July 1 marked the 25th anniversary of the effective date of Pennsylvania’s insurance bad-faith statute, 42 Pa. C.S.A. Section 8371. For attorneys who litigate in the insurance field, this statute—which allowed insureds to sue their insurers for bad-faith conduct and, if successful, recover punitive damages, attorney fees, interest and costs—has had a tremendous impact. With a nod to another recent milestone, the recent retirement of longtime late-night host David Letterman, here is a “Top Ten List,” in chronological order, of the groundbreaking federal and state court decisions from the last 25 years addressing Section 8371.
‘Lombardo’
In Lombardo v. State Farm Mutual Automobile Insurance, 800 F. Supp. 208, 213 (E.D. Pa. 1992), an early question was whether the bad-faith statute created an independent cause of action, or simply provided for additional damages to supplement the traditional breach of contract action. The late Judge Daniel Huyett concluded that Section 8371 “create[d] a new cause of action for bad-faith conduct.” Subsequent courts would echo that analysis, and it became the accepted view that Section 8371 created an independent cause of action.
