The Limitations of the Unfair Insurance Practices Act in Pennsylvania Workers’ Compensation Disputes 

by Robert S. Stickley, Esq. and Connor J. Thomson, CPCU, WRP 

Robert S. Stickley, Esq., is the Founding Partner of Stickley Law, LLC, a boutique insurance defense law firm based in the Philadelphia, Pennsylvania, region.  Mr. Stickley has tried numerous high-severity personal injury and fraud cases to verdict and has extensive first-party commercial and personal lines claims handling experience.  Mr. Stickley also serves as special fraud litigation counsel for insurance companies. 

Mr. Stickley received his J.D. from Widener University School of Law in 1997 and holds a B.A.A.S. in Political Science and Economics from the University of Delaware.  In addition to his legal and undergraduate degrees, Mr. Stickley holds an advanced degree in Litigation Management. 

Mr. Stickley can be reached via e-mail at rstickley@stickley.law. 

Connor J. Thomson, CPCU, WRP, is a Law Clerk at Stickley Law, LLC, a boutique insurance defense law firm based in the Philadelphia, Pennsylvania, region, and a law student at Villanova University Charles Widger School of Law.  Mr. Thomson also served as the 2023-24 Law Student Vice-Chair of the American Bar Association Tort Trial & Insurance Practice Section Workers’ Compensation and Employers’ Liability Committee. 

Mr. Thomson can be reached via e-mail at cthomson@stickley.law. 

Statutory Language and Case Law 

An emerging, highly disturbing trend in Pennsylvania first-party disputes is plaintiffs alleging that insurance companies acted in bad faith as prohibited under the Unfair Insurance Practices Act, 40 P.S. § 1171.1 et seq.  The UIPA states, in pertinent parts: 

(10) Any of the following acts . . . shall constitute unfair claim settlement or compromise practices. 

* * * 

(ii) Failing to acknowledge and act promptly upon written or oral communications with respect to claims . . . . 

(iii) Failing to adopt and implement reasonable standards for the prompt investigation of claims . . . . 

(iv) Refusing to pay claims without conducting a reasonable investigation based upon all available information. 

(v) Failing to affirm or deny coverage of claims within a reasonable time after proof of loss statements have been completed and communicated to the company . . . . 

(vi) Not attempting in good faith to effectuate prompt, fair[,] and equitable settlements of claims in which the company’s liability . . . has become reasonably clear. 

* * * 

(xiv) Failing to promptly provide a reasonable explanation of the basis in the insurance policy in relation to the facts or applicable law for denial of a claim or for the offer of a . . . settlement. 

* * * 

40 P.S. § 1171.5(a)(10)(ii), (iii), (iv), (v), (vi), (xiv) (emphases added). 

The UIPA establishes standards for prompt, reasonable, and good faith investigations but does not provide plaintiffs with a private cause of action in first-party disputes.  See, e.g., Leach v. Nw. Mut. Ins. Co., 262 F. App’x 455, 459 (3d Cir. 2008) (“[T]here is no private [cause] of action under the UIPA, which can only be enforced by the state insurance commissioner”); Weinberg v. Nationwide Cas. & Ins. Co., 949 F. Supp. 2d 588, 598 (E.D. Pa. 2013) (“Courts within the Third Circuit and   . . . Commonwealth of Pennsylvania continue to recognize that the UIPA does not provide plaintiffs with a private cause of action”). 

But what about workers’ compensation disputes?  Does the UIPA provide claimants with a private cause of action? 

The answer: no.  See 31 Pa. Code § 146.1.  According to The Hon. Ricardo C. Jackson (Ret.) of the Philadelphia County Court of Common Pleas, a counterclaim that alleged that a workers’ compensation insurance company acted in bad faith as prohibited under the UIPA was “not supported by law” and “not legally cognizable.”  Mfrs. Alliance Ins. Co. v. Sagot, NO. 02120, 2009 Phila. Ct. Com. Pl. LEXIS 21, at *12, *13 (Phila. Cnty. Ct. Com. Pl. Apr. 14, 2009). 

In general, “bad faith actions are disallowed under the Pennsylvania Workers’ Compensation Act,” which “is the exclusive remedy for [work-related] injuries.”  Id. at *12 (citing Kuney v. PMA Ins. Co., 578 A.2d 1285 (Pa. 1990)).  “An employer’s liability for work-related injuries is governed solely by the . . . Act, and the same is true of a [workers’] compensation insurance [company].”  Kuney, 578 A.2d at 1286 (emphases added).  Even a workers’ compensation insurance company that intentionally, fraudulently, and deceptively mishandles an injured employee’s claim will not face the possibility of a large verdict in a civil action.  See, e.g., id. at 1288; Poyser v. Newman & Co., 522 A.2d 548 (Pa. 1987) (holding that civil actions to recover damages for intentional torts are barred by the Act). 

The Act’s Exclusivity Provision 

On April 19, 2023, the Supreme Court of Pennsylvania provided a refresher on the Act’s exclusivity provision, stating that the Act’s “linchpin is its ‘exclusivity provision,’ which provides that ‘[t]he liability of any employer . . . shall be exclusive and in place of any and all other liability to such employees . . . in any action at law or otherwise on account of any injury or death . . . or occupational disease.’”  Franczyk v. Home Depot, Inc., 292 A.3d 852, 853 (Pa. 2023) (quoting 77 P.S. § 481(a)). 

“Over the long history of the Act, [Pennsylvania] courts have recognized only a few narrow exceptions” to the exclusivity provision, and there is “no shortage of cases that have reaffirmed the breadth of the exclusivity provision’s application, and in sweeping terms.”  Id. at 853, 857.  One narrow exception is where an employer conceals, alters, or intentionally misrepresents information related to a work-related injury, which results in aggravation.  See Fry v. Atl. States Ins. Co., 700 A.2d 974 (Pa. Super. Ct. 1997).  A second narrow exception is where an employer actively misleads employees already suffering as the victims of workplace hazards, thereby precluding such employees from receiving prompt medical attention and care.  See McGinn v. Valloti, 525 A.2d 732 (Pa. Super. Ct. 1987).  When such deliberate conduct is present, the Pennsylvania Legislature cannot “insulate employers from liability . . . by limiting liability to coverage provided by the . . . Act.”  Fry, 700 A.2d at 976 (quoting Martin v. Lancaster Battery Co., 606 A.2d 444, 448 (Pa. 1992)). 

In conclusion, plaintiffs in first-party disputes and claimants in workers’ compensation disputes cannot leverage the UIPA to receive extra-contractual damages.  Only Pennsylvania’s Insurance Commissioner can leverage the UIPA to “examine and investigate the affairs of every person engaged in the business of insurance . . . to determine whether such person has been or is engaged in any unfair method of competition or in any unfair or deceptive act or practice.”  27 P.L.E. INS. § 3 (2024) (citing 40 P.S. § 1171.7). 

If you ever come across the UIPA, pause, take a deep breath, and remember that the Act’s exclusivity provision immunizes workers’ compensation insurance companies that act in self-interest or ill-will or engage in “species of bad faith [that] flourish notwithstanding the absence of ‘self-interest’ or ‘ill-will,’” such as “[s]hoddy claims-handling, lack of diligence, non-responsiveness, haphazard investigation, unreasonable denials, and the like.”  Rancosky v. Wash. Nat’l Ins. Co., 170 A.3d 364, 379 (Pa. 2017) (Wecht, J., concurring). 

For more information on this topic, to learn about Stickley Law, LLC’s experience defending bad faith actions throughout Pennsylvania and New Jersey, or to learn about Stickley Law, LLC’s insurance claims training service, please contact Robert S. Stickley, Esq., at rstickley@stickley.law or Connor J. Thomson, CPCU, WRP, at cthomson@stickley.law. 

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