This is the case of Lindenberg v. Jackson Nat’l Life Ins. Co. in the United States Court of Appeals for the Sixth Circuit.

In Lindenberg, the court ruled that a plaintiff may recover bad faith and punitive damages against an insurance courier for bad faith refusal to pay on a valid policy and claim.

The District Court found that the statutory remedy for a bad faith claim was not the only remedy for an insurance company’s bad faith refusal to pay on a policy.

Relevant Factual Background

This case involves an auto collision resulting in death, and the ensuing coverage dispute regarding a $350,000 life insurance policy, of which the Plaintiff was designated as the primary beneficiary of the policy issued by Jackson National Life Insurance Company. The decedent’s surviving children were the alternate beneficiaries.

According to court records, the Plaintiff submitted a claim for the benefit of the policy limit, but the Defendant sent a list of demands that the Plaintiff had to meet before it would make a payment.

Among other things, the insurer wanted the Plaintiff to sign waivers and obtain court-appointed guardians for the descendant’s minor children.

In court documents, the Plaintiff said that the Defendant threatened that if the plaintiff did not comply with their requirements she could “waive her rights to the claim so that Defendant could disburse the proceeds to the minor children.”

Plaintiff Filed Suit Against Insurer

As a result, the Plaintiff filed suit against the insurer for refusal to pay on the policy and for bad faith claims relating to the mishandling of the claim.

Eventually, the life insurance policy was paid out, but a jury proceeded to hear Plaintiff’s “claims for common law breach of contract, statutory bad faith, and common law punitive damages based on breach of contract.”

The Plaintiff Prevails at Trial

This jury found in favor of the Plaintiff and awarded $350,000 in compensatory damages and an additional $87,500 for the specific claim of bad faith, plus $3,000,000 in punitive damages.

The Defendant Appealed the District Court’s Ruling

On appeal, the Sixth Circuit held that nothing in the bad faith statute (Tenn. Code Ann. § 56-8-113)  “limits an insured’s remedies to those provided therein.”

The Sixth Circuit ruled that there was sufficient evidence on the record to conclude that the Defendant acted in bad faith and that Defendant’s refusal to pay on the plaintiff’s claim was unjustified based upon clear and convincing evidence.