Rush v. Zurich American Insurance Company
4:15-cv-04367
D.S.C.Jul 20, 2016Background
- In Oct. 2012 Rush (truck driver) injured his shoulder and submitted an insurance claim under his employer’s policy with Zurich.
- Zurich repeatedly requested additional documentation and delayed processing the claim despite Rush’s compliance.
- Rush sued in state court (five causes of action including breach of contract, Improper Claims Practices Act, Insurance Trade Practices Act, breach with fraud, and bad faith); Zurich removed to federal court and moved to partially dismiss under Rule 12(b)(6).
- Zurich argued both the Improper Claims Practices Act and the Insurance Trade Practices Act do not create private causes of action.
- Rush sought statutory attorney’s fees under S.C. Code § 38-59-40 (Improper Claims Practices Act) and actual/punitive damages under the Insurance Trade Practices Act.
- The court analyzed South Carolina precedent and statutory language and denied dismissal of Rush’s claim insofar as it seeks attorney’s fees under § 38-59-40, but dismissed the Insurance Trade Practices Act claim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Improper Claims Practices Act (§ 38-59-20) creates a private cause of action allowing recovery beyond statutory attorney’s fees | Rush contends he may pursue relief under the Act and seeks attorney’s fees under § 38-59-40 | Zurich argues the Act does not create a private cause of action for claimants | Court: Declined to dismiss Rush’s second cause of action to the extent it seeks attorney’s fees under § 38-59-40 tied to his breach-of-contract claim; Act otherwise provides administrative remedy only |
| Whether the Insurance Trade Practices Act (§ 38-57) creates a private cause of action for actual/punitive damages | Rush asserts violations of §§ 38-57-30 and -70 and seeks damages | Zurich contends the statute authorizes administrative remedies only and no private civil claim exists | Court: Dismissed Rush’s third cause of action under the Insurance Trade Practices Act (no private right of action) |
Key Cases Cited
- Masterclean, Inc. v. Star Ins. Co., 347 S.C. 405, 556 S.E.2d 371 (S.C. 2001) (holding the Insurance Trade Practices Act and related claims-practices provisions manifest legislative intent to create administrative remedies rather than private causes of action)
- Nichols v. State Farm Mut. Auto. Ins. Co., 279 S.C. 336, 306 S.E.2d 616 (S.C. 1983) (discussing statutory attorney’s fees under the predecessor to § 38-59-40 and their application to breach-of-contract suits)
- Ocean Winds Council of Co-Owners, Inc. v. Auto-Owners Ins. Co., 241 F. Supp. 2d 572 (D.S.C. 2002) (applying Masterclean and concluding § 38-59-20 does not create a private cause of action for first-party claimants)