JULY 2008 BAD FAITH CASES INSURER’S MOTION GRANTED TO PRECLUDE INQUIRY INTO POST ARBITRATION CONDUCT OF THE INSURER WITH REGARD TO BAD FAITH CLAIM (Philadelphia Federal)
Plaintiff initiated suit against the insurer stemming from an automobile accident in which he sustained injuries. Plaintiff was involved in an automobile accident. Plaintiff had an insurance policy with the insurer which provided for uninsured motorist coverage. Plaintiff filed a claim with his insurer. The insurer made an initial offer which plaintiff rejected and then made another offer.
However, plaintiff chose to have his claim evaluated by an arbitration panel. The panel awarded him $500,000 for the claim. The award was molded to fit plaintiff’s policy and the insurer paid plaintiff $100,000, plaintiff’s policy limit.
Plaintiff filed a bad faith and breach of contract action against the insurer. The plaintiff alleged that the insurer acted in bad faith with regard to his claim by frustrating, delaying, and hindering his receipt of benefits and forcing him to arbitration. Plaintiff claimed that the insurer did not have a reasonable basis to refuse to pay his policy limit before the arbitration panel rendered its decision. The case is currently in discovery.
The insurer filed a motion for a protective order in the United States District Court for the Eastern District of Pennsylvania with regard to a situation that occurred during the deposition of an employee of the insurer. The insurer argued that inquiries regarding its post arbitration activity should not be permitted because the questions are irrelevant to the issues in a bad faith claim. The plaintiff claimed that these questions will provide relevant evidence and are reasonably calculated to lead to discovery of admissible impeachment evidence.
The court found that information regarding the insurer’s actions after arbitration is not relevant to the bad faith claim and would not be admissible into evidence. The court held that there is not a reasonable likelihood that inquiries into post arbitration actions would lead to admissible impeachment evidence against the insurer’s employee.
Therefore the court granted the insurer’s motion for a protective order precluding plaintiff from asking deponents about post arbitration conduct.