Reed Smith Client Alerts

In Rancosky, court heeds Reed Smith’s warnings in amicus brief that motive requirement sought by insurers would make it “exceedingly difficult to prove statutory bad faith”.

In a long-awaited, landmark decision, the Pennsylvania Supreme Court yesterday delivered a decisive victory to policyholders across the Commonwealth and a final blow to insurance companies’ long-running attempts to make it harder for Pennsylvania policyholders to prevail on statutory bad faith claims.

In Rancosky v. Washington National Insurance Company, No. 28 WAP 2016, the court confirmed that, to prevail on a claim under Pennsylvania’s bad faith statute, 42 Pa.C.S. §8371 (“Section 8371”), a policyholder must satisfy a two-part test, and only a two-part test: A policyholder must prove by clear and convincing evidence that (1) the insurer did not have a reasonable basis for denying benefits under the policy, and (2) the insurer knew of or recklessly disregarded its lack of a reasonable basis.