Federal Court Dismisses Bad Faith Claims Asserted Directly Against to Claims Adjusters in a UIM Case

In the case of Holohan v. Mid-Century Ins. Co., No. CV 20-6903 (E.D. Pa. Sept. 27, 2021 Tucker, J.), the court denied bad faith claims asserted by a Plaintiff against two (2) automobile insurance adjusters. Other bad faith claims asserted against the carrier were allowed to proceed.

According to the Opinion, this case involved claims against an automobile insurance carrier regarding two (2) distinct motor vehicle accidents. The insured husband alleged personal injuries as a result of a first accident that were exacerbated in a second accident. The Plaintiff alleged that he was underpaid on the first loss for medical benefits and asserted that his UIM claim was mishandled relative to the second accident.

The Plaintiff brought various claims for breach of contract and bad faith as well as claims under the Unfair Trade Practices and Consumer Protection Law against the two (2) individual claims representatives.

The Defendant carrier filed a Motion to Dismiss the claims against it as well as the individual claims representatives.

The court found that the claims against the individual adjusters failed after finding that, while insurance adjusters have a duty to their principals and should conduct investigations in a proper manner, this duty does not create a contractual obligation between the adjuster and the insured. Rather, only the principal, that is, the insurance company, could have such contractual liability.

The court dismissed the claims against the individual adjusters for these reasons and given that there were no facts pled by the Complaint to support any claims of deceptive or fraudulent conduct under the Unfair Trade Practices and Consumer Protection Law.

The court did allow the statutory bad faith claims asserted against the carrier to proceed after finding that the Plaintiff had stated sufficient factual allegations in support of the same. In particular, the Plaintiff alleged, in part, that the carrier and one of the adjusters conducted seven (7) peer reviews with respect to the Plaintiff’s treatment in an effort to challenge causation and deny benefits.

The court otherwise dismissed the Plaintiff’s common law bad faith claims after finding that those claims were subsumed in the breach of contract claims.

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

I send thanks to Attorney Lee Applebaum of the Philadelphia law firm of Fineman Krekstein & Harris for bringing this case to my attention.   Please be sure to check out Attorney Applebaum’s excellent Pennsylvania and New Jersey Insurance Bad Faith Case Law blog HERE.  

Source of image:  Photo by Adolfo Felix on Unsplash.com.