Plaintiff pleaded violations of six sections of the Unfair Insurance Practices Act (UIPA) in support of its statutory bad faith claims. The plaintiff specifically prefaced its recitation of these UIPA violations as being “evidence of bad faith”, and did not plead them as separately stated causes of action. The insurer moved to strike the UIPA averments as prejudicial, “confusing and immaterial”, and because proving a UIPA violation is irrelevant to proving a statutory bad faith claim.
The court denied the motion.
The court found that the alleged UIPA violations amounted to allegations that the insurer “made deceptive, misleading or untrue statements through advertising, misrepresented facts relating to contract provisions, refused to pay claims without conducting reasonable investigation, did not good faith attempts to effectuate equitable settlements, compelled persons to institute litigation to recover amounts due, and attempted to settle claims for less than the amount due.” It held these allegations were relevant to the bad faith claim. The court cited three Eastern District cases, from 1991, 1992, and 1993, in support of its conclusion that UIPA violations are permitted to support statutory bad faith claims.
Note: The case law is not uniform in accepting UIPA violations to support statutory bad faith cases.
(1) Some opinions rule that UIPA allegations are never relevant and must be stricken or dismissed. Under this theory, once the Superior Court’s Terletsky bad faith standards were adopted in 1994, it became unnecessary to reference the UIPA or the Unfair Claim Settlement Practices Regulations to provide standards for determining statutory bad faith. See the June 2018 Kunsman case, summarized here. (In its 2017 Rancosky decision, Pennsylvania’s Supreme Court adopted the Terletsky standards for determining statutory bad faith.)
(2) Other courts find UIPA violations can support statutory bad faith claims, but with some nuances as to what is permitted.
Some simply find UIPA violations relevant, as in today’s case described above. See the June 2014 Militello case, summarized here.
Some cases add that UIPA violations cannot constitute bad faith per se, however, such violations can be considered in evaluating bad faith. See the April 2017 Ridolfi case, summarized here.
This goes to the idea that a UIPA violation might be evidence of bad faith, while not itself constituting bad faith. See the 2017 Jack case, summarized here. As pointed out above, the plaintiff in the present case specifically prefaced its UIPA allegations with the qualification that the recited UIPA violations were “evidence of bad faith”.
Some courts, however, will dismiss UIPA allegations that simply recite the UIPA’s statutory language in tandem with conclusory language that violating these UIPA provisions constitutes bad faith. These cases require the plaintiff to additionally plead independent facts constituting the conduct that violates the UIPA and support a finding of statutory bad faith. See the October 2018 Higman case, summarized here.
A link to UIPA and Unfair Claim Settlement Practices Regulations related case summaries on this Blog can be found here.
Date of Decision: January 31, 2019
Penn-Dion Corp. v. Great American Insurance Co., U.S. District Court Eastern District of Pennsylvania CIVIL ACTION NO. 17-4634, 2019 U.S. Dist. LEXIS 15334 (E.D. Pa. Jan. 31, 2019) (Slomsky, J.)