According to an article in the Legal Intelligencer, Senior US District Judge Clarence Newcomer issued a ruling in Barber v. UNUM Life Insurance Co. refusing the insurance company’s request that the suit’s bad-faith claim be thrown out because of an ERISA pre-emption, the Legal Intelligencer reported. Newcomer cited his now-famous June 2002 Rosenbaum v. UNUM Life Insurance Co. , decision in which he contended that there was no pre-emption. Newcomer gave the green light for lawyers to immediately take Barber up to the US 3 rd Circuit Court of Appeals – which handles federal court appeals from Mid-Atlantic states.
A 3 rd Circuit ruling – assuming the appeals judges agree to hear the matter at all – would settle more than a year of uncertainty over a common ERISA pre-emption issue. The legal anxiety arose when many of Newcomer’s colleagues on the Philadelphia-based Eastern District of Pennsylvania bench rejected his view and ruled in their own cases that plaintiffs could not include a bad-faith claim in an ERISA lawsuit (See Federal Judges Disagree on ERISA Pre-Emption ).
The pre-emption issues is not inconsequential for
ERISA plaintiffs because ERISA’s permitted damages are
strictly limited while a bad-faith claim allows for an
award of punitive damages
Defense lawyers in the
case eventually asked Newcomer to reconsider. But the issue
got complicated when the US Supreme Court handed down its
decision last term in
Kentucky Association of Health Plans Inc. v. Miller
Newcomer responded by asking the lawyers to submit new
legal briefs to discuss whether
had announced a new test for deciding when ERISA pre-empts
a state law claim, and, if so, whether the Pennsylvania
bad-faith statute survived the new test.
Newcomer eventually handed down a decision in September, asserting that he had been right all along, and that the Miller decision proved it (See ERISA Pre-Emption Case Not Headed for Appeals Court ).
In briefs filed with the 3 rd Circuit asking the judges to accept the case, defense lawyers argue that the Barber case “offers the court the opportunity to resolve a split of authority among the district courts which, in its current state, threatens to cause widely divergent results in similar cases based not on factual distinctions but, instead, on nothing more than the random selection of the judge assigned to the particular case.”
In their response, the plaintiff’s attorneys also urged the 3rd Circuit to take up the case “because the view of the majority of the district courts — that (the bad-faith law) is not saved from pre-emption — is incorrect, and as a result, insurers are being allowed to handle claims in bad faith with impunity.”