OCTOBER 2015 BAD FAITH CASES: UNFAIR INSURANCE PRACTICES ACT CANNOT BE BASIS FOR PRIVATE CAUSE OF ACTION (Philadelphia Federal)

In Assurity Life Insurance Company v. Nicholas, the insured raised various counterclaims.  There was no bad faith count as such, but a count was pleaded for violation of the Unfair Insurance Practices Act.  The insurer moved to dismiss the court.

The court observed the well-recognized position that: “The UIPA expressly provides that enforcement of its provisions is the responsibility of the Insurance Commissioner and does not confer a private right of action.” The insured conceded the point, but attempted to argue that while the UIPA itself cannot be the basis for a claim, bad faith can be shown if the conduct at issue violated the UIPA.  The court stated that “there may be some extent to which conduct violative of the UIPA could serve as the basis for a bad faith claim,” citing Moore v. State Farm. However, the court did not have to reach the issue because there was no separate count for bad faith pleaded in this case.  Thus, it was clear that a “separate count asserting a claim directly under the UIPA cannot stand….”

Date of Decision: October 1, 2015

Assurity Life Ins. Co. v. Nicholas, CIVIL ACTION No. 14-6522, UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA, 2015 U.S. Dist. LEXIS 133701 (E.D. Pa. October 1, 2015) (Heffley, USMJ)