurer’s independent insurance adjuster, finding no duty owed to the insured by the insurer’s independent adjuster. “Pennsylvania courts permit insureds to sue their insurers for the actions of their insurers’ agents, including adjusters[, and] Pennsylvania courts also recognize that independent insurance adjusters ‘owe a duty of performance to their principals, the insurance companies.’” Thus, “[t]he Supreme Court of Pennsylvania is unlikely to impose a duty of care on adjusters to insureds.”

Date of Decision: March 25, 2015

Tippett v. Ameriprise Ins. Co., CIVIL ACTION No. 14-4710, 2015 U.S. Dist. LEXIS 37513 (E.D. Pa.  March 25, 2015) (Sanchez, J.)