Expert Allowed To Testify Regarding Bad Faith, But With Limitations

In the case of Three Rivers Hydroponics, LLC v. Florists’ Mut. Ins. Co., No. 2:15-CV-809 (W.D. Pa. Jan. 27, 2020 Hornak, J.), the court allowed a Plaintiff’s bad faith expert to testify with certain limitations.

The case arose out of a first party property loss from fire damage to a commercial greenhouse sterilization system.

The Plaintiff alleged that the carrier had wrongly denied coverage and that, as a result, the Plaintiff was forced out of business due to the carrier’s conduct. The Plaintiff sued for breach of contract and bad faith.

One of the experts the Plaintiff sought to use at trial was a bad faith expert. That bad faith expert was an attorney who also had over twenty (20) years of experience as a claims adjuster. That expert was offered by the Plaintiff to present opinions regarding insurance industry standards and practices, regarding the carrier’s handling of the claim at issue, regarding the carrier’s compliance with insurance statutes and regulations, and with respect to an interpretation of the carrier’s policy that was issued to the Plaintiff.

The carrier brought a Daubert Motion to Preclude the Plaintiff’s bad faith expert’s testimony. The defense asserted that the expert attorney’s legal conclusions would not help a jury. The carrier more specifically sought to preclude the expert from testifying on whether or not the carrier violated statutes or regulations and with respect to the expert’s interpretation of the Plaintiff’s insurance policy.

The federal district court ruled that “the admissibility of expert testimony hinges on a ‘trilogy of restrictions’: qualification, reliability and fit.”

In this matter the admissibility of the testimony rested on the restrictions pertaining to 'fit.'   In that regard, the court noted that, under Federal Rule of Evidence 702, the expert testimony must help the jury to understand the evidence or to determine a fact in issue.

The court noted that the “standard for fit is ‘not that high,’ although the standard was noted to be is higher than mere relevance.

In the end, the court ruled that, with certain limitations, the bad faith expert’s testimony would assist the jury in determining what constituted reasonable conduct when handling an insurance claim. The court noted that the expert’s twenty-six (26) years of experience as a claims adjuster would also be helpful in providing the jury with guideposts as to what constitutes reasonable adjusting and claims handling conduct.

As such, the expert was permitted to testify as to best practices in handling insurance claims of the type at issue in this case.

The expert was prohibited from testifying on whether or not the carrier violated any statutes or regulations.

Anyone wishing to review a copy of this decision may click this LINK


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