NOVEMBER 2015 BAD FAITH CASES: INSURANCE FRAUD CLAIMS BARRED BY STATUTE OF LIMITATIONS; LIMITS ON EXPERT TESTIMONY AS TO ULTIMATE ISSUE OF BAD FAITH (Philadelphia Federal)

In Schatzberg v. State Farm Mutual Automobile Insurance Company, the insurer brought a statutory insurance fraud claim against a medical provider, under 18 Pa.C.S. § 4117, among other fraud based claims.  This claim has a two year statute of limitations. The court found that the insurer was on notice of the alleged fraudulent billing scheme well beyond the limitations periods applicable to the various claims; and the court rejected all tolling theories. Thus, summary judgment was granted against the insurer.

In an interesting alternative holding, the court found there could be no justifiable reliance on the alleged fraud after a certain period, because the insurer was aware of the fraud but kept making payments anyway.

In a second opinion the same day, granting the insurer partial summary judgment on the plaintiff’s defamation claims, the court made observations as to how experts could not testify on the ultimate legal issue of bad faith; and footnoted various statutory and regulatory provisions addressing the Pennsylvania Legislature’s concern with combating insurance fraud.

Dated of Decisions: October 7, 2015

Schatzberg v. State Farm Mut. Auto. Ins. Co., CIVIL ACTION NO. 10-2900, 2015 U.S. Dist. LEXIS 136722 (E.D. Pa.  October 7, 2015) (QUIÑONES ALEJANDRO, J.)

Schatzberg v. State Farm Mut. Auto. Ins. Co., CIVIL ACTION NO. 10-2900, 2015 U.S. Dist. LEXIS 136730 (E.D. Pa.  October 7, 2015) (QUIÑONES ALEJANDRO, J.)