Print Friendly, PDF & Email

Plaintiffs James and Marlene Genter brought claims, among others, for consumer protection law violations against Allstate after the insurer denied coverage on their underinsured motorist (UIM) claims. This included claims for violating the Unfair Insurance Practices Act. The plaintiffs brought suit in Allegheny County and Allstate removed to the Western District on diversity grounds.

The claim arose from an accident involving Mr. Genter and Adam O’Bryan, in which the plaintiff suffered severe injuries which he claimed would have permanent effects on his health and earning capacity. Due to the extent of his injuries, plaintiff deemed Mr. O’Bryan’s $100,000 policy limit insufficient to fully compensate him for his injuries. Thus, the plaintiff sought the underinsured motorist benefits he believed to be available under his auto insurance policy with Allstate—benefits which, according to the plaintiff, had a limit of $2 million.

Allstate offered Genter $15,000 to settle the claim, which Genter’s counsel rejected, requesting arbitration. Allstate responded that it was unwilling to arbitrate the claim and that Genter would have to bring suit in order to vindicate his rights to the UIM benefits.

That was Allstate’s stand.

Genter brought suit, making claims, among others, under Pennsylvania’s Unfair Trade Practices and Consumer Protection Law (UTPCPL) seeking treble damages and alleging that the insurer failed to settle the claim in a prompt, fair and equitable fashion. In that claim, Genter alleged violation of Pennsylvania’s Unfair Insurance Practice’s Act as part of the basis for that count.  Plaintiff claimed that Allstate’s actions constituted an intentional course of conduct calculated to take advantage of the insured’s old age and poor health to force an unreasonably low settlement.

Allstate moved to dismiss but the Western District denied the insurer’s motion.

The court concluded that Allstate’s denial of the insured’s UIM claim could well have constituted misfeasance in this case, rather than nonfeasance, as the insured had sufficiently alleged wrongful and intentional action on the part of the insurer to deny reasonable claims. The court found further that deceptive conduct, which is something distinct from fraudulent conduct, could be the basis of a UTPCPL claim.

The court specifically found such misfeasance was pleaded based on the following allegations:  “Plaintiffs claim that Allstate ‘unreasonably delayed’ handling their benefits claim; ‘failed to make a reasonable settlement offer;’ ‘failed to adequately investigate’ their benefits claim; ‘failed to negotiate in good faith;’ and ‘failed to promptly provide a reasonable explanation of the basis in the insurance policy in relation to the facts or applicable law’ for the proposed $15,000 settlement.”  As such, Genter was found to have stated a viable claim under UTPCPL.

As to the alleged violations of Pennsylvania’s Unfair Insurance Practices Act, which Pennsylvania’s Supreme Court has long held does not create a private right of action in itself, the court stated in a footnote:  “Plaintiffs assert that ‘Defendant’s violation of the Pennsylvania Unfair Insurance Practice Act constitutes an unfair trade practice under the [CPL] [as] set forth in Pekular v. Eich, 355 Pa. Super. 276 (1986).’ … The Court in Pekular determined that an insured may maintain a private cause of action under the CPL even though allegations in his or her complaint address acts that are also prohibited by the Pennsylvania Unfair Insurance Practices Act. The decision in Pekular does not provide Plaintiffs an independent basis for relief.”

The Western District did, however, grant Allstate’s motion to strike the awarding of treble damages.

Date of Decision: June 24, 2011

Genter v. Allstate Prop. & Cas. Ins. Co., 11cv0709, United States District Court for the Western District of Pennsylvania, 2011 U.S. Dist LEXIS 67840 (June 24, 2011) (Schwab,  J.)

It should be observed that other courts have questioned the use of UTPCPL claims concerning claims handling by insurance company, such as failure to pay a claim,  and that the UTPCPL only give a cause of action in the conduct leading up to the sale of the insurance policy.