Big Implications for Policyholder Bad Faith Claims in Pennsylvania

By: Stacy RC Berliner
Shareholder and Ohio State Bar Association-Certified Specialist in Insurance Coverage Law

On September 28, 2017, the Pennsylvania Supreme Court held that an insurer need not prove an insurance company’s motive of self-interest or ill-will as a prerequisite to prevailing in a bad faith claim under Section 8371. Instead, the Court adopted a two-part test first articulated by the Superior Court in Terletsky v. Prudential Property & Cas. Ins. Co., 649 A.2d 680 (Pa. Super. 1994) in establishing bad faith. In order to prevail on a bad faith claim, the policyholder must present clear and convincing evidence that (1) the insurer did not have a reasonable basis for denying benefits under the policy; and (2) the insurer knew of or recklessly disregarded its lack of a reasonable basis. Rancosky v. Washington National Insurance Co., Case No. 28 WAP 2016.

The Pennsylvania Supreme Court Justices unanimously affirmed a decision by the state’s Superior Court holding that an insurer’s motive of self-interest or ill will is merely one factor that can be considered in an analysis of potential bad faith conduct. Writing for the majority, Justice Max Baer wrote that “[w]e do not believe that the General Assembly intended to create a standard so stringent that it would be highly unlikely that any plaintiff could prevail thereunder when it created the remedy for bad faith. Such a construction could functionally write bad faith under Section 8371 out of the law altogether.”

The Rancosky opinion provides policyholders with a clear test and an obtainable pathway to punitive damages in line with the legislature’s intent to deter bad faith conduct. Policyholders questioning whether their insurer’s conduct satisfies this burden should consult an insurance recovery attorney.

The materials available at this web site are for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem. Use of and access to this web site or any of the links contained within the site do not create an attorney-client relationship between Thacker Robinson Zinz LPA and the user or browser. The opinions expressed at or through this site are the opinions of the individual author and may not reflect the opinions of the firm or any individual attorney.

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Big Implications for Policyholder Bad Faith Claims in Pennsylvania

By: Stacy RC Berliner
Shareholder and Ohio State Bar Association-Certified Specialist in Insurance Coverage Law

On September 28, 2017, the Pennsylvania Supreme Court held that an insurer need not prove an insurance company’s motive of self-interest or ill-will as a prerequisite to prevailing in a bad faith claim under Section 8371. Instead, the Court adopted a two-part test first articulated by the Superior Court in Terletsky v. Prudential Property & Cas. Ins. Co., 649 A.2d 680 (Pa. Super. 1994) in establishing bad faith. In order to prevail on a bad faith claim, the policyholder must present clear and convincing evidence that (1) the insurer did not have a reasonable basis for denying benefits under the policy; and (2) the insurer knew of or recklessly disregarded its lack of a reasonable basis. Rancosky v. Washington National Insurance Co., Case No. 28 WAP 2016.

The Pennsylvania Supreme Court Justices unanimously affirmed a decision by the state’s Superior Court holding that an insurer’s motive of self-interest or ill will is merely one factor that can be considered in an analysis of potential bad faith conduct. Writing for the majority, Justice Max Baer wrote that “[w]e do not believe that the General Assembly intended to create a standard so stringent that it would be highly unlikely that any plaintiff could prevail thereunder when it created the remedy for bad faith. Such a construction could functionally write bad faith under Section 8371 out of the law altogether.”

The Rancosky opinion provides policyholders with a clear test and an obtainable pathway to punitive damages in line with the legislature’s intent to deter bad faith conduct. Policyholders questioning whether their insurer’s conduct satisfies this burden should consult an insurance recovery attorney.

The materials available at this web site are for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem. Use of and access to this web site or any of the links contained within the site do not create an attorney-client relationship between Thacker Robinson Zinz LPA and the user or browser. The opinions expressed at or through this site are the opinions of the individual author and may not reflect the opinions of the firm or any individual attorney.

Back to posts
Print article

Big Implications for Policyholder Bad Faith Claims in Pennsylvania

By: Stacy RC Berliner
Shareholder and Ohio State Bar Association-Certified Specialist in Insurance Coverage Law

On September 28, 2017, the Pennsylvania Supreme Court held that an insurer need not prove an insurance company’s motive of self-interest or ill-will as a prerequisite to prevailing in a bad faith claim under Section 8371. Instead, the Court adopted a two-part test first articulated by the Superior Court in Terletsky v. Prudential Property & Cas. Ins. Co., 649 A.2d 680 (Pa. Super. 1994) in establishing bad faith. In order to prevail on a bad faith claim, the policyholder must present clear and convincing evidence that (1) the insurer did not have a reasonable basis for denying benefits under the policy; and (2) the insurer knew of or recklessly disregarded its lack of a reasonable basis. Rancosky v. Washington National Insurance Co., Case No. 28 WAP 2016.

The Pennsylvania Supreme Court Justices unanimously affirmed a decision by the state’s Superior Court holding that an insurer’s motive of self-interest or ill will is merely one factor that can be considered in an analysis of potential bad faith conduct. Writing for the majority, Justice Max Baer wrote that “[w]e do not believe that the General Assembly intended to create a standard so stringent that it would be highly unlikely that any plaintiff could prevail thereunder when it created the remedy for bad faith. Such a construction could functionally write bad faith under Section 8371 out of the law altogether.”

The Rancosky opinion provides policyholders with a clear test and an obtainable pathway to punitive damages in line with the legislature’s intent to deter bad faith conduct. Policyholders questioning whether their insurer’s conduct satisfies this burden should consult an insurance recovery attorney.

The materials available at this web site are for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem. Use of and access to this web site or any of the links contained within the site do not create an attorney-client relationship between Thacker Robinson Zinz LPA and the user or browser. The opinions expressed at or through this site are the opinions of the individual author and may not reflect the opinions of the firm or any individual attorney.

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Print article

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