How The Maryland Insurance Administration's Bad Faith Decisions Matter
Why does anyone case about what the Maryland Insurance Administration thinks about bad faith? After all, you can just appeal to the Circuit Court and try the case to a jury there.
The Maryland Insurance Administration matter because their decisions are persuasive authority in Maryland, entitled to “great deference”, especially if applied over a long period of time. Maryland Courts follow them.
Our interpretation [of a separate dispute involving the validity of a waiver] is also aligned with the one used by the MIA in related proceedings. The MIA, when considering Brethren’s denial of the claim, held that when a release is executed within the statutory framework of § 19-511, the statute should define the permissible scope of the release as to the UM insurer. “Although never binding upon the courts, the contemporaneous interpretation of a statute by the agency charged with its administration is entitled to great deference, especially when the interpretation has been applied consistently and for a long period of time.” Baltimore Gas and Elec. Co. v. Public Service Comm’n of Maryland, 305 Md. 145, 161, 501 A.2d 1307, 1315 (1986) (citations omitted)
Brethren Mut. Ins. Co. v. Buckley, 437 Md. 332, 348-49, 86 A.3d 665, 674 (2014).
*** Disclosure: Brethren hired me as an expert on an unrelated part of this matter.***
Losing before the Maryland Insurance Administration came back to haunt the Brethren Mutual Insurance Company. Buckley, Brethren’s insured, had sued Brethren twice. One suit alleged first party bad faith under Md. Code Insurance 27-1001. Buckley filed that suit with the Maryland Insurance Administration. But Buckley also brought a separate contract claim against Brethren for not paying. Brethren asserted the same defense in both cases. Brethren claimed that Buckley had accidentally waived her claim against Brethren by signing a broad waiver in a release with GEICO. Buckley got different results in her cases. She won in front of the Maryland Insurance Administration, but lost on summary judgment in the Circuit Court. The Maryland Insurance Administration declared the waiver non-binding. The Circuit Court held that it applied. Buckley appealed the summary judgment. In the opinion quoted above, the Court of Appeals sided with the Maryland Insurance Administration’s interpretation. The Maryland Insurance Administration opinion added another nail to the coffin.
Brethren v. Buckley is not the only case that relied on a Maryland Insurance Administration bad faith decision. In Whiting-Turner Contracting Co. v. Liberty Mut. Ins. Co., 912 F. Supp. 2d 321, 339-40 (D. Md. 2012), the Maryland’s Federal District Court had to decide what counted as a first party bad faith claim under Maryland’s bad faith statute. The court decided that the claim at issue was a first party claim based on “K.T. v. Churchill Casualty, Ltd., Case No. 27–1001–08–00031 (Md.Ins.Admin. Sep. 29, 2008)” and “I.M. v. Am. Skyline Ins. Co., Case No. 27–1001–08–00040 (Md.Ins.Admin. Oct. 31, 2008).”
Brethren v. Buckley shows that Maryland Insurance Administration decisions are worth winning. It might not have the same effect as a trial win, but it shows you convinced a specialist that you were right. That helped Buckley enough that the Court of Appeals threw it into the opinion. They also provide a relatively cheap way to test arguments in the judicial system and can bolster a negotiating position.
As cited authority, however, the Maryland Insurance Administration decisions are even more useful. As Brethren v. Buckley and Whiting-Turner v. Liberty Mutual show, a Maryland Insurance Administration opinion has and will persuade judges.
There is an added bonus. Practically, the Maryland Insurance Administration decisions are also the only persuasive authority. Maryland appellate courts have produced exactly zero opinions addressing the merits of what counts as bad faith. The only reported opinion discussing the statute’s application is Cecelia Schwabber III, 636 F.Supp.2d 481(2009). You cannot cite what is not there.
By comparison, the Maryland Insurance Administration has been deciding dozens of cases each year since 2007. To the extent that precedent about Maryland's first party bad faith statute exists, that precedent will probably be a Maryland Insurance Administration decision.
Bottom line, the Maryland Insurance Administration decisions are not just worth citing. They are the only cases available to cite. It's a shame that they are not even categorized by subject anywhere.
Update (June 30, 2015): This post is probably the most popular (judging from visitors) we ever wrote. That's great because this is the post about why we bothered starting this blog. But it needs an update.
One of our biggest discoveries writing this blog was that MIA opinions are only one source of persuasive authority about the statute. The other is the United States District Court. As time went on, we wound up gathering up a great many unreported District Court opinions in our hunt for bad faith law.