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Bad Faith Expert Testimony in Coverage Litigation

Most lawyers trying bad faith cases want to introduce expert testimony to support their claims or defenses. Under Daubert, however, “bad faith” expert testimony is not always admitted. This article addresses when this type of testimony will be admitted and when it will be limited or excluded.

Daubert motions in property insurance bad faith cases. The Federal Rules of Evidence govern the admissibility of expert opinions in federal cases. Rule 702 provides that a witness who is qualified as an expert by knowledge, skill, experience, training, or education may testify in the form of an opinion or otherwise if certain conditions are met. The burden is on the proponent of expert testimony to prove its admissibility by a preponderance of the evidence. In deciding a motion to exclude expert testimony, the trial judge acts as a “gatekeeper” to determine whether the proffered testimony is relevant, reliable, and helpful to the trier of fact.

The three factors that courts consider are: (1) qualifications, (2) reliability, and (3) fit. With regard to qualifications, an expert must be qualified by “specialized expertise,” which is liberally interpreted to include “a broad range of knowledge, skills, and training.” In addition to these three factors, courts also consider whether the expert is trying to opine on the ultimate legal conclusion.

When proffering bad faith experts in property insurance litigation, practitioners must be careful to select experts who are qualified and able to testify generally about the customs and practices of insurance companies in reaching coverage decisions or amount of loss. The expert must also be able to testify about the ways in which the insurance company in this particular action fell short of or complied with industry custom and/or practice.

Qualifications for experts in insurance bad faith cases. It appears that the question of expert qualification in the context of claims handling and bad faith experts is largely based on the type and length of the expert’s experience. While the experience need not be of the same type in every case, the expert’s experience must adequately inform his or her understanding of the industry’s customs and practices.

For example, the Ninth Circuit Court of Appeals in Hangarter v. Provident Life & Accident Insurance Co., 373 F.3d 998, 1015–16 (9th Cir. 2004), a case involving an insurer’s discontinuation of disability benefits, held that an expert with 25 years of experience working for insurance companies and as an independent consultant qualified him to testify about claims adjustment standards and practices. This expert had been found qualified to testify on insurance practices and standards within the industry 12 times before and had never been found unqualified.

In Geico Casualty Co. v. Beauford, No. 8:05-cv-697-T-24EAJ, 2007 WL 2412974, at *3–5 (M.D. Fla. Aug. 21, 2007), a Florida federal district court permitted the insured’s proffered “insurance industry expert” to testify as an expert in, among other things, “insurance bad faith in Florida and any related issue of claims adjuster handling.” The insurer attempted to exclude the expert’s testimony for lack of qualifications, but the court sided with the insured, who had highlighted the expert’s almost 30 years of training, experience, and knowledge in the handling of insurance claims.

In sharp contrast, where an expert’s qualification in one field is only “vaguely related” to another field, the court may hold that the expert is not qualified in the second field. For example, in California Shoppers, Inc. v. Royal Globe Insurance Co., 221 Cal. Rptr. 171, 208 (Ct. App. 1985), an action against an insurance company based on its failure to defend its insured in a third-party action, the California appellate court held that the trial court erred in permitting an attorney to testify as an expert on the subject of insurance company practices. Although he was “a highly qualified trial attorney,” the court found that he lacked any special knowledge, skill, experience, training, or education in the area of insurance company practices.

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PUBLISHED IN GPSOLO, VOLUME 37, NUMBER 3, MAY/JUNE 2020 © 2020 BY THE AMERICAN BAR ASSOCIATION. REPRODUCED WITH PERMISSION. ALL RIGHTS RESERVED. THIS INFORMATION OR ANY PORTION THEREOF MAY NOT BE COPIED OR DISSEMINATED IN ANY FORM OR BY ANY MEANS OR STORED IN AN ELECTRONIC DATABASE OR RETRIEVAL SYSTEM WITHOUT THE EXPRESS WRITTEN CONSENT OF THE AMERICAN BAR ASSOCIATION./div>


 

ABOUT JAY LEVIN

Jay M. Levin is an insurance recovery attorney and serves as the chair of the firm’s Insurance Recovery practice group in the Philadelphia office. He focuses his practice on representing policyholders in disputes with insurance companies involving all types of insurance coverage. Jay has extensive litigation experience in multi-million dollar property insurance coverage cases, including suits involving policy construction and application, cause and origin, valuation, and business interruption issues. He has assisted clients in successfully resolving eight and nine-figure Hurricane Katrina and Superstorm Sandy cases without litigation, and successfully representing other policyholders in litigating Katrina and Sandy cases. Jay represents financial institutions and other commercial policyholders in claims arising under fidelity and crime policies, including claims arising out of defaulted mortgages and employee embezzlement.

 

 

 

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