THERE IS NO PRIVATE CAUSE OF ACTION UNDER THE UIPA OR UCSP REGULATIONS (Philadelphia Federal)

Last week, we summarized Judge Jones decision in this case regarding whether the insured adequately pleaded bad faith. In this post, we address his ruling on whether violations of Pennsylvania’s Unfair Claims Settlement Practices (UCSP) regulations and Unfair Insurance Practices Act (UIPA) can state a private cause of action.

Judge Jones found the applicable case law clear that there is no private right of action under the UIPA or UCSP regulations. Rather, these laws and regulations can only be enforced by the insurance commissioner.

The court cites numerous opinions supporting this conclusion, including, e.g., the Third Circuit’s Leach opinion, Judge Dalzell’s opinion in Upper Pottsgrove v. International Fidelity, Judge Tucker’s decision in Weinberg v. Nationwide, and Judge Kosik’s decision in Oehlhmann v. Metropolitan Life, among the many cases cited.

The court did appear to recognize, however, that under some circumstances a bad faith claim could be premised on a UIPA or UCSP violation, citing Judge Conaboy’s Aldsworth decision, and Judge Rambo’s 2014 Militello decision.

[Note:  Last May, we posted a breakdown of how various courts have addressed the extent of the relationship between the UIPA and UCSP regulations and statutory bad faith claims.]

Finally, the court dismissed the insured’s Unfair Trade Practices and Consumer Protection Law claim, solely under the economic loss doctrine.

Date of Decision: March 19, 2020

Clapps v. State Farm Insurance Cos., U. S. District Court Eastern District of Pennsylvania, CIVIL ACTION NO. 19-3745, 2020 U.S. Dist. LEXIS 47800 (E.D. Pa. Mar. 19, 2020) (Jones II, J.)