A six-person jury returned a verdict against the Illinois State Medical Inter-Insurance Exchange Mutual Insurance Company (“ISMIE”) for bad-faith failure to settle. ISMIE argued on appeal that, among other things, trial of the bad faith claim to a six-person jury was unconstitutional. The First District Court of Appeals agreed and gave retroactive effect to an Illinois Supreme Court decision holding a recent statutory change limiting juries in civil cases to six people was unconstitutional.
We cover current issues, highlights and best practices exclusively on claims of bad faith and extra contractual damages.
Pennsylvania Supreme Court Holds Pennsylvania Law Does Not Require a Policyholder to Prove Insurer’s Self-Interest or Ill Will to Succeed on a Bad Faith Claim
Insured LeAnn Rancosky, who was employed as a letter carrier for the United States Postal Service, purchased a “cancer insurance” policy from Washington National Insurance Company. Rancosky’s employer automatically deducted her bi-weekly premium payments from her paycheck. The policy contained a “waiver-of-premium” provision, which excused premium payments in the event Rancosky became disabled due to cancer. The waiver provision set forth certain requirements be met, including being disabled due to cancer for a period greater than 90 consecutive days beginning on or after the date of diagnosis. Rancosky was diagnosed with cancer, became disabled, and made claims under the policy. Her claims were later denied due to an erroneous statement of disability provided by her physician, which the carrier did not follow up on despite having adequate information in its possession calling into question the physician’s statement. She sued the carrier for breach of contract and bad faith under the Pennsylvania statute. The Pennsylvania Supreme Court, clarifying Pennsylvania law, held that a policyholder is not required to prove the insurance carrier’s subjective ill will or self-interest to succeed on a statutory bad faith claim under Pennsylvania law.