DECEMBER 2016 BAD FAITH CASES: ERISA PRE-EMPTS BAD FAITH CLAIMS INVOLVING BREACH OF ALLEGED SETTLEMENT AGREEMENT, REACHED TO RESOLVE PRIOR INSURANCE DISPUTE OVER PAYMENTS UNDER ERISA HEALTH PLAN (Philadelphia Federal)
In this ERISA health plan case, the insurer had offered to freeze premiums for a substantial period of time to settle an earlier dispute over payments under the plan; but then allegedly reneged. The insured brought suit under various state law theories, including bad faith. The action was removed to federal court and a partial motion to dismiss was filed, on the basis that ERISA pre-empted the claims over this alleged settlement agreement. The court found itself “constrained by the ‘extraordinary preemptive power’ of ERISA,” and it refused to remand the action. It dismissed the statutory bad faith claim, among others.