Presenting a live 90-minute webinar with interactive Q&A Demystifying the "Bad Faith Set-Up" in Insurance Litigation Navigating the Space Between Aggressive Advocacy and Allegations of the So-Called Set-Up TUESDAY, AUGUST 16, 2016 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific Today’s faculty features: Robert T . Horst, Partner , Timoney Knox , Fort Washington, Pa. Danya J. Pincavage, Partner , Ver Ploeg & Lumpkin , Miami C. Scott Rybny, Partner , Timoney Knox , Fort Washington, Pa. Daniel L. Petrilli, Timoney Knox , Fort Washington, Pa. The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10 .
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STRAFFORD PUBLICATIONS WEBINAR August 16, 2016 August 16, 2016 Demystifying the “Bad Faith Set Demystifying the “Bad Faith Set-Up” in Demystifying the “Bad Faith Set-Up” in Demystifying the “Bad Faith Set Up” in Up” in Insurance Litigation Insurance Litigation Daniel L. Petrilli Danya J. Pincavage C. Scott Rybny Associate Shareholder Partner Timoney Knox, LLP Ver Ploeg & Lumpkin, P.A. Timoney Knox, LLP (215) 540-2637 (305) 577-3996 (215) 540-2658 Dpetrelli@timoneyknox.com dpincavage@vpl-law.com Srybny@timoneyknox.com 5
OVERVIEW I. Is There Really Such a Thing as a “Set-Up?” Does the Concept Even Exist? II. Developing Caselaw III. Common Tells for the “Bad Faith Set-Up” 6
OVERVIEW IV. Insurer Best Practices V. Claimant Pitfalls V. Claimant Pitfalls VI. Alert! The New Frontier – “Social Duty” 7
INTRODUCTION INTRODUCTION 8
9
EVALUATING BAD FAITH THE REASONABLE BASIS • THE “FAIRLY DEBATABLE” • DEFENSE DEFENSE 10
I. THE “BAD FAITH SET-UP”: FACT OR FICTION? 11
II. DEVELOPING CASELAW 12
PENNSYLVANIA 13
SHANNON V. NEW YORK MUTUAL INS. CO., 2013 U.S. DIST. LEXIS 165280 (M.D. PA. NOV. 21, 2013) • Insurer Files Motion to Strike “Bad Faith Set-Up Affirmative Defense” • Policyholder Sued Insurer for Bad Faith Failure to Offer Policy Limits Leading to Jury Award 18X the Policy Limits 14
SHANNON V. NEW YORK MUTUAL INS. CO., 2013 U.S. DIST. LEXIS 165280 (M.D. PA. NOV. 21, 2013) • “Bad faith set-up" involved "a quick settlement demand, followed by a quick closing of the window before important information is provided so that any subsequent limits offers by the insurer so that any subsequent limits offers by the insurer are bemoaned as too late." • Court Does Not Expressly Acknowledge the “Bad Faith Set-Up” as an Affirmative Defense, but Does Not Strike the Defense 15
DIETZ & WATSON, INC. V. LIBERTY MUTUAL INS., 2015 U.S. DIST. LEXIS 58827 (E.D. PA. MAY 5, 2015) • Insurer Argued Assignment of Bad Faith Claim Involved Collusion Similar to “Bad Faith Set-Up” • Court Tacitly Acknowledges the “Bad Faith Set- Up” as the Basis for an Affirmative Defense 16
DIETZ & WATSON, INC. V. LIBERTY MUTUAL INS., 2015 U.S. DIST. LEXIS 58827 (E.D. PA. MAY 5, 2015) • “if proven, these two affirmative defenses, without limitation, are valid defenses to D&W’s [policyholder’s] action. The facts alleged by Liberty [insurer] are sufficient for it to take Liberty [insurer] are sufficient for it to take discovery into the areas of D&W’s alleged voluntary payment made without the consent of Liberty and D&W’s bad faith.” 17
NEVADA 18
STRIEGEL V. AM. FAMILY MUT. INS. CO., 2015 U.S. DIST. LEXIS 88653 (D. NEV. JUL. 7, 2015) • Court Held that it was Reasonable for the Insurer to Not Have Settled a Claim within a Two-Week Timed, Settlement Period • Because of Multiple Similar Filings, the Court Referred Counsel for the Claimiant to the State Bar of Nevada for Disciplinary Review 19
STRIEGEL V. AM. FAMILY MUT. INS. CO., 2015 U.S. DIST. LEXIS 88653 (D. NEV. JUL. 7, 2015) • The Court Opined that Counsel “has a modus operandi of using similar demand letters in operandi of using similar demand letters in multiple cases in this District, which impose an multiple cases in this District, which impose an unreasonable time constraint of two weeks on their demands for payment to set up a bad faith claim” 20
KANSAS 21
NELSON V. PROGRESSIVE NORTHWESTERN INS., 2016 U.S. DIST. LEXIS 28952 (D. KAN. MAR. 7, 2016) • Policyholder Sues Insurer for Bad Faith Failure to Settle a Third Party Personal Injury Claim • Insurer Argues Excess Verdict Was Caused By Its Policyholder’s “Refusal to Defend the Claim” and Her “Counsel’s Intent to Pursue a Bad Faith Claim” 22
NELSON V. PROGRESSIVE NORTHWESTERN INS., 2016 U.S. DIST. LEXIS 28952 (D. KAN. MAR. 7, 2016) • Proper inquiry involves whether facts "raise a suspicion of the ’cat-and-mouse’ game between claimants and insurers” • Operative facts include “arbitrary settlement • Operative facts include “arbitrary settlement deadlines and deprived the insurer of information in order to hamper the insurer’s ability to investigate the accident" 23
ROBERTS V. PRINTUP, 595 F.3D 1181 (10TH CIR. 2010) • Third Party Claimant Submits a Timed, 10-day Settlement Demand to an Insurer After an Automobile Accident • Offer Was Accepted 3 Weeks Later, But Claimant Filed Suit and Obtained an Excess Verdict 24
ROBERTS V. PRINTUP, 595 F.3D 1181 (10TH CIR. 2010) • For Timed-Settlement Demands, the Court Emphasized a Policy Designed "to avoid creating the incentive to manufacture bad faith claims by shortening the length of the settlement offer, while shortening the length of the settlement offer, while starving the insurer of the information needed to make a fair appraisal of the case" 25
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