Rancosky v. Washington National
Insurance Company –Superior Court – December 16, 2015
In the course of holding against an insurance company on a claim by
its insured, the court said the following:
Insurance bad faith actions are governed by 42 Pa.C.S.A. § 8371, which
provides as follows:
In an action arising under an insurance policy, if the court finds that
the insurer has acted in bad faith toward the insured, the court may take all
of the following actions:
(1) Award interest on the amount of the claim from the date the claim
was made by the insured in an amount equal to the prime rate of interest plus
3%.
(2) Award punitive damages against the insurer.
(3) Assess court costs and attorney fees against the insurer.
The Pennsylvania legislature did not provide a definition of bad
faith, as that term is used in section 8371, nor did it set forth the manner in
which an
insured must prove bad faith. While our Supreme Court has not yet addressed
these issues, this Court has ruled that, to succeed on a bad faith
claim, the insured must present clear and convincing evidence to
satisfy a two part test: (1) the insurer did not have a reasonable basis for
denying
benefits under the policy, and (2) the insurer knew of or recklessly disregarded
its lack of reasonable basis in denying the claim. Terletsky,
649 A.2d at 688.
“There is a requisite level of culpability associated with a finding
of bad faith. Merely negligent conduct, however harmful to the
interests of the insured, is recognized by Pennsylvania courts to be categorically
below the threshold required for a showing of bad faith.”
Greene, 936
A.2d at 1189. Bad faith claims are fact specific and depend on the conduct of
the insurer vis à vis the insured. Condio
v. Erie Ins.
Exchange, 899
A.2d 1136, 1143 (Pa. Super. 2006). The fact-finder must consider “all of the
evidence available” to determine whether the insurer’s
conduct was “objective and intelligent under the circumstances.” Berg v. Nationwide Mut. Ins. Co., 44 A.3d 1164, 1179 (Pa. Super. 2012)
A “dishonest purpose” or “motive of self-interest or ill will” is not
a third element required for a finding of bad faith. Greene, 936
A.2d at 1191; see
also Nordi v. Keystone Health Plan West Inc., 989 A.2d 376, 385 (Pa.Super. 2010). A “motive of self-interest or
ill will” may be considered in
determining the second prong of the test for bad faith, i.e., whether an insurer
knowingly or recklessly disregarded its lack of a reasonable basis for
denying a claim. Greene, 936
A.2d at 1190.
There is a heightened duty of good faith was imposed on the insurer in
a first-party claim because of the special relationship between the insurer and
its insured, and the very nature of the insurance contract. See Romano v. Nationwide Mut. Fire Ins. Co., 646 A.2d 1228, 1231 (Pa. Super. 1994) (holding that an insurer must
act with the “utmost good faith” toward its insured).
Individuals expect that their insurers will treat
them fairly
and properly evaluate any claim they may make. A
claim must
be evaluated on its merits alone, by examining
the particular
situation and the injury for which recovery is
sought. An
insurance company may not look to its own
economic
considerations, seek to limit its potential
liability, and operate in
a fashion designed to “send a message.” Rather,
it has a duty to
compensate its insureds for the fair value of
their injuries.
Individuals make payments to insurance carriers
to be insured in
the event coverage is needed. It is the
responsibility of insurers
to treat their insureds fairly and provide just
compensation for
covered claims based on the actual damages
suffered. Insurers
do a terrible disservice to their insureds when
they fail to
evaluate each individual case in terms of the
situation presented
and the individual affected.
Bonenberger v. Nationwide Mut. Ins.
Co., 791 A.2d 378, 382 (Pa.
Super.
2002).
-------------------
If the case is old, the link
may have become stale and may not work, but you can use the case name, court,
and date to find the opinion in another source (e.g., Westlaw, Lexis, Google
Scholar)
