A federal court recognized in a first-party insurer bad faith case, that under Ohio law the burden of proof would be on the plaintiff to prove the absence of a fairly or reasonably debatable reason for denying insurance coverage.
According to the federal judge in this case, one of two types of insurer bad faith claims in Ohio involves a failure to determine whether there is a lawful basis to deny coverage. “A bad faith claim based on failure to determine whether there was a lawful basis to deny coverage is not tied to the underlying merits of the decision to grant or deny coverage.” Jordan v. Liberty Mut. Fire Ins. Co., NO. 4:19CV0093, 2019 WL 3082304, at *4 (N.D. Ohio July 15, 2019).
The federal judge also recognized the other prong of Ohio insurer bad faith law which survives intervening decisions and "involves the merits of the contract claim. Therefore, in this type of case, the success of the [bad faith] tort claim hinges upon the success of the contract claim." Jordan, 2019 WL 3082304, at *4.
In the eyes of this judge, the plaintiff's allegations met the requirements to plead both types of insurer bad faith claims under Ohio law. The court denied the carrier's motion for judgment on the pleadings in favor of receiving evidence on these legally sufficient claims.
The Jordan v. Liberty Mutual Fire Insurance Company case is discussed along with many other first-party insurance cases addressing Fairly or Reasonably Debatable Claims, in 2 Dennis J. Wall, LITIGATION AND PREVENTION OF INSURER BAD FAITH § 11:17 (3d Edition Thomson Reuters and 2020 Supplements).
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