Insurer Bad Faith Setup Defense and Reverse Bad Faith Claims: Insurer vs. Policyholder Perspectives

Insurer Defenses Against Policyholders in Bad Faith Litigation

Recording of a 90-minute CLE webinar with Q&A


Conducted on Wednesday, December 2, 2020

Recorded event now available

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Program Materials

This CLE webinar will examine how counsel for insurers can recognize when a third-party plaintiff is attempting to "setup" the insurer for a claim of bad faith. The panel will address what insurers can do to avoid this trap and counterclaims and relevant affirmative defenses based on the plaintiff's fraudulent conduct or misrepresentations.

Description

An insurer that has acted in bad faith may be liable for significant extra-contractual and punitive damages. Thus, unscrupulous plaintiffs have manufactured, manipulated, and proffered settlements under conditions which the insurer must, for legitimate reasons, refuse and thereby make itself vulnerable to damages for "bad faith."

When defending bad faith claims, insurers are increasingly deploying strategies, counterclaims, and affirmative defenses to expose the plaintiff's wrongful conduct related to the claim, such as the plaintiff's failure to cooperate, failure to give proper notice of a claim, or fraud and misrepresentation.

Some courts permit insurers to assert a "bad faith setup" defense, whereby they are allowed to demonstrate that claimants employed their own bad faith setup tactics solely to obtain punitive damages. Some states permit insurers to assert a counterclaim for "reverse bad faith." When allowed, insurers are entitled to recover for a plaintiff's breach of the covenant of good faith and fair dealing, although this approach has had limited success. Only one state expressly authorizes this defense by statute. Nonetheless, several reported cases recognize the claim, at least in dicta, and insurers continue to deploy it.

Listen as our authoritative panel of policyholder and insurer counsel discusses the latest litigation trends in defenses raised by insurers in bad faith litigation that focus on the alleged wrongful conduct of the claimant. The panel will cover bad faith setup, fraud or misrepresentation by the claimant, and the affirmative defense of reverse bad faith.

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Outline

  1. Trends in defenses to bad faith claims focusing on claimant's conduct
    1. Bad faith setup
    2. Fraud or misrepresentation
    3. Other defenses or strategies
  2. Trends in "reverse bad faith" as an affirmative defense
  3. Best practices for policyholders and claimants to counter these defenses
  4. Best practices for insurers in raising and proving these defenses

Benefits

The panel will review these and other relevant issues:

  • What conduct by claimants generally gives rise to a bad faith setup defense, and how have courts treated this defense?
  • What types of conduct by the policyholder or claimant are typically considered bad faith conduct?
  • In what circumstances have insurers pursued the doctrine of reverse bad faith, and how have the courts treated these arguments?

Faculty

Garbowski, Mark
Mark Garbowski

Shareholder
Anderson Kill

Mr. Garbowski is an attorney in the Insurance Recovery group in Anderson Kill's New York office. His practice...  |  Read More

Koepff, Paul
Paul R. Koepff

Partner
Clyde & Co US

Mr. Koepff handles insurance coverage and reinsurance disputes, litigating various kinds of insurance and...  |  Read More

Wiener, Harris
Harris Wiener

Senior Counsel
Clyde & Co US

Mr. Wiener focuses his practice on complex insurance, reinsurance and commercial disputes in federal and state court,...  |  Read More

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