JULY 2009 BAD FAITH CASES
NO BAD FAITH WHERE NO DUTY TO DEFEND OR INDEMNIFY WORKERS’ COMPENSATION CLAIMS (Philadelphia Commerce)

In Letwin v. Rain & Hale, LLC, a Philadelphia Commerce Court case, the Court addressed whether a denial to defend and indemnify a workers’ compensation claim breached the insurance agreement and constituted bad faith. The policy included exclusions for workers’ compensation claims.

The court refused plaintiff’s request to look at the underwriting file, instead following Pennsylvania law and looking at the face of the complaint to determine defense and coverage issues. The court further declined to revisit the workers’ compensation judge’s employment status ruling, on collateral estoppel grounds. Since “the insurer did not breach the duty to defend, a claim for bad faith can not exist.” The Court cited T.A. v. Allen, 868 A.2d 594 (Pa. Super. 2005), Cresswell v. Nat’l Mut. Cas. Ins. Co., 820 A.2d 172 (Pa. Super. 2003), and Frog, Switch & Mfg. Co. v. Travelers Ins. Co., 193 F.3d 742 (3d Cir. 1999), .

Date of Decision: June 17, 2009

Letwin v. Rain & Hale, August Term 2007, No. 2316, 2009 Phila. Ct. Com. Pl. LEXIS 96 (C.C.P. Phila. June 17, 2009) (New J.) (Commerce Case Management Program)