JUNE 2009 BAD FAITH CASES EVIDENCE PRECLUDED OF INSURER EMPLOYEE PARTICIPATION IN PROFIT SHARING PLAN TO SHOW MOTIVE IN DENYING CLAIM OR JOINING PUBLIC ADJUSTER IN CASE (PHILADELPHIA FEDERAL)
In Grammenos v. Allstate Insurance Company, the insurer had joined the insured’s public adjuster as a third party defendant, claiming that the public adjuster participated in making an improper claim and should be liable under Pennsylvania’s insurance fraud statute. At trial the jury ultimately found for the public adjuster and entered a verdict in his favor and against the insurer on this claim.
On a motion in limine prior to trial, the insurer successfully obtained an order precluding evidence that its employees participated in a profit sharing plan which purportedly gave them a motive to deny claims and to harass public adjusters. The court found that the public adjuster was attempting to assert a bad faith affirmative defense to the insurer’s fraud claims. As the public adjuster was not an insured, the court found it had no standing to assert a statutory bad faith claim under 42 Pa.C.S. § 8371. Thus, the evidence was inadmissible for those reasons.
In addition, the court found the evidence inadmissible because the evidence was irrelevant to the public adjuster’s efforts to show the insurer’s allegedly improper motive in bringing the claim; and to the extent it may have had some probative value, it was outweighed by the prejudice it could create and confusion it could cause the jury.
Date of Decision: April 30, 2009
Grammenos v. Allstate Ins. Co., CIVIL ACTION NO. 07-2725, 2009 U.S. Dist. LEXIS 37069 (E.D. Pa. April 30, 2009) (Rueter, Chief M.J., sitting by agreement of the parties)