Rancosky v. Washington National Ins. Co., Aplt.
28 WAP 2016
| Pa. | Sep 28, 2017Background
- Appeal from Superior Court affirming in part and vacating in part a trial‑court judgment in a denial‑of‑insurance‑benefits case (Rancosky v. Washington Nat. Ins. Co.).
- Chief Justice Saylor files a concurring opinion joining Parts I and III of the majority but offering separate reasoning for Part II.
- The core legal question concerns what mental-state threshold (§ 8371) the insurer must meet for an insured to recover for bad faith denial of benefits.
- Saylor endorses a threshold of at least recklessness (knowledge or reckless disregard) for bad‑faith liability, rejecting a requirement of proof of ill will or a “smoking gun.”
- He emphasizes that reckless conduct (not mere negligence) suffices for compensatory relief and fee‑shifting under § 8371, while punitive damages must be assessed under federal Due Process constraints.
- Saylor concurs with remand to apply the recklessness standard and to ensure punitive awards comply with constitutional (State Farm) standards.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standard for bad‑faith liability under 42 Pa.C.S. § 8371 | Rancosky: insurer acted without reasonable basis and with culpability sufficient for bad faith (recovery under § 8371) | Washington Nat.: bad faith should be limited to extreme ill will or similar high culpability (need a “smoking gun”) | Saylor: § 8371 requires at least reckless disregard or knowledge; ill will not required; circumstantial evidence may suffice |
| Punitive damages standard | Plaintiff: punitive damages appropriate for bad‑faith conduct | Defendant: punitive awards must be constrained by constitutional limits | Saylor: punitive damages must follow conventional standards and federal Due Process (State Farm) “degree of reprehensibility” analysis; remand to consider constitutional limits |
Key Cases Cited
- Commonwealth v. Kloiber, 378 Pa. 412, 106 A.2d 820 (Pa. 1954) (criminal intent may be inferred from circumstantial evidence)
- Farmer v. Brennan, 511 U.S. 825 (U.S. 1994) (the term “recklessness” is not self‑defining; discussion of civil‑law recklessness)
- State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408 (U.S. 2003) (Due Process requires case‑specific assessment of reprehensibility for punitive damages)