TRENTON, June 8 – The State Senate of New Jersey has passed a Bill which will, if passed by the General Assembly and signed by the Governor, impact bad faith litigation in the Garden State. On June 7, 2018, the New Jersey State Senate passed New Jersey Senate Bill 2144, the New Jersey Insurance Fair Conduct Act (IFCA). The statue provides for remedies and damages against insurers who commit “an unreasonable delay or unreasonable denial of a claim for payment of benefits under an insurance policy” or a violation of New Jersey’s Unfair Claims Settlement Practices Act (UCSPA). The UCSPA catalogs more than ten different forms of insurer misconduct.
In its current form, the statute is unclear as to whether or not it adheres to the New Jersey Supreme Court’s common law standard of bad faith conduct which holds that mere negligence is not bad faith and the refusal to settle a debatable claim does not constitute bad faith. Under Supreme Court precedent, a bad faith Plaintiff must successfully show that there are no debatable reasons for the denial of insurance benefits.
The bill passed by the State Senate proposes treble damages and attorney fees as well as cost recovery as part of the remedies. The Bill also provides for actual damages and the above-mentioned remedies “upon establishing” prohibited conduct, although it is silent as to the requisite burden of proof, e.g. preponderance of the evidence, clear and convincing proof. The Bill has been referred to the State General Assemblies Banking & Commerce Committee.