The Thursday afternoon panel opened with a presentation by David White of Breakstone, White & Gluck PC, who presented the view of bad faith litigation from the perspective of the policyholders’ counsel. Mr. White offered insight into how insurers can avoid bad faith litigation, including best practices at all levels of the claims handling process. Mr. White suggested that insurers should keep in mind that juries will often determine a case based on moral values, defined by the jurors’ political philosophy. Thus, insurers are advised to understand not only the legal and factual issues in the case, but to keep in mind moral values against which jurors will evaluate allegations of bad faith.
Mr. White identified several things that policyholders’ counsel looks for to establish a bad faith claim, including an insurer’s failure to respond or investigate, overly broad requests for unnecessary information, unreasonable delays in the claims handling process, “incredibly” low settlement offers, insurers driving clear liability cases to needless suit, and failing to protect interests of the insured. Mr. White pointed out several mistakes that insurers may make that could suggest bad faith, including unintentionally establishing formal or informal policies that could be used to demonstrate institutional bad faith, such as tying performance reviews and compensation to denial of claims. As an aside, Mr. White also warned that insurers’ expert witnesses can be used to further a policyholder’s case, because cross examination of an expert witness can reinforce actual or perceived deficiencies in the claims handling process, as compared to best practices.
Rick Hammond of Johnson & Bell Ltd. continued the discussion with a presentation on the latest trends and theories in bad faith litigation. Mr. Hammond observed that bad faith cases are often determined during the claims handling process or the early phases of litigation, and that in many instances, insurers often unwittingly supply the “bricks” that allow policyholders to establish a bad faith claim. To safeguard against this, insurers are advised to maintain an objective standard in the investigation of the claim. Similarly, claims handlers should be cognizant that entries into the claims handling file could later be used in bad faith litigation. Moreover, insurers are reminded that every policy provision is cloaked with the duty of reasonableness, and that policyholders’ counsel is becoming more adept at framing insurers’ claims handling practices in a poor light.