By Charles Haddick
Special to the Legal
In my last post, I introduced a bad faith ruling from the Western District of Pennsylvania that has received considerable attention since it was published on Jan. 4. Now, we continue our look at the Wisinski case, beginning with an in-depth analysis of the ruling.
To the extent an over-arching observation can be made, the ruling, in large part, appears to place heavy burdens and obligations on the insurer to safeguard the rights of the insured even though Pennsylvania law clearly holds that a UM/UIM proceeding is adversarial in nature, according to Condio vs. Erie, and that an insurer need not subvert it’s own rights in such a proceeding to the rights of the insured.
Moreover, even though the insured in Wisinski was represented by counsel throughout the duration of her UM claim, the court did not appear to find this highly significant and appeared to impose greater responsibility for safeguarding the insured’s rights on the insurer than Wisinski’s own lawyer.
Starting off with a change in assumption of such high magnitude -- the precise duty owed by an insurer to an insured in a UM/UIM context -- was sufficiently fundamental to then cause the remainder of the opinion to lean the way it did, contrary to existing bad faith law and highly in favor of the insured. In fairness to the ruling, we will examine each feature of the opinion individually.
The first casualty of the above assumption was the falling of another: the long-held belief in Pennsylvania that negligence and bad faith do not describe legally equivalent conduct. Nonetheless, in Wisinski, the court may have interpreted conduct on the part of the insurer that may have been no more than negligence as satisfying the liability standard under the bad faith statute.
Ironically, Cohill correctly observed that the insured has a burden of producing clear and convincing evidence that the insurer acted intentionally or recklessly in handling of the claim, citing Employer’s Mutual Casualty Company vs. Loos. The court also observed that an insured must show that the breach of the duty of good faith must include some motive of self-interest or ill will, citing Koserowski vs. Allstate. In fact, the court appears to have correctly applied this standard when it entered summary judgment in favor of American Commerce on the bad faith claim relating to the handling of the first-party portion of the claim when Cohill wrote, “we can discern no ill will on the part of ACIC and find that ACIC did not act in bad faith with regard to this claim.”
But this same discernment appears to be lost, to some degree, when the handling of the UM/UIM claim is examined. The court found that ACIC committed bad faith by failing to advise the insured of the proper limits of coverage. The court did so despite writing, “while there is no direct evidence that ACIC intentionally did not inform Mrs. Wisinski of the correct policy limit, and insurance company is in the best position to accurately determine the correct policy limit of its own policy.”
While this may or may not be true, the next leap in logic was substantial, when the court wrote: “an insurance company that possesses the information to allow them to accurately determine the policy limits but failed to inform the insured of the correct policy limits does so either intentionally or recklessly.” (emphasis added)
The court here appeared to overlook two fairly significant facts. First, the insured had a copy of her policy and her own lawyer. Wouldn’t that, especially in the adversarial setting of a UM/UIM claim, put the insurer in at least as good a position to make a determination what her limits were? Second, why doesn’t the court here at least allow for the possibility of mistake or inadvertence on the part of the insurer, especially at the summary judgment stage where disagreement over the “limit” was actually whether a recognized $50,000 limit was stacked to provide an aggregate of $100,000 in coverage? To ignore such a possibility is to wrongly equate negligence and bad faith, and controlling Pennsylvania law does not permit such an equation, as we shall see in an upcoming post.
So, despite acknowledging the need for the plaintiff to produce clear and convincing evidence of bad faith, and that such evidence must include proof of ill will or improper motive, and despite acknowledging it was aware of no direct evidence of intentional misrepresentation concerning the policy limits, the Wisinski court nevertheless made an assumption at the summary judgment stage that ACIC could not have simply made a mistake, or been negligent, but ruled that because the insurer had the same information the insured and her lawyer had, it either knew or should have known the correct policy limits, and intentionally or recklessly misrepresented them to its insured.
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 [email protected].
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