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Insurance Coverage & Bad Faith

Steptoe’s insurance litigation practice includes the defense of coverage, bad faith, and employment-related claims, including class actions, in both state and federal trial and appellate courts, as well as coverage analysis and prosecution of declaratory judgment actions.  We have extensive experience in litigating the following matters:

Insurance Litigation, Bad-Faith Defense, and Counseling
In the arena of bad-faith defense, Steptoe lawyers incorporate the case law and court decisions that have defined the concept of “bad-faith” and use them to develop a robust defense for insurers.

We defend a broad array of individual coverage and bad-faith cases, including some that are seeking large amounts of punitive damages.  Steptoe has coordinated the national defense of institutional claim handling programs, and litigated coverage and abuse-of-process claims against insurers.  We have achieved notable successes, and our work has resulted in favorable published trial-court opinions.

Steptoe also provides other counseling services to help insurers avoid litigation and minimize bad-faith exposure while also running an efficient and fair claim-handling operation.

Class Action Defense
Our practice group has extensive experience defending class actions in jurisdictions across the country.  Of particular note, we have defended Allstate Insurance Company in eight class actions or putative class actions in Arizona, Arkansas, Illinois, Kentucky, Montana, New Mexico, Texas, and the District of Columbia. 

Counseling and Other Services
In addition to litigation defense, the firm provides coverage opinion services and legal auditing services.  We also litigate declaratory judgment actions when an insurance company has decided to defend an insured under a reservation of rights.

Appellate Advocacy
Steptoe has an extensive appellate practice in the insurance field, which includes matters brought to the firm at the appeals stage as well as cases that the firm handled in the trial courts.  We have argued and obtained successful results for his insurance company clients before the US Court of Appeals for the Second, Fourth, Fifth, Sixth, and Eleventh Circuits, and in six State Supreme or Appellate Courts. 

Representative Matters

Individual Insurance Cases

  • Represented Insurance Company of the State of Pennsylvania in a complex workers’-compensation bad-faith case alleging “institutional” bad faith and mishandling of the plaintiff’s claims for medical and lost-earnings benefits.  (North Carolina Court of Appeals.)  The court granted several motions for partial summary judgment, dismissing the plaintiff’s claims of bad faith, punitive damages, vicarious liability for the alleged malpractice of an independent medical examiner, and aiding and abetting. 
  • Won dismissal of bad faith claim on summary judgment in US District Court for the Northern District of Alabama, and obtained affirmance of District Court decision on appeal before the US Court of Appeals for the Eleventh Circuit on behalf of Travelers.
  • Won a major victory for National Union Fire Insurance Company of Pittsburgh, PA when the federal district court for the Western District of Texas granted the company’s motion for summary judgment in a coverage/bad faith action brought by Tesoro Refining and Marketing Company.   The court ruled that the undisputed facts did not establish an employee “theft” as defined by the policy, and thus granted National Union summary judgment. 
  • Won a motion to dismiss from the Arizona Superior Court in Yavapai County on behalf of State Farm in a mass action tort case.  The case arises out of the highly publicized 2012 Yarnell Fire, in which a hot shot fire crew tragically died.  Multiple homeowners filed suit against State Farm and many other insurers alleging their homes were underinsured, and asserting, inter alia, claims for breach of contract, negligence, bad faith, and punitive damages.  The court granted State Farm’s motion to dismiss in its entirety, knocking out a significant part of plaintiffs’ case by dismissing plaintiffs’ breach of contract, negligence, and equitable contract reformation claims with prejudice. 
  • Represented Allstate in a Maryland homeowner’s bad faith action arising from Hurricane Isabel.  Working with Maryland counsel, Steptoe secured summary judgment against a claim that the insurer acted in bad faith when it determined that the plaintiffs’ loss was caused by flood (a non-covered peril) rather than wind.  The Circuit Court of St. Mary’s County (Maryland) also found a lack of evidence of an institutional scheme to underpay claims.

Class Action Cases

  • Represented Allstate in a putative statewide (Illinois) class action filed in Madison County, Illinois, by an Allstate insured who attacked the company’s claim-settlement practices for “minor impact soft tissue” injuries.  We obtained a dismissal order, persuading the Madison County trial court to dismiss the case because the putative class representative lacked any legally recognized injury and could not show that Allstate breached its contract with her.
  • Defended client and group of affiliated insurance companies in putative nationwide class action asserting bad faith and other causes of action arising out of client’s use of Colossus.

Counseling Cases

  • In Allstate Ins. Co. v. Donoher (Ariz. Ct. App. 1999), Steptoe lawyers obtained summary judgment in the trial court and then affirmance on appeal, establishing that the "occurrence" requirement in a homeowner's policy's insuring clause barred coverage for negligent supervision claims arising out of criminal conduct by the insureds' child.

Appellate Cases

  • Represented the Alliance of American Insurers, the American Insurance Association (AIA), the National Association of Independent Insurers (NAII), and the National Association of Mutual Insurance Companies as amici curiae in the US Supreme Court on the merits of State Farm's successful constitutional challenge to a $145 million punitive damages award in a bad-faith action. 
  • Obtained a reversal of a $5.7 million judgment against a St. Paul Travelers' entity, Northland Insurance Company.  This dispute arose from a disagreement over an "additional insured" provision in a Northland policy covering certain operations in the State of Arizona's prison facilities.  In a case of first impression in Arizona, the Court agreed with our interpretation of the policy and limited the scope of the "arising out of operations" language in the policy.
  • Represented the Alliance, AIA, and NAII as amici curiae in successfully establishing that, in the tripartite relationship, appointed defense counsel may represent both the insured and the insurer as clients. 
  • Defended an insurer against breach-of-contract and wrongful-termination claims by a former agent, establishing that cause for termination is evaluated based on the employer's good-faith belief rather than the employee's actual guilt. 
  • Obtained a unanimous reversal by the Arizona Supreme Court of a unanimous Court of Appeals' decision as to the circumstances in which injuries arise out of the use of an automobile for purposes of an exclusion in a homeowner's policy. 
  • Obtained summary judgment and affirmance on appeal dismissing environmental contamination coverage and bad faith claims against his client in Alabama Federal District Court and the US Court of Appeals for the Eleventh Circuit. 

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