Tuesday, January 11, 2011

Latest UM Bad Faith Decision of Note

Senior U.S. District Judge Maurice B. Cohill Jr., of the Western District Federal Court, recently issued the latest uninsured (UM) motorist benefits Bad Faith decision of note in the case of Wisinski v. American Commerce Group Inc., slip copy, 2011 WL 13744 (W.D.Pa. Jan. 4, 2011, Cohill, J.).

In Wisinski, the plaintiff asserted that the carrier had breached the contract of insurance, violated the Section 8371 bad faith statute, and conducted unfair trade practices in violation of Pennsylvania's Motor Vehicle Financial Responsibility Law with its handling of the claim.

By way of background, the plaintiff allegedly injured both knees in the accident and eventually required injections in both knees, arthroscopic repair, and bilateral knee replacement surgery. The plaintiff's medical expenses in this regard were over $40,000 and she also presented a wage loss claim.

During the course of the UM claim, the UM carrier pointed to the plaintiff's prior medical history of knee trouble and viewed the case as an aggravation of pre-existing conditions case.

The carrier at one point represented that the limits were only $50,000 but later corrected that to note the available limits were actually $100,000.

The UM carrier offered $7, 798 to settle the matter early in the claim. As the case proceeded, the carrier eventually coughed up its $100,000 limits.

Then in settlement, the carrier presented the claimant with a release that contained language requiring the plaintiff release any bad faith claims against the carrier. Plaintiffs counsel would not agree to such language and secured a revised release.

The case thereafter proceeded into this bad faith litigation. After reviewing the cross-motions for summary judgment filed by the parties, the court granted in part and denied in part each of the motions. In his decision Judge Cohill found, by clear and convincing evidence, that the insurer, American Commerce Group, Inc., also known as ACIC, acted in bad faith in five ways:

-by misrepresenting the uninsured motorists policy limits;

-by refusing to arbitrate the claim despite clear arbitration language in the policy;

-by misleading the insured about its intentions to appeal an arbitration award;

-by presenting unreasonably low settlement offers; and

-by unreasonably delaying payment of the settlement funds and attempting to have the plaintiff waive future claims against it for bad faith.

The courts ruling left for a jury decision only the issue of the amount of damages the plaintiff was entitled to under the circumstances presented.

Judge Cohill's decision reads as a thorough primer on the handling of UM claims.

Copies of the 34-page opinion in Wisinski v. American Commerce Group Inc. , PICS No. 11-0068, are available from The Legal Intelligencer/Pennsylvania Law Weekly and can be secured by calling the Pennsylvania Instant Case Service at 800-276-PICS (7427) to order or for information.

Source: "Federal Judge Finds 'Intentional' Bad Faith on Insurer's Part" by Shannon P. Duffy, Legal Intelligencer Jan. 11, 2011).

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