Yearly Archives: 2021

Fifth Circuit Weighs in on Aftermath of Texas Supreme Court’s Decisions Affecting Insurers’ Pre-Appraisal Award Payments and Damages under the Texas Prompt Payment of Claims Act

Just a few short years ago, there was a bright line rule under Texas law concerning appraisal awards.  If an insurer timely paid an appraisal award, that payment extinguished all of the insurer’s contractual and extracontractual liability to the insured.  See, e.g., Garcia v. State Farm Lloyds, 514 S.W.3d 257, 264-273 (Tex. App.—San Antonio 2016, pet. denied); Anderson v. Am Risk Ins. Co., 2016 Tex. App. LEXIS 6538, *10 (Tex. App.—Houston [1st Dist.] 2016, no pet.); Perry v. United Servs. Auto Ass’n, 2018 Tex. App. LEXIS 10108, *7 (Tex. App.—Amarillo 2018, no pet.); Gonzales v. Allstate Vehicle and Property Ins. Co., 2019 U.S. Dist. LEXIS 26203, *3 (S.D. Tex. 2019).  The Fifth Circuit had previously agreed, making an Erie guess

Tagged with: , , , , , , , , ,
Posted in Bad Faith

Fifth Circuit Finds Potential Coverage for Data Breach; Interprets “Publication” Broadly

Using general contract interpretation principles, the Fifth Circuit reversed summary judgment in favor of an insurer and found a duty to defend Landry’s in a data breach lawsuit. Landry’s Inc. v. The Insurance Company of the State of Pennsylvania, No. 19-20430 (July 21, 2021). Landry’s contracted with Paymentech to process credit card payments at its restaurants, hotels, and casinos. Paymentech discovered a data breach across fourteen Landry’s locations resulting in $20 million of fraudulent credit card payments. The data breach involved an unauthorized program installed on Landry’s payment-processing devices. The program searched data from credit cards’ magnetic strips, including the cardholder’s name, card number, expiration date, and internal verification code, as the information was being routed through the payment-processing systems.

Tagged with: , , , ,
Posted in Bad Faith

Iowa Supreme Court Rejects Restaurant’s Allegations of Bad Faith and Breach of Contract After Appraisal

The Iowa Supreme Court recently reversed the appellate court’s denial of an insurer’s motion for a directed verdict, finding that United Fire did not breach the insurance policy and did not commit bad faith during a property appraisal. Luigi’s, Inc. v. United Fire and Cas. Co., No. 19-1669, — N.W.2d —-, 2021 WL 1932711 (Iowa May 14, 2021). About The Author

Tagged with: , , , , , , ,
Posted in Bad Faith

Lack of Notice No Excuse for Failure to Settle

An insurer can no longer claim its lack of notice of a lawsuit against its insured excuses it for failing to settle the suit after the Georgia Supreme Court’s recent decision in GEICO Indemnity Co. v. Whiteside, Case No. S21Q0227 (Ga. April 19, 2021). In Whiteside, the Georgia Supreme Court held that an insurer’s bad faith failure to settle a claim may result in liability for judgments in excess of the insured’s policy, even in cases where the insured also breaches its contractual duty to notify the insurer of a suit brought against it. About The Authors

Tagged with: , , , , ,
Posted in Bad Faith

Avoid Creating Coverage By Estoppel, Waiver & Forfeiture: California

Waiver, estoppel and forfeiture are doctrines on which insureds often rely to try to create coverage outside the terms of the insurance policy. Insureds will often assert that they are entitled to such extra-contractual coverage based entirely on how the insurer handled the claim.  But under California law, these doctrines often do not apply, and an insurer can avoid a potential waiver, estoppel or forfeiture by communicating with the insured. Although the terms are often used interchangeably, the doctrines are different. Estoppel refers to conduct by the insurer that reasonably causes an insured to rely to his detriment. Waiver is an express or implicit intentional relinquishment of a known right demonstrated. And forfeiture is the assessment of a penalty against

Tagged with: , , , , , ,
Posted in Uncategorized

A Jury Must Find An Insurer Acted Unreasonably In Order To Find Bad Faith Failure to Settle

On March 8, 2021 the California Court of Appeal, reversing a $10 million verdict against Farmers, found that a jury must specifically find unreasonable acts by an insurer to support a “failure to settle” bad faith finding.  Pinto v. Farmers Ins. Exch., No. B295742, __ Cal. App. 5th __, 2021 WL 857776 (Cal. Ct. App. Mar. 8, 2021).  The court also clarified that it has never held that a failure to accept a reasonable settlement is per se unreasonable under California law.  The case involved a single-vehicle rollover accident, which left the claimant, a passenger in Farmers’ insured vehicle, a quadriplegic. Farmers issued an auto insurance policy with a $50,000 each person and $100,000 each occurrence limit to the owner

Tagged with: , , , , ,
Posted in Bad Faith

Tips for Avoiding First-Party “Bad Faith” in Illinois

Illinois does not recognize bad faith as an independent tort. In the first-party context, bad faith is a purely statutory construct which hinges upon whether an insurer’s conduct was “vexatious and unreasonable.” Section 155 of the Illinois Insurance Code (215 ILCS 5/155) provides the exclusive remedy[1] for bad faith conduct by an insurer and also preempts other causes of action that at their core constitute a breach of good faith and fair dealing.[2] Section 154.6 of the Illinois Insurance Code (215 ILCS 5/154.6) enumerates 18 improper claim practices. Although these practices are not dispositive of a Section 155 claim, a court may properly consider the enumerated actions when determining whether an insurer’s conduct was vexatious and unreasonable.[3] As a result,

Tagged with: , , ,
Posted in Bad Faith

Recent Bad Faith Cases Regarding Reasonableness of Medical Treatment

In two recent cases, the courts showed substantial deference to patients’ treating physicians in determining the reasonableness of medical treatment. This deference appears to reflect a reluctance of courts to decide what healthcare is appropriate for a patient. In Peterson v. Western National Mut. Ins. Co., 946 N.W.2d 903 (Minn. 2020), the policyholder was involved in a low-speed automobile accident. Following the accident, she sought treatment from a chiropractor for body aches and headaches. She entered into a settlement with the other driver and her insurer also paid her policy’s no-fault benefits. For two to three years following the accident, the insured underwent various treatments for her headaches. Eventually, she tried Botox injections, which she found effective. The insured’s treating

Tagged with: , , , , , , ,
Posted in Bad Faith

Claims Handling: Questions Are the Answer

The key issue in insurance bad faith litigation is whether the claims professional reasonably handled the claim. Throughout the claims-handling process, the claims professional should constantly ask him-or-herself whether the investigation is sufficient to support a coverage determination and how someone might challenge that determination. By asking and answering those questions, the claims professional can be confident in his or her coverage determination. And to ensure that the claims professional’s analysis is not lost, his or her file should contain the evidence necessary to fully explain any such determination. About The Authors

Tagged with: , , , , ,
Posted in Bad Faith
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
Subscribe For Updates

nobadfaith

Cozen O’Connor Blogs