By Charles Haddick
Special to the Legal
On Jan. 4, Judge Maurice Cohill of the U.S. District Court for the Western District of Pennsylvania issued a ruling in the insurance bad faith case of Wisinski vs. American Commerce Group Inc. and American Commerce Insurance Company. The court entered summary judgment in favor of the insured relative to bad faith and breach of contract claims arising out of an uninsured motorist claim.
While the court also granted summary judgment in favor of the insurer with respect to the plaintiff’s first party benefits claim, it is the portion of Cohill’s opinion that found bad faith in the handling of the UM/UIM claim that is drawing the most attention.
It is unclear whether or not American Commerce will seek an appeal of the ruling at the conclusion of the litigation.
The opinion spans 32 pages and is such a rich discussion of so many facets of bad faith claims handling that it cannot be broken down and analyzed in a single post. Over the next several blog posts, then, we will look at the Wisinski decision in some detail and analyze why some of the assumptions underlying the opinion may be a departure from existing bad faith precedent in Pennsylvania on both the state and federal levels. While it is far too early to determine whether the opinion is a brief departure from the trend to narrow the footprint cast by Section 8371, or perhaps a sign of something more, it is worth an immediate look.
The court’s discussion of the factual history of the first party and UM/UIM insurance claims alone comprises nearly half of the 32-page opinion. We will discuss specific facts as they lend themselves to the specific issues we will be examining. It is sufficient for current purposes to know that the case arises out of an auto accident Wisinski reported to ACIC on Dec. 21, 2001. The first party claim was pursued initially, and Wisinski, who was represented by counsel throughout the claim, did not place American Commerce on notice of a UM claim until Dec. 18, 2003. The parties disputed whether or not the policy between them provided for arbitration of the UM claims. ACIC originally informed Wisinski that the policy was a single $50,000 limit policy, when in reality the limit was stacked twice in the aggregate to $100,000.
Several settlement offers were made by ACIC after learning that Wisinski, who sought compensation for knee injury, had made a prior SSI claim, and was diagnosed by her own doctor with degenerative arthritis. Settlement in principal for the policy limit of $100,000 was reached in late 2006 and an acceptable release agreement was finalized in February 2007 under which $100,000 policy limits were paid.
A bad faith claim was subsequently filed on behalf of Wisinski. The three chief claims against American Commerce relative to handling the UIM claim concerning bad faith were the company’s failure to advise its insured of the correct policy limits; its failure to proceed to arbitration; and its initial offer of a release agreement which sought release of any and all claims, including bad faith claims.
In our next post, we will start to tackle analysis of Cohill’s ruling.
Charles Haddick is a partner with Dickie McCamey & Chilote. I welcome feedback from readers, along with any suggestions for topics you would like to see discussed in this space. Please e-mail me at firstname.lastname@example.org.