Recently, a Pennsylvania federal court dismissed a bad faith claim against an insurer on the grounds that the claim was subsumed by the plaintiff’s breach of contract claim in the same proceeding.  Fingles v. Continental Cas. Co., No. 08-CV-05943 (E.D.Pa. April 28, 2010).  Please click here to read a copy of the court’s decision.

In Fingles, the executor of the estate of a decedent, who had been an insured of the defendant under a long-term care insurance policy, had engaged in a number of disputes regarding the insurer’s handling of the decedent’s claims for coverage.  The executor filed a complaint against the insurer that included a number of claims related to the defendant’s claims handling, including claims for breach of contract and bad faith.

On the insurer’s motion, the court dismissed the claim for bad faith based in contract.  The court cited a number of decisions holding under Pennsylvania law that a claim for bad faith breach of a contract must be prosecuted as a breach of contract claim, and that the implied covenant of good faith and fair dealing does not allow for a claim separate and distinct from a breach of contract claim.

As to the cause of action for statutory bad faith for violation of the Pennsylvania Unfair Trade Practices and Consumer Protection Law (“UTPCPL”), the court held the plaintiff alleged more than a mere denial of a claim or nonfeasance, but rather alleged malfeasance sufficient to satisfy the “deceptive conduct” prong of the statute.  Thus, the court dismissed the bad faith claim based on breach of contract on the grounds it was subsumed within the breach of contract, and dismissed a count based on alleged fraudulent conduct as inadequately pleaded, but allowed the UTPCPL claim to survive.