Right now, I’m preparing for a coverage trial involving aspects of both New Jersey and Massachusetts law. I was reviewing the Unfair Claims Settlement Practices Acts (“UCSPA”) adopted in both states, and I noticed the following.
The New Jersey version of UCSPA prohibits certain bad behavior if committed “with such frequency as to indicate a general business practice.” This includes “[r]efusing to pay claims without conducting a reasonable investigation based upon all available information.” It also includes “[n]ot attempting in good faith to effectuate prompt, fair and equitable settlements of claims in which liability has become reasonably clear.”
The Massachusetts version of UCSPA forbids carriers from behaving badly in the same ways – but it doesn’t contain the onerous requirement that the carriers’ misbehavior constitute a “general business practice.”
I guess the industry had better lobbyists in Trenton than in Boston. (That’s probably the only thing that’s better in Trenton than in Boston. Oops, I shouldn’t have said that.)
Also, while Massachusetts provides procedures for a private right of action under UCSPA (Massachusetts General Laws Ch. 93A), New Jersey does not. In Pickett v. Lloyd’s, 131 N.J. 457, 468 (1993), however, the New Jersey Supreme Court has stated that UCSPA “declare[s] state policy.” Therefore, as the court did in Pickett, courts may use the guidelines of UCSPA to determine whether a carrier has engaged in bad faith.
I encourage all policyholders having difficulty with a claim to review the provisions of UCSPA for possible help. (I also encourage all claims personnel, if they want to avoid bad faith litigation. to train themselves in the provisions of UCSPA.)
By the way, there’s a good discussion of UCSPA below the Mason-Dixon line over at the Tennessee Insurance Litigation Blog.