The Supreme Court had held previously that Iowa workers' compensation carriers can be held liable in bad faith
actions because state statues place an "affirmative obligation" on insurance carriers to act reasonably.
Though the attorney-client privilege was not at issue, the court's sweeping language has arguably created some doubt whether the privilege applies to protect such communications in bad faith
(13) The case proceeded to trial, after which a jury determined that GEICO had acted in bad faith
, and the settlement was unreasonable and tainted by bad faith on the part of the settling parties.
to find insurers in bad faith
even without evidence of nefarious intent.
Only one state, Tennessee, has enacted a statute allowing insurers to recover damages if a policyholder brings a lawsuit against an insurer in bad faith
. The insurer may recover up to 25% of the policyholder's fraudulent claim.
Ashley states in Bad Faith
Actions: Liability and Damages, that almost 30 state courts recognized arguments of bad faith by the mid-1990s.
(5) Did Exxon have an intentional scheme to cheat Alabama out of royalties due under the lease deserving of punitive damages, or is this case simply a question of contract interpretation that, even if breached in bad faith
, would not allow punitive damages?
The key determinant is whether the third-party administrator is both acting like an insurer and subject to the danger that it will, like an insurer acting in bad faith
, place its own economic interest ahead of the interests of the policyholder.
If the deferential standard of review applies, however, a decision is found to be arbitrary and capricious (or an abuse of discretion) "where the decision is in bad faith
, not supported by substantial evidence, or erroneous on a question of law." (25) Further, an abuse of discretion may be found where an ERISA plan administrator makes a decision that "conflicts with the plain language of the plan." (26) An abuse of discretion may also be found in welfare benefit claims where the plan administrator seeks to place greater weight on the opinions of reviewing physicians than on the opinions of treating and examining doctors.
An insurance carrier that is acting in bad faith
. may be liable for an amount far in excess of its coverage if bad faith can be proven.
(24) However, some states only award declaratory fees if the insurer's coverage denial was in bad faith
"The right of the principal to terminate [a broker's] authority is absolute and unrestricted, except only that he may not do it in bad faith
, and as a mere device to escape the payment of the broker's commissions.
Given this lower standard, the jury in Camacho returned a verdict for the insured finding that Nationwide "acted negligently or in bad faith
in failing to settle the claims."
claim in bad faith
. (4) Danny Kelly and Henry Thomas were involved in a
(4) When an insurer acts in bad faith
and the insured's damages exceed the available UM/ UIM policy limits, the insured will be able to plead a prima facie bad-faith claim.