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Massachusetts: Third-Party Claim Handler Made Reasonable, Prompt Efforts to Settle Nursing Home Liability Claim, and Therefore Was Not Liable For $14 M Excess Verdict

On March 18, 2019, the First Circuit Court of Appeals affirmed a decision holding that Sedgwick Claims Management Services made reasonable and prompt efforts to settle a nursing home liability claim, and therefore was not liable for a $14M excess verdict despite the fact that the highest pretrial offer Sedgwick made was for $250,000. Calandro v. Sedgwick Claims Management Services, Inc. 2019 WL 1236927, ___ F.3d ___ (2019). In a colorful appellate decision notable for its loquaciousness, the First Circuit observed, “every case has its twists and turns, and an insurance carrier is not to be held to a duty of prescience.” In reaching its decision, the Court further observed that “perfection is not the standard” to demonstrate good faith

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Georgia Supreme Court Spares Insurance Company from a $5.3 Million Bad-Faith Verdict

Last week, the Georgia Supreme Court confirmed that an insurance carrier’s duty to settle a claim against its policyholder arises only after an injured claimant presents a “valid offer” to settle within policy limits. In First Acceptance Insurance Company of Georgia v. Hughes,[1] the Court found that, because the letter presented to First Acceptance by the injured parties’ counsel was not a time-limited settlement demand, First Acceptance’s failure to respond before the injured parties withdrew their offer did not constitute negligence or a bad faith failure to settle the claim within policy limits. In 2008, First Acceptance’s policyholder caused a multi-car crash killing the policyholder and injuring five others, including Julie An and her 2-year-old daughter. The policy had the

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QUITE THE SPLIT: LOUISIANA THIRD CIRCUIT COURT OF APPEAL APPLIES TEN-YEAR PRESCRIPTIVE PERIOD TO CONTRACT-BASED BAD FAITH CLAIMS

In a surprising decision on rehearing, on February 4, 2019, a panel of the Louisiana Third Circuit Court of Appeal reversed itself and held that bad faith claims arising out of an insurance contract are subject to a ten-year prescriptive period rather than a one-year prescriptive period.[1] Fils v. Starr Indemnity & Liability Company, — so. 3d — (La. App. 3rd Cir. 5/9/2018)(on r’hrg), centered on the timeliness of the plaintiff’s bad faith claims against his uninsured motorist carrier. Dissatisfied with the $45,000 that his UM carrier had tendered following a motor vehicle accident on August 28, 2013, the policyholder filed suit against the insurer for additional benefits the day before the expiration of the two-year prescriptive period applicable to

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In Rhode Island, No Duty of Good Faith to Third Party Claimant

In Summit Insurance Company v. Stricklett, — A.3d —, No. 2017185APPEALPC12536, 2019 WL 190358, (R.I. Jan. 15, 2019), the Supreme Court of Rhode Island held that – similar to many jurisdictions – the duty to act in a reasonable manner and in good faith settling a claim does not run to the claimant absent an assignment from the insured. The facts of Stricklett are simple. Mr. Stricklett’s vehicle was insured by Summit under a policy with a $25,000 per person, $50,000 per accident coverage limit. In 2002, Stricklett allegedly collided with eleven-year-old Scott Alves, requiring that Alves undergo medical treatment. Alves’s parents submitted the medical bill to Summit Insurance Company, who investigated the incident and determined that Stricklett was not

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ALLEGED BAD FAITH FAILURE TO ADVISE POLICYHOLDER OF CONSEQUENCES OF SETTLEMENT CONDUCT CAUSES INSURER TO SETTLE $22 MILLION LAWSUIT

Progressive recently settled a bad faith lawsuit with the guardians of a child injured in a car accident driven by a Progressive policyholder, Earl Lloyd. Progressive faced liability for an underlying judgment in excess of $22 million against Lloyd, who had purchased a $10,000 auto policy from Progressive. The bad faith lawsuit alleged that Progressive failed to advise its insured regarding the significance of executing a financial affidavit. Had the insured executed the financial affidavit, the claimant allegedly would have accepted the insured’s $10,000 policy limits in exchange for a release of Lloyd. The case, Wallace Mosley v. Progressive American Insurance Company, was set for trial beginning December 10, 2018 in the U.S. District Court for the Southern District of

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Fort Worth Court of Appeal Reverses Judgment Awarding Bad Faith Damages Against Insurer

While the November 8, 2018 Court of Appeal of Texas, Fort Worth Division opinion reverses a trial court’s judgment on grounds of legal insufficiency and standing, the court’s analysis and application of current Texas bad faith law is of much more interest. The trial court judgment held that Old American Insurance Company violated both the Texas Unfair Settlement Practices and the Prompt Payment of Claims Acts by failing to promptly pay benefits owed under the life insurance policy assigned to Lincoln Factoring, LLC (assignee of beneficiary’s policy benefits). But the appellate court reversed, concluding that as a matter of law Lincoln could not recover damages on the claims it plead. Old Am. Ins. Co. v. Lincoln Factoring, LLC, No. 02-17-00186-CV,

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The Florida Supreme Court Pushes Florida Bad Faith Standard Closer to Negligence in Harvey v. GEICO Decision

The Florida Supreme Court recently decided Harvey v. GEICO Gen. Ins. Co., No. SC17-85, 2018 WL 4496566, at *1 (Fla. Sept. 20, 2018), an important case setting forth what many will try to argue has lessened the standard for bad faith law in Florida to one of negligence plus. The case has a detailed but uncomplicated factual history. However, the factual summary contained in the majority’s opinion must be read along with that of Justice Canady’s dissent in order to understand the full picture factually. On August 8, 2006, GEICO’s insured, James Harvey (“Insured” or “Mr. Harvey”), was in a motor vehicle accident. The accident resulted in the fatality of the other driver, and Mr. Harvey was at fault. Mr.

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Crypto Covered Under Homeowner’s Policy? Ohio Trial Court Holds Coverage and Bad Faith Claims for Bitcoin Theft Survive Motion for Judgment on the Pleadings

From the high market cap Bitcoin, Ether, Ripple, and Litecoin, to the quirky Fonziecoin, Selfiecoin, Pizzacoin, and (thank you, Dennis Rodman) Pot Coin, we have all been blasted by news of crypto and blockchain, and tales of kids in their parents’ basements getting rich off this new wonder that many of us struggle to understand. But what we might not have heard of, or thought about, is potential insurance coverage under a homeowner’s insurance policy in the event of theft of this “alt” currency. On September 25, 2018, a Columbus, Ohio trial court judge denied an insurer’s motion for judgment on the pleadings on the grounds that its assessment of Bitcoin as “money” subject to a $200.00 sublimit under a

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Texas Federal Court Holds Rock Dust Discharged into Stream is Excluded “Pollutant,” so Insurer Owed No Duty to Defend or Indemnify, and Committed No Bad Faith

On July 10, 2018, Judge John H. McBryde of the United States District Court for the Northern District of Texas, Fort Worth Division, held an insurer owed no coverage to a New Jersey rock quarry owner for the accidental pumping of crushed rock particles into a stream. The policy’s pollution exclusion precluded coverage, regardless of whether the rocks were “wanted or useful.” Great Am. Ins. Co. v. ACE Am. Ins. Co., No. 4:18-CV-114-A, 2018 WL 3370620, at *5 (N.D. Tex. July 10, 2018). Absent coverage or any injury independent of the claim for policy benefits, the court also rejected the insured’s bad faith claim. Background Eastern Concrete Materials, Inc. operates a New Jersey rock quarry, where it crushes rock into

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Illinois Appellate Court Holds Insurer Owed Coverage in Fatal Chicago Gang Shooting Lawsuit, but Insurer Did Not Commit Bad Faith in Denying Claim

On March 1, 2018, an Illinois appellate court held an insurer breached its duties to defend and indemnify a grocer after gang members shot and killed a young woman and injured another outside of the Chicago grocer. The court interpreted “liability arising out of . . . premises” language in an additional insured endorsement, broadly holding that if the basis for imposing liability arises out of the premises, the party qualifies as an insured regardless of how the injury occurs. Dominick’s Finer Foods v. Indiana Ins. Co., 2018 IL App (1st) 161864, ¶ 66. Thus, a premises defect, such as an icy sidewalk or poor lighting, was not required. However, the court refused to find the insurer committed statutory bad

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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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