SEPTEMBER 2006 BAD FAITH CASES
BAD FAITH CLAIMS UNDER PENNSYLVANIA’S BAD FAITH STATUTE CANNOT REST ON INSURERS EXACTING HIGHER PREMIUMS (Middle District)
In Liberty Mutual Insurance Company v. Muskin Leisure Products, Inc., Liberty Mutual brought suit against Muskin to recover retrospective premiums allegedly owed under a series of workers’ compensation policies. Muskin counterclaimed, seeking bad faith damages pursuant to Pennsylvania’s bad faith statute based on Liberty Mutual’s attempt to collect retrospective premiums, alleging that this was not allowed under the policy. Liberty Mutual moved to dismiss the bad faith claims arguing, among other things, that a bad faith claim premised on extracting a higher premium is not actionable under Pennsylvania’s bad faith statute. The United States District Court for the Middle District of Pennsylvania considered current case law and agreed with Liberty Mutual, ultimately dismissing the bad faith claim. After noting that a bad faith claim under Pennsylvania’s bad faith statute cannot rest on an insurer exacting higher premiums, the Court found that because Muskin did not allege Liberty Mutual denied benefits, as required by the statute, there was no such cause of action against Liberty Mutual.
Date of Decision: September 13, 2006
Liberty Mut. Ins. Co. v. Muskin Leisure Prods., U.S. District Court for the Middle District of Pennsylvania, No. 3:CV-05-0253, 2006 U.S. Dist. LEXIS 65271 (M.D. Pa. 2006) (Vanaskie, J.).