The Pennsylvania Supreme Court has ruled on a case concerning a bad faith insurance claim, unanimously upholding the decision of the state Superior Court in favor of the plaintiff. At issue was whether a policyholder must demonstrate ill will on the part of an insurer as well as lack of a reasonable basis in denying a claim. While malice can be used as a factor to determine whether an insurer acted in bad faith, the Court said it is no longer a prerequisite for plaintiffs to succeed in bad faith claims.
In the case before the court, a U.S. postal worker had purchased a supplemental insurance policy for cancer from Conseco Health Insurance Company. Conseco cut off coverage to the worker because of an error concerning a date. The error occurred in paperwork filled out by the plaintiff’s doctor and mistakenly identified the date on which she became disabled. Conseco refused to cover the plaintiff because they claimed she had not paid her premiums.
The Conseco policy contained a waiver-of-premium provision that excused payments from policyholders who become disabled due to cancer more than 30 days after the start of the policy, and if the disability continues for 90 consecutive days or more, beginning on or after the diagnosis date. Unbeknownst to the plaintiff, her date of diagnosis was entered incorrectly by the doctor on the physician’s statement required by Conseco.
The plaintiff stopped making premium payments because she was disabled with cancer and over the course of the next two years submitted several claims for her cancer treatment as her battle with the disease progressed. Conseco paid the claims, but then discovered in a company audit of payroll premium deductions that she had stopped paying her premiums on a day that did not comply with the dates required by the waiver of premium provision on the policy. A year later, when her cancer relapsed, the company denied her claims for further benefits.
The plaintiff filed a lawsuit against Conseco charging them with bad faith. Conseco won the trial in Washington, Pennsylvania. Later on appeal, the Pennsylvania Superior Court vacated the first judgment and remanded the case for further proceedings. The new ruling by the Supreme Court was an affirmation of the Superior Court’s decision and was a majority opinion voted on by five judges, plus two affirming opinions.
The Supreme Court ruling is a clear victory for policyholders. For years, insurers had argued that claimants had a burden to prove ill-will or self-interest on the part of the insurer to succeed in a bad faith lawsuit. The Court said in its decision that providing evidence that the insurer did not have a reasonable basis to deny benefits and that the insurer knew of or recklessly disregarded its lack of a reasonable basis for denying benefits, is sufficient to establish bad faith.
If you have a bad faith claim, we can help you recover compensation and hold your insurer accountable. At AlpernSchubert P.C. our experienced team can provide you with skilled legal representation to resolve your case with the best possible outcome. Call 412-765-1888 today to schedule a free initial consultation with a Pittsburgh bad faith insurance lawyer from AlpernSchubert. You can also contact us online. From our offices in Pittsburgh, we proudly serve clients throughout Western Pennsylvania, including New Castle, Washington, Allegheny County, Lawrence County, and Washington County.