"In 2008, the Minnesota Legislature created a private cause of action for bad faith in first-party insurance."[1] The Minnesota statute is Minnesota Statute Section 604.18.[2]
The Eighth Circuit quickly and clearly summarized the statute in 2022:
To make a bad faith claim, the insured must establish both that the insurer lacked a reasonable basis for denying the insurance benefits and that the insurer knew it lacked a reasonable basis for denying benefits or acted in reckless disregard of the lack of a reasonable basis.[3]
Or, as the Minnesota Supreme Court put it in a slightly lengthier interpretation, reaching the same result:
Several things are clear from the plain text and structure of the statute. First, the burden rests with the insured to prove that the insurer violated the standard of conduct. Second, to prevail, the insured must establish two independent facts: (1) the insurer did not have a reasonable basis for denying the benefits of the insurance policy, and (2) the insurer either knew it lacked a reasonable basis for denying the benefits or it recklessly disregarded the fact that it lacked a reasonable basis for denying the benefits.[4]
[1] Friedberg v. Chubb & Son, Inc., 800 F. Supp. 2d 1020, 1025 (D. Minn. 2011) (Keyes, United States Magistrate Judge).
[2] Minn. Stat. § 604.18 (West; Westlaw current with legislation effective through April 19, 2023 from the 2023 Regular Session). By its terms, the Minnesota statute allows for an award of costs and attorney's fees under certain conditions.
[3] Wobig v. Safeco Ins. Co. of Am., 40 F. 4th 843, 848 (8th Cir. 2022) (construing and applying Minn. Stat. § 604.18 subd. 2(a)).
[4] Peterson v. W. Nat'l Mut. Ins. Co., 946 N.W.2d 903, 910 (Minn. 2020).
Express Statutory Causes of Action in first-party cases in the United States are discussed in Section 9:14 of 2 DENNIS J. WALL, LITIGATION AND PREVENTION OF INSURER BAD FAITH (West Publishing Company 3d Edition, 2023 Supplements in process).
This blog article ©2023 Dennis J. Wall. All rights reserved.
Comments