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Bad Faith Blog

We cover current issues, highlights and best practices exclusively on claims of bad faith and extra contractual damages.

Bad Faith Blog
October 17, 2017

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.

Bad Faith Blog
May 9, 2017

Wisconsin Insurer’s Thorough, Adequate, and Timely Investigation and Proper Settlement Negotiation Tactics Bar Bad Faith and Statutory Pre-Judgment Interest Claims

Elizabeth Baires was in a car accident with an underinsured driver while insured by State Farm. After State Farm consented to settling with the underinsured motorist for its $100,000 limits, plaintiff and her husband demanded that State Farm settle her claims for the $200,000 UIM stacked limits. State Farm refused her demand, leading to plaintiff and her husband filing suit for breach of contract, loss of consortium, and bad faith refusal to pay plaintiff’s claim. Thereafter, the federal district court granted State Farm’s motion for partial summary judgment on the bad faith claim.

Bad Faith Blog
October 13, 2016

Wisconsin Supreme Court: When Subrogating Insurers Aren’t Required to Make Insureds Whole

Summary: Dufour, a motorcyclist insured by Dairyland Insurance Company, was seriously injured while riding his motorcycle, collected full policy limits from the tortfeasor for his bodily injuries and full property damage (PD) and underinsured (UIM) bodily injury (BI) limits from Dairyland, and then sued Dairyland for bad faith when it refused to pay him the property damage subrogation funds Dairyland collected from the tortfeasor’s insurer. The trial court granted summary judgment to Dufour on his breach of contract claim, but in favor of Dairyland on the bad faith claim finding it had not unreasonably withheld the funds from Dufour. The Court of Appeals affirmed the breach of contract award, but reversed on the bad faith claim holding Dairyland had acted in bad faith due to its made whole doctrine obligations and remanded to determine the bad faith damages. The Wisconsin Supreme Court reversed on both counts.

Bad Faith Blog
May 5, 2016

The Absence of Bad Faith Diminishes Potential Consequential Damages Award

Summary: Burgraff was injured when a Menard employee was loading Burgraff’s vehicle with materials purchased from Menard. Burgraff’s vehicle and trailer were insured by Millers First Insurance Company (Millers First). Menard was self-insured up to $500,000 and had an excess layer of $500,000 with CNA. During mediation Millers First agreed to settle Burgraff’s claim for $40,000. In exchange for the payment of $40,000, Millers First would be fully discharged as would “one-sixth of any liability that Menard, Inc. may have to [ ] Burgraff.” Millers First then stopped defending Menard. Menard did not settle so the tort case proceeded to trial. The circuit court, thereafter, ruled Millers First had no further defense obligation to Menard, the court of appeals reversed, and the Supreme Court of Wisconsin agreed Millers First had a duty to defend Menard through trial.

Bad Faith Blog
July 9, 2012

So Which Rule Applies? Wisconsin Supreme Court Justices Disagree in a Split Decision

Summary: A Wisconsin high school discharged an employee who then sued. The school district’s insurer defended the case through an adverse summary judgment, but refused to indemnify the school district for an adverse judgment even though it had never sent a reservation of rights letter. The majority ruled that the doctrines of waiver or estoppel were insufficient “to defeat… a coverage clause in an insurance contract that would otherwise justify the insurer’s denial of coverage.” The Maxwell case is primarily a coverage opinion which declares how and when the estoppel and waiver doctrines apply in state courts in Wisconsin. Because of its brief discussion of Wisconsin bad faith law it merits attention in our blog.