SEPTEMBER 2008 BAD FAITH CASES EFFORT BY INSURED CONVICTED OF INSURANCE FRAUD TO BRING BAD FAITH CLAIM REBUFFED BY COURT (Western District)

In Tuschak v. State Farm Mutual Automobile Insurance Company, the carrier rejected coverage for a breach of contract so severe, that the insured was convicted of insurance fraud for his claim.  Yet, he brought breach of contract and bad faith claims against the insurer.  The court’s response says it all:  “Tuschak has not discharged this burden. State Farm  had a reasonable basis for denying Tuschak’s claim. Tuschak engaged in, indeed was convicted of, insurance fraud. He lied to State Farm  about the very cause of the claim he submitted. His lies during the processing of the claim provided a contractual basis upon which State Farm  could reasonably deny coverage. As previously stated, a reasonable basis for State Farm’s defeats a claim for bad faith.”

Date of Decision:  July 14, 2008

Tuschak v. State Farm Mut. Auto. Ins. Co., No. 07-589, 2008 U.S. Dist. LEXIS 55020 (W.D.Pa. July 14, 2008) (Ambrose, J.)

L.A.