Specializing inInsurance coverage litigation issues

Bad Faith

Frequently, aggrieved policy holders and determined insurers alike, inquire of whether the decision and action of the insurer is “bad faith” for which the insurer can be penalized. The simple answer is that the decision is not so simple.

While some states like California, New York, Texas, Florida, Wisconsin, and others, have laws which favor the policy holder in such matters, Michigan does not. However, all is not lost. Some twenty or so years ago, a bad faith case was first presented to the Michigan Appellate courts, with the Supreme Court finally setting forth a number of criteria upon which a claim of bad faith may be based. In that case, a medical malpractice insurer refused to settle a case against its policy holder physician which resulted in a verdict in excess of the policy limits. The courts confirmed that such conduct was, indeed, a bad faith breach of the insurance policy, and the insurer was liable to pay all damages incurred by the physician as a result of the bad faith breach.

Although the Supreme Court, in a subsequent opinion, modified its previous holding as to the calculation of those damages, it did not negate or nullify its holding and finding of bad faith breach of the insurance policy. It was also made clear that the enumerated acts of bad faith may not be the only acts upon which a claim of bad faith may be brought, and the “failure to settle” scenario may not be the only circumstance which gives rise to a cause of action for bad faith breach of the insurance policy. And, it was made equally clear that each case was fact dependent and the determination of bad faith was to be decided on a case-by-case basis.

When the conduct of the insurer is egregious, when the behavior of the insurer is critically suspect, whether there was a bad faith breach of the insurance policy must be considered. Once the claim is made, though, the lawsuit is taken more seriously by the insurers and defended more vigorously. Unfortunately, insurers view the present state of the Michigan law of bad faith much too myopically, narrowly defining its conduct, and ascribing to the view that unless the suit involved a “failure to settle,” there is no reason to worry about a bad faith claim.

A few years ago, Barry M. Feldman, litigated a very similar case against a medical insurer, and obtained a settlement of $2,100,000 against the insurer. He has seen other cases in which the insurer’s conduct is flagrantly unreasonable and without regard to the well being of the policy holder, where the insurer has placed its interests ahead of those of its insured. So, where the facts warrant, Mr. Feldman aggressively pursues these claims for his clients. And, as a result, he has obtained positive results for his clients.

If you have any questions about the conduct you have received from an insurer, do not hesitate to call or email Barry M. Feldman.