Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—PaSuperCt: Insurance Company Did Not Misrepresent Insurance Policy, (Dec 13, 2012)

By Jody Coultas, J.D.

An insurance company was not liable for allegedly misrepresenting an insurance policy in violation of the Pennsylvania Unfair Trade Practices and Consumer Protection Law (CPL), according to a Pennsylvania superior court (Fazio v. The Guardian Life Insurance Company of America, December 12, 2012, Olson, J.). The purchasers were also not entitled to a jury trial.

The purchasers alleged that the insurance company’s representative misled them into purchasing life insurance policies in violation of the CPL. A trial court ruled that the purchasers were not entitled to a jury trial and dismissed the claims.

The trial court did not err in concluding that the purchasers were not entitled to a jury trial, according to the court. Although the CPL is silent on the issue of the right to a jury trial, the purchasers argued that the statutory language of the CPL makes specific reference to the court’s ability to award non-common law remedies such as treble damages and, therefore, could have specifically delineated that only bench trials were available under it. However, a section of the CPL specifically declares that “the court” is to determine whether treble damages are warranted and whether costs and fees should be awarded. Because the legislature specifically used the term “the court” instead of “the jury,” the plain language directed the court to find that the CPL does not provide an express directive for the right to a jury trial.

The fact that the CPL is grounded in common law fraud, a cause of action that included a right to a jury trial and existed at the time the Pennsylvania Constitution was adopted, did not alter the court’s finding. The CPL is not grounded solely in common law fraud, and some unfair trade practices are not based in fraud. Plaintiffs seeking to state a CPL claim must demonstrate the elements of fraud, but must prove additional elements to state the claim. Fraud and the CPL have distinct statute of limitations and burdens of proof. Accordingly, the court declined to insert a right to a jury trial, inherent in common law fraud, into the CPL.

The trial court was also correct in holding that the purchasers failed to show that the insurance company violated the CPL, according to the court. The purchasers argued that the company’s representative made material misrepresentations in order to induce them to purchase a certain policy. There was sufficient evidence that the company’s representative did not use misleading or deceptive information in explaining insurance premiums.

The case is No. 1240 WDA 2011.

Kenneth Robert Behrend (Behrend & Ernsberger P.C.) for Ross E. Fazio. Dianne S. Wainwright (Margolis Edelstein) for Guardian Life Insurance Company of America.

Cases: StateUnfairTradePractices PennsylvaniaNews