Bad Faith Blog

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.

State Farm provided automobile insurance to Barry and Kimberly Shaffer which provided medical payments and UIM coverage. Barry was involved in a head-on collision which resulted in multiple serious injuries to his neck, back, eyes, and knees. At that time, Barry was on Social Security and military disability for several physical ailments. Shaffer underwent back surgery and six months later asked State Farm to assign a UIM adjuster. The Shaffers settled their liability claim with the adverse driver for roughly $28,000 below that driver’s liability limit. After a $250,000 UIM settlement demand was met with a $10,000 settlement offer, the Shaffers filed suit more than four years after the accident. The District Court granted State Farm’s motion for summary judgment on the bad faith claim and thereafter the UIM breach of contract claim was tried, which resulted in a $250,000 award in favor of the Shaffers. The Shaffers appealed the bad faith summary judgment, which was affirmed by the Third Circuit.

Here the issue was the conduct of the insurer under in handling a claim for underinsured motorist coverage. The injured insured had presented evidence of future wage loss of over $4,000,000.00, but liability coverage of only $3,000,000.00.

Summary: A 1996 Jeep Grand Cherokee owned by Daniel and Sheryl Berg sustained heavy damage in an accident. The Bergs took their vehicle to a dealer participating in their automobile insurer’s “Blue Ribbon Repair Service Program.” According to the Bergs, although the appraiser concluded the Jeep’s frame could not be repaired because it was “too twisted,” the insurer “reversed” the appraisal and sent the Jeep to another repair shop to attempt repairs over the next four months.