Today's Insurance Bad Faith Arena: Gaining the Upper Hand

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Featured Speakers:

Tim LawReed Smith, Philadelphia, PA

[email protected]

Alicia CurranCozen O’Connor, Dallas, TX

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The webinar will begin promptly at 2pm EST.

FC&S Legal presents: Hot Issues in the Insurance Bad Faith Arena

Brought to you by The National Underwriter Company, publishers of FC&S Legal © 2013. All Rights Reserved

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Duty of Good Faith and Fair Dealing Heightened duty that arises out of the special relationship

between an insurance company and its policyholder Tort / Common Law, Contract, Statute Common Areas of Bad Faith Litigation:

(1) unfounded refusals to pay policy proceeds; (2) delay in making payment; (3) deceiving the insured; (4) failing to settle liability claims, especially those with a

potential for a judgment in excess of policy limits.

Introduction to Bad Faith


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Expert Testimony

Expert Testimony in Bad Faith Litigation

• Provide opinion testimony to educate a judge and jury about matters that are beyond the ordinary experience and understanding

• Require fact finder to evaluate expert testimony that is often diametrically opposed

• Generally, not a necessity – unless your opponent has an expert, then it is. Or if you are litigating certain issues in certain states, California, Wisconsin, Texas, and Massachusetts most notably.


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Standard of Expert Admissibility

Federal Rule of Evidence 702:

If scientific, technical or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training or education, may testify thereto in the form of an opinion or otherwise.


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Judge as Gatekeeper

Judges have an obligation to exclude expert evidence that does not meet the standard of admissibility.

Is the witness an expert on the topic on which he or she will testify?

Will his or her testimony assist the trier of fact to understand the evidence?

Does knowledge of claim handling practices constitute scientific, technical or other specialized knowledge?


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Expert Conclusions

Province of the jury to draw inferences and reach conclusion on the ultimate issue.

Best expert testimony points to established standards and evaluates whether the insurance company’s conduct complied with those standards.

Worst expert testimony is conclusory, based on speculation, hostility, or personal inclination/bias.


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Payment of Claims

What is the effect of the payment of a claim during the pendency of bad faith allegations?


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Time-Sensitive Policy Limit Demands

One common bad faith allegation is failing to settle within limits.

Another common bad faith allegation is settling the liability of some insureds for the limits of the insurance, while leaving the remaining insureds without any insurance.

Finally, yet another common scenario arises when there is an opportunity to settle the liability of fewer than all insureds and the insurance company fails to do so, seeking to preserve limits for other insureds.


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Consent to Settlement

Typically, the insurance policy gives the insurance company the right to settle claims

A “voluntary payments” clause can eliminate coverage where an insured settles without the insurance company’s consent

Settlement demands can be time sensitive What happens if the insurance company does not respond? What happens if an insurance company rejects a settlement

offer that the policyholder deems reasonable?


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Litigation Sensitivity

Does the Insurance Company Continue to Owe a Duty of Good Faith Once Litigation Commences?

Duty of Good Faith. Goals of Cooperation and Protection – help the insured through a time of hardship.

Duty of Zealous Representation – adversity, struggle against the policyholder. In tension with duty of good faith and fair dealing.


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Can Good Faith and Zealous Representation Co-exist???

Of course. Duty to Investigate

An insurance company has a duty to promptly and fairly investigate the claim – but not to leave every stone unturned.

Right to Discovery An insurance company has a right to relevant discovery.

No right to abusive litigation tactics Sanctionable under the rules. Some courts say the discovery rules are exclusive remedy for

discovery violations and abuses.


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New Legislation

NJ Bad Faith Statute Update Would codify remedy for bad faith insurance practices in

New Jersey. Applies to all claims filed on or after October 1, 2012. Allows suits under the New Jersey Unfair Claims

Settlement Practices Act.NY Bad Faith Statute UpdateTexas HB 2125 – Appraisals Mandatory Where

Disputed Amount of Loss - Dies in the House


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Hot Issues in the Insurance Bad Faith Arena

Q&A


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Today's Insurance Bad Faith Arena: Gaining the Upper Hand