Federal Middle District Court of Pennsylvania Allows Bad Faith Claim To Proceed Where Carrier Allowed Same Claims Rep to Handle Both Third Party and UIM Claim

In the case of Vella v. State Farm Mutual Automobile Insurance Co., Civil Action No. 17-1900 (M.D. Pa. Apr. 23, 2018 Rambo, J.), the court granted in part and denied in part a Motion to Dismiss a Bad Faith claim arising out of the handling of a UIM claim.

According to the Opinion, the insured submitted a UIM claim to its insurer following a motor vehicle accident.

The tortfeasor in the accident happened to also be insured by the same carrier for liability purposes.

The carrier assigned the same claim representative to manage both the first-party UIM claim and the third-party negligence claim. The insured eventually sued for bad faith as to the handling of both claims.

The insurer moved to dismiss aspects of the bad faith claim on the basis that Pennsylvania law precludes a third-party claimant from bringing a cause of action for bad faith against a tortfeasor’s insurer.

The Court denied the motion in part and granted in part. More specifically, the Court found the insured sufficiently pleaded facts regarding the interplay between the claims handling of first-party UIM and third-party negligence claims to make out a plausible bad faith claim.

However, the Court dismissed those allegations in the Complaint pertaining to claims asserted by the insured for bad faith against the insurer solely on the basis of the carrier’s actions regarding the handling of the third-party claim.

Anyone wishing to review this decision in the Vella case may click this LINK.

I send thanks to Attorney Lee Appelbaum of the Philadelphia bad faith defense firm of Fineman, Krekstein & Harris, and writer of the excellent Pennsylvania and New Jersey Insurance Bad Faith Case Law Blog, for bringing this case to my attention.