While doing research on certain nationwide principles of no-fault law, I came across an issue that I felt compelled to discuss: bad faith. Dave Gottlieb at NFP has discussed this issue extensively. While I disagree with his perspective, it is one that is shared by many. Roy Mura also discusses this issue quite extensively at Coverage Counsel.
My view on “bad faith” has always been that penalty interest at a rate of 24% along with an attorney fee of 20% is sufficient to penalize a recalcitrant no-fault insurance carrier. Those of us who litigate these cases on a regular basis know that many times a $3,000 case can yield interest in an amount commensurate if not greater than the said principle amount. And then there is the attorney fee.
Off the beat and path, I came across Endo Surgical Center v. Allstate New Jersey Ins. Co., 2009 WL 4877155 (NJ Sup. Ct. App. Div. 2009). The following represents the relevant portion of Endo Surgical Center:
“Plaintiff cites Pickett v. Lloyd’s, 131 N.J. 457 (1993) in support of its argument that defendant acted in bad faith by unnecessarily delaying the proceedings. Plaintiff’s reliance on Pickett is misplaced.
Plaintiff correctly cites Pickett for the general principle that an insurer owes a duty of good faith to its insured in processing a first-party claim, id. at 467, and that the insurer may be liable to its insured for consequential economic losses for the insurer’s bad faith in either delaying the processing of the claim or in failing to pay benefits, id. at 481. However, an insured’s right to pursue a common law action for consequential damages pursuant to Pickett is not applicable to PIP actions.Endo Surgi Ctr. v. Liberty Mut. Ins., 391 N.J.Super. 588, 592-96 (App.Div.2007). Rather, because PIP benefits are statutory in nature, “the sole remedy for a wrongful denial of PIP benefits is an award of the interest mandated by N.J.S.A. 39:6A-5(h) and attorney’s fees. ” Id. at 594.
What is more, even if Pickett was applicable to the present matter, we are satisfied that plaintiff’s bad faith claim fails as a matter of law. Pursuant to Pickett, if a claim is “fairly debatable,” bad faith is not established. Id. at 473. Under that standard, “a claimant who could not have established as a matter of law a right to summary judgment on the substantive claim would not be entitled to assert a claim for an insurer’s bad–faith refusal to pay the claim.” Ibid.
Interesting.
