FC&S Legal presents: Hot Issues in the Insurance Bad Faith Arena Featured Speakers: Tim Law Reed Smith, Philadelphia, PA Tlaw@reedsmith.com Alicia Curran Cozen O’Connor, Dallas, TX acurran@cozen.com The webinar will begin promptly at 2pm EST. Brought to you by The National Underwriter Company, publishers of FC&S Legal © 2013. All Rights Reserved

Introduction to Bad Faith Duty of Good Faith and Fair Dealing Heightened duty that arises out of the special relationship between an insurance company and its policyholder Tort / Common Law, Contract, Statute Common Areas of Bad Faith Litigation: (1) unfounded refusals to pay policy proceeds; (2) delay in making payment; (3) deceiving the insured; (4) failing to settle liability claims, especially those with a potential for a judgment in excess of policy limits. Brought to you by The National Underwriter Company, publishers of FC&S Legal © 2013. All Rights Reserved

Expert Testimony Expert Testimony in Bad Faith Litigation Provide opinion testimony to educate a judge and jury about matters that are beyond the ordinary experience and understanding Require fact finder to evaluate expert testimony that is often diametrically opposed Generally, not a necessity – unless your opponent has an expert, then it is. Or if you are litigating certain issues in certain states, California, Wisconsin, Texas, and Massachusetts most notably. Brought to you by The National Underwriter Company, publishers of FC&S Legal © 2013. All Rights Reserved

Standard of Expert Admissibility Federal Rule of Evidence 702: If scientific, technical or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training or education, may testify thereto in the form of an opinion or otherwise. Brought to you by The National Underwriter Company, publishers of FC&S Legal © 2013. All Rights Reserved

Judge as Gatekeeper Judges have an obligation to exclude expert evidence that does not meet the standard of admissibility. Is the witness an expert on the topic on which he or she will testify? Will his or her testimony assist the trier of fact to understand the evidence? Does knowledge of claim handling practices constitute scientific, technical or other specialized knowledge? Brought to you by The National Underwriter Company, publishers of FC&S Legal © 2013. All Rights Reserved

Expert Conclusions Province of the jury to draw inferences and reach conclusion on the ultimate issue. Best expert testimony points to established standards and evaluates whether the insurance company’s conduct complied with those standards. Worst expert testimony is conclusory, based on speculation, hostility, or personal inclination/bias. Brought to you by The National Underwriter Company, publishers of FC&S Legal © 2013. All Rights Reserved

Payment of Claims What is the effect of the payment of a claim during the pendency of bad faith allegations? Brought to you by The National Underwriter Company, publishers of FC&S Legal © 2013. All Rights Reserved

Time-Sensitive Policy Limit Demands One common bad faith allegation is failing to settle within limits. Another common bad faith allegation is settling the liability of some insureds for the limits of the insurance, while leaving the remaining insureds without any insurance. Finally, yet another common scenario arises when there is an opportunity to settle the liability of fewer than all insureds and the insurance company fails to do so, seeking to preserve limits for other insureds. Brought to you by The National Underwriter Company, publishers of FC&S Legal © 2013. All Rights Reserved

Consent to Settlement Typically, the insurance policy gives the insurance company the right to settle claims A “voluntary payments” clause can eliminate coverage where an insured settles without the insurance company’s consent Settlement demands can be time sensitive What happens if the insurance company does not respond? What happens if an insurance company rejects a settlement offer that the policyholder deems reasonable? Brought to you by The National Underwriter Company, publishers of FC&S Legal © 2013. All Rights Reserved

Litigation Sensitivity Does the Insurance Company Continue to Owe a Duty of Good Faith Once Litigation Commences? Duty of Good Faith. Goals of Cooperation and Protection – help the insured through a time of hardship. Duty of Zealous Representation – adversity, struggle against the policyholder. In tension with duty of good faith and fair dealing. Brought to you by The National Underwriter Company, publishers of FC&S Legal © 2013. All Rights Reserved

Can Good Faith and Zealous Representation Co-exist??? Of course. Duty to Investigate An insurance company has a duty to promptly and fairly investigate the claim – but not to leave every stone unturned. Right to Discovery An insurance company has a right to relevant discovery. No right to abusive litigation tactics Sanctionable under the rules. Some courts say the discovery rules are exclusive remedy for discovery violations and abuses. Brought to you by The National Underwriter Company, publishers of FC&S Legal © 2013. All Rights Reserved

New Legislation NJ Bad Faith Statute Update Would codify remedy for bad faith insurance practices in New Jersey. Applies to all claims filed on or after October 1, 2012. Allows suits under the New Jersey Unfair Claims Settlement Practices Act. NY Bad Faith Statute Update Texas HB 2125 – Appraisals Mandatory Where Disputed Amount of Loss - Dies in the House Brought to you by The National Underwriter Company, publishers of FC&S Legal © 2013. All Rights Reserved

Hot Issues in the Insurance Bad Faith Arena Q&A Brought to you by The National Underwriter Company, publishers of FC&S Legal © 2013. All Rights Reserved

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