© Barry Zalma 2005
Some insurers, rather than acting in good faith and dealing fairly with their insureds, unjustly delay payment of claims until they are sued. Once sued the insurer pays the claim and eliminates, by so doing, the right of the insured to collect compensatory damages for breach of contract. By doing so the nefarious insurer hopes to limit its punitive damage exposure to he single digit limit on punitive damages set by the U.S. Supreme Court in State Farm Mutual Automobile Insurance Co. v. Campbell, 123 S.Ct. 1513, 538 U.S. 408, 155 L.Ed.2d 585 (U.S. 2003).
The Third Circuit Federal Court of Appeals, faced with such a situation refused to allow the insurer to avoid the result of its wrongful conduct by paying a claim after suit is filed. The Third Circuit upheld a punitive damages award that appeared to be 75 times larger than the compensatory award. The only contract benefits not paid before trial was $2,000 expended to prepare a proof of loss, a specific additional
