Pa. High Court Dismisses Insurer Appeal of $3.07M Award

September 5, 2006

The Pennsylvania Supreme Court has dismissed an appeal by Erie Insurance Exchange of a judge’s order to pay $3.07 million to a customer who alleged that her claim was mishandled.

In a January 2002 case, Luzerne County Judge Peter Paul Olszewski Jr. said customer Jean Hollock was entitled to the money because of how the insurer handled her claim stemming from a June 1992 automobile accident in which she injured her arm. The judge said the company showed “deliberate indifference and, in some instances, blatant dishonesty” to Hollock.

The state Supreme Court agreed to hear the case in June 2005 and listened to oral arguments in December, but did not rule on the issues. A majority of the justices said in the one-page order issued Aug. 22 that they erred in agreeing to hear the case.

Two of the seven justices disagreed, saying the court should have decided the appeal to provide guidance on the application of a 1990 state law that allows a customer to sue an insurer alleging bad faith in the handling of the customer’s insurance claim.

A company spokesman said officials were not sure what further action would be taken.

“While we prefer not to address specific details of this case, it is important to note that we have a proven record of settling claims — on average over 40,000 claims each month — quickly and fairly,” spokesman Mark Dombrowski said.

Hollock had alleged, among other things, that the company acted in bad faith by forcing her to arbitration. She rejected a claims adjuster’s offer to settle for $30,000, and an arbitration panel later awarded her $865,000. Hollock filed suit after the company paid her only her $500,000 policy limit.

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