A health insurer recently asked Pennsylvania’s high court to overturn an appellate decision loosening the standard for punitive bad faith penalties in a case over a cancer insurance claim that experts say could lead to a surge in bad faith claims by policyholders if the justices find that ill intent on the insurer’s part is not required.
Buoyed by a pair of friend-of-the-court briefs filed by insurance industry trade groups, Conseco Health Insurance Co. told the Pennsylvania Supreme Court in a filing last week that a state appellate court erred in ordering a new trial in a bad faith case brought by policyholder LeAnn Rancosky, who developed ovarian cancer in 2003.
According to Sherilyn Pastor, leader of McCarter & English LLP’s insurance coverage group, policyholders face a tough-enough task in prevailing on bad faith claims without a requirement of subjective ill will.
“Proving bad faith is already a difficult task for a policyholder under the ‘clear and convincing’ standard of proof,” Pastor said. “Even when someone is doing something wrong in the claims-handling process, they usually don’t write it down somewhere in the claim file. That means that the policyholder has to deduce from insurers’ conduct what their motivations were.”