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PA Supreme Court Addresses Level of Proof Required Under Statutory Bad Faith Claim

In an opinion dated September 28, 2017, the Pennsylvania Supreme Court, Western District, considered as an issue of first impression the level of proof required to prevail in a bad faith claim, examining the elements of a bad faith insurance claim under the PA bad faith statute, 42 Pa.C.S. Section 8371.  The lawsuit involved policy coverage issues under a cancer insurance policy issued to plaintiff as a supplement to her primary employer-based health insurance.  The Rancosky v. Washington National Insurance Company court confirmed that the two-step process, known as the Terletsky test, applied to determine whether a claimant could recover in a bad faith action.  More specifically, a plaintiff must prove by clear and convincing evidence that: (1) the insurer

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Fifth Circuit Provides Road Map for Review and Trial of Bad Faith Claims in Mississippi

Mississippi essentially has three levels of claim when insurance is at issue: (1) mere breach of contract, allowing recovery of contract damages; (2) breach of contract + no arguable basis for breach, which entitles recovery of consequential damages; and (3) breach of contract + no arguable basis for breach + malice/gross disregard for the rights of the insured, which entitles the recovery of punitive damages.  In Briggs v. State Farm Fire & Cas. Co., 2016 WL 7232136 (5th Cir. Dec. 16, 2016), the Fifth Circuit Court of Appeals approved the bifurcation of the trial of an insurance dispute by the district court.  In so doing, the Fifth Circuit provided a road map for how such claims should be handled for

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Alabama’s High Court: No Contract Means No Bad Faith

In many states, pleading and proving the existence of a valid contract is necessary for both a breach of contract cause of action and also for a viable bad faith claim, and the Alabama Supreme Court addressed exactly that issue last year in Alfa Life Ins. Corp. v. Kolza 159 So.3d 1240 (Ala., Aug. 22, 2014). The case involved a life insurance claim.  The plaintiff’s decedent had applied for a policy and filled out an application that misstated his driving record.  He then received a “Conditional Receipt” that afforded $100,000 in coverage while the application was pending.  He was subsequently given a medical examination that disclosed high cholesterol levels and a family history of heart disease.  He died in an

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Water Loss Case Gives Rise to Dispute Over Bad Faith Standard For ‘Genuine Dispute’ and Admissibility of Expert Evidence

In a recent decision in the case of Pyramid Technologies, Inc. v. Hartford Casualty Ins. Co., 752 F.3d 807 (9th Cir., May 19, 2014), the Ninth Circuit, relying on California law upheld a grant of summary judgment dismissing the insured’s business interruption claim as speculative and, by a split decision, reversed in part and remanded in part the trial court’s exclusion of the testimony from the insured’s expert witnesses under Daubert standards.  In addition, and most importantly, it also reversed a grant of summary judgment  concerning the insurer’s “genuine dispute” defense to the insured’s bad faith claims, holding that bad faith was an issue for the factfinder under the facts of the case. In an upcoming Alert, Joann Selleck of

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The Hawaii Supreme Court Answers “Other Insurance” Provisions and the Duty to Defend

The Hawaii Supreme Court in Nautilus Ins. Co. v. Lexington Ins. Co., — P.3d —-, 2014 WL 560805 (2014), answers the following certified questions from the 9th Circuit on “other insurance” provisions and the duty to defend: 1. Whether an insurer may look to another insurer’s policy in order to disclaim the duty to defend, where the complaint in the underlying lawsuit alleges facts within coverage. Unless another insurer’s policy is specifically named in the first insurer’s policy, an insurer may not look to another insurer’s policy in order to disclaim the duty to defend, where the complaint in the underlying lawsuit alleges facts within coverage. 2. Whether an “other insurance” clause that purports to release an otherwise primary insurer

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Texas Hurricane Season: Statutory Requirements for Handling Claims

For Texans, the prime hurricane season from August to September is now over. Although there were no big storms this year, claims handlers still need to be attentive to timely adjusting their first party claims. The Texas Prompt Payment of Claims Act mandates prompt payment of claims. See Tex. Ins. Code Ann. §§ 542.051-.061.  After receiving notice of a claim, within 15 days, an insurer is required to: (1) acknowledge receipt of a claim; (2) begin an investigation; and (3) request documentation from the claimant that is needed for its investigation. Tex. Ins. Code Ann. § 542.055(a).  Further, the insurer is to notify the claimant in writing of the acceptance or rejection of the claim within 15 days after it receives the

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Avoiding Insurance Bad Faith
Cozen O’Connor represents insurance clients in jurisdictions throughout the U.S. against statutory and common law first- and third-party extracontractual claims for actual and consequential damages, penalties, punitive and exemplary damages, attorneys’ fees and costs, and coverage payments. Whether bad faith claims are addenda to a broader coverage matter or are central to the complaint, Cozen O’Connor attorneys know how to efficiently respond to extracontractual causes of action. More
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