Insurance Companies Beware: Recent West Virginia High Court Ruling May "Unleash a Flood of Lawsuits"

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Since 2005, insurers operating in West Virginia have been able to rest a bit more easily knowing that so-called third-party bad faith or Jenkins claims had been eliminated by amendments to the West Virginia Unfair Trade Practices Act. A recent West Virginia Supreme Court of Appeals opinion, however, could end all of that.

In its June 11, 2010 decision in Michael v. Appalachian Heating, LLC, Case No. 35127, the West Virginia Supreme Court of Appeals held that the West Virginia Human Rights Act prohibits unlawful discrimination by a tortfeasor's insurer "in the settlement of a property damage claim when the discrimination is based upon race, religion, color, national origin, ancestry, sex, age, blindness, disability or familial status." Moreover, the Court specifically held that "[t]he prohibition of a third-party law suit against an insurer under the [West Virginia Unfair Trade Practices Act] does not preclude a third-party cause of action against an insurer under...the West Virginia Human Rights Act."

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