38 Allegations But A Bad Faith Claim Ain’t One (PA)
In Brown v. Liberty Mut. Ins. Co., the Eastern U.S District Court for Pennsylvania granted the defendant’s motion to dismiss against a plaintiff’s bad faith claim citing statutory insurance violations against the defendant. The plaintiff was involved in a motor vehicle accident, and sought benefits form her insurer for uninsured motorist benefits. As a result, the plaintiff brought a bad faith claim against the insurer in the initial complaint. The court dismissed the initial bad faith claim made under 42 Pa C.S. § 8371, but allowed the plaintiff to amend and replead the complaint.
After amendment, the court still ruled in favor of the defendant. While plaintiff alleged “dilatory” and “abusive claim handling” in the investigation and negotiation of her UIM claim, the court concluded that the amended complaint’s 38 ways in which Liberty Mutual may have acted in the bad faith, they were all merely conclusions. The Court reminded the policyholder that merely because you have a particular policy limit, that is the “theoretical maximum that an insured could recover.” It is not the de facto value of a claim. Thus Liberty Mutual’s motion to dismiss the bad faith claim with prejudice was granted. In order to make a bad faith claim, the policyholder must show that there was no reasonable basis to deny a benefit, and demonstrate evidence that the insurer knew or recklessly disregarded its knowledge of a reasonable basis. A mere disagreement over a settlement claim does not reach this level.
Thanks to Kevin Riley for his contribution to this post. Should you have any questions, please contact Tom Bracken.