In 2005, the West Virginia Legislature barred any third-party claimant from suing for bad faith insurance practices. W.Va. Code 33-11-4a. The issue here is whether conduct occurring after 2005 is discoverable and admissible in a third-party bad faith claim that was filed before the 2005 legislation became effective.
A grade school student received a head injury on the playground. The boy was treated and then returned to school with a doctor’s note prohibiting any playground activities. Nevertheless, he was returned to the playground and suffered additional injuries. Thereafter, the boy’s parents sued the school system and the claim was handled by the state’s insurer, AIG. According to the plaintiffs, AIG failed to properly investigate the claim and unreasonably delayed payment. The plaintiffs filed their bad faith claim before the enactment of W.Va. Code 33-11-4a.
AIG filed a motion for a protective order to preclude the plaintiff from engaging in any discovery relating to post-2005 conduct. The trial court denied the motion, finding that the plaintiff’s bad faith claim had been filed before the 2005 legislation and, therefore, post-2005 conduct was still subject to discovery.
AIG argues that W.Va. Code 33-11-4a not only prevented bad faith claims from being filed after its effective date, i.e., July, 2005, but also prevented any bad faith conduct occurring after 2005 from being used to support a bad faith claim. In fact, AIG argues that the trial court’s order permitting discovery of post-2005 conduct constitutes a violation of due process. To support its due process argument, AIG cites Hensley vs. Dep’t of Health and Human Resources, 203 W.Va. 456, 508 S.E.2d 616 (1998) and Wampler Foods, Inc. vs. Workers Compensation Division, 216 W.Va. 129, 602 S.E.2d 805 (2004). These cases, it says, stand for the proposition that “the law in effect at the time of the alleged violation should apply to claims arising from that violation.”
The plaintiffs accuse AIG of attempting to “rewrite” the law. According to the plaintiffs, W.Va. Code 33-11-4a was meant to prohibit the filing of bad faith claims after its effective date--nothing more. In other words, it “expresses absolutely no intent to limit, affect, prohibit, restrict or exclude evidence of claims misconduct occurring after July 8, 2005.” The plaintiff cites a federal case, Vincenzo vs. AIG Ins. Services, 2007 W.L. 2773834 (N.D. W.Va. 2007), in which Judge Keely applied a similar analysis.
This remains an important question for attorneys practicing bad faith law in West Virginia. It may also give guidance for interpreting similar statutory language in the future.