Centre County Court Confirms That Bad Faith Statute Does Not Apply to Carrier's Conduct in Litigation Process As a Legal Adversary

In the recent decision in the case of Hardy v. Erie Insurance Exchange, No. 2012-CV-2059 (C.P. Centre Co. March 7, 2017, Ruest, J.), the court addressed cross-motions for summary judgment in an automobile accident matter.   The case more specifically centered around property damage claims, medical expenses claims along with related bad faith claims.   The Plaintiff filed an action alleging breach of contract and bad faith.  

Of note, the court allowed the breach of contract action to go forward as genuine issues of material fact remained on that count.   However, the court granted summary judgment to the carrier on the Plaintiff’s claims for bad faith.  

In so ruling, the court noted that, an insurance company is not required to blindly pay each claim without investigation in order to avoid a bad faith lawsuit.  

While the Plaintiffs argued in this matter that the Defendant carrier acted in bad faith by failing to promptly and accurately investigate and handle the claim, the court found that the facts of record indicated that the carrier responded to the claim within a reasonable amount of time.   The court also found that the Defendant carrier was not liable for bad faith under the allegations of violations of the Unfair Insurance Practices Act.  

The court also rejected the Plaintiff’s claims for bad faith under 42 Pa. C.S.A. §8371 on the basis of the Defendant’s allegations during litigation.   The court noted that the appellate courts of Pennsylvania have declined to find that the broad language of §8371 covers a party’s action during discovery as a basis for a bad faith allegation.  

Rather, §8371 has been read by the Pennsylvania appellate courts to only allow for a remedy for bad faith conduct that alleged arises when a carrier is acting as an insurer, not actions by the carrier when acting as a legal adversary in the litigation process.  

Overall, the court granted summary judgment to the carrier on the bad faith claim.  

Anyone wishing to review this decision may click this LINK.