Nebraska’s Unfair Insurance Claims Settlement Practices Act, found at Neb. Rev. Stat. § 44-1535, et seq., does not allow for a private right of action. Under Neb. Rev. Stat. § 44-1537:

The purpose of the Unfair Insurance Claims Settlement Practices Act is to set forth standards for the investigation and disposition of claims arising under policies issued to residents of this state.

These standards are identified under § 44-1540 and include conduct such as:

(1) Knowingly misrepresenting to claimants and insureds relevant facts or policy provisions relating to coverages at issue;

(2) Failing to acknowledge with reasonable promptness pertinent communications with respect to claims arising under its policies;

(3) Failing to adopt and implement reasonable standards for the prompt investigation and settlement of claims arising under its policies;

(4) Not attempting in good faith to effectuate prompt, fair, and equitable settlement of claims submitted in which liability has become reasonably clear;

(5) Not attempting in good faith to effectuate prompt, fair, and equitable settlement of property and casualty claims (a) in which coverage and the amount of the loss are reasonably clear and (b) for loss of tangible personal property within real property which is insured by a policy subject to section 44-501.02 and which is wholly destroyed by fire, tornado, windstorm, lightning, or explosion;

Because of the act’s purpose and expressed intention was not to be used for private actions, an insurance company might attempt to get a complaint dismissed if it was brought under this particular cause of action, in the case of a private individual versus their insurance company.

Notably, however, a recent ruling in J.L.’s Plaza 93, LLC v. Capitol Specialty Insurance Corporation,1 cleared up uncertainty about pleading bad faith and using the Unfair Insurance Claims Settlement Practices Act as support. In this federal case in Nebraska, the policyholder brought a bad faith action against its insurer and referenced the Unfair Insurance Claims Settlement Practices Act. In response, the defendant moved for dismissal of the case, claiming that the policyholder improperly used the Unfair Insurance Claims Settlement Practices Act to bring forth a private right of action.

In a memorandum in opposition to the defendant’s motion to dismiss, the policyholder argued that it was not bringing the claim under the Unfair Claims Settlement Practices Act, but rather bringing the action under a common law first-party bad faith tort cause of action and using § 44-1540 to reference common bad faith guidelines. The district court agreed with the policyholder’s argument that the complaint was merely using § 44-1450 in order to establish parallel duties that were already imposed upon insurance companies under the common law.

Attorneys in states with a bad faith first-party tort cause of action that have similar statutory restrictions may want to study this case further and review the Order and motions to determine if a similar action might be brought in their state. For example, South Carolina’s bad faith insurance statute, found under S.C. Code Ann. § 38-59-20, has a similar restriction to Nebraska’s bad faith statute, in that it does not allow for a private right of action against an insurer.2 Also, like Nebraska, South Carolina allows first-party bad faith tort actions to be brought against an insurer who has committed or engaged in bad faith conduct.3
_____________________________
1 J.L.’s Plaza 93, LLC v. Capitol Specialty Ins. Corp., 8:19-CV-184 (D. Neb. Oct. 3, 2019) (Lawsuit was filed by Merlin Law Group attorney, Javier Delgado, along with the help of assisting attorneys and law clerk, Anthony Orlando).
2 See Ocean Winds Council of Co-Owners, Inc. v. Auto-Owners Ins. Co., 241 F. Supp. 2d 572, 578 (D.S.C. 2002).
3 Nichols v. State Farm Mut. Auto. Ins. Co., 306 S.E.2d 616, 618 (S.C. 1983).

  • So my question is if the carrier hires an Engineer to produce a report that favors them. Then stands behind it when evidence is presented showing their Manipulation of onsite evidence to create a false narrative. Would not the carrier be guilty of Insurance fraud and Bad Faith?