DOES ERISA STILL PREEMPT BAD FAITH CLAIMS FOLLOWING
MORAN? SIGNS POINT TO "YES".
Although the Third Circuit has yet to rule on the issue, district courts in Pennsylvania
have repeatedly and consistently held that the Pennsylvania bad faith statute, 42 Pa.C.S. §8371,
is preempted by ERISA. See, e.g., Campbell v. Prudential Insurance Company, 2002 WL
462085 (E.D. Pa. 03/25/02); Cecchanecchio v. Continental Casualty Company, 2001 WL 43783
(E.D. Pa. 01/19/01); Ginsberg v. Independence Blue Cross, 2001 WL 267874 (E.D. Pa.
03/16/01); Murphy v. Metropolitan Life Insurance Company, 152 F.Supp.2d 755 (E.D. Pa.
2001); Stead v. UNUM Life Insurance Company of America, CA No. 99-4470 (E.D. Pa.
03/14/00); Tutolo v. Independence Blue Cross, 1999 WL 274975 (E.D. Pa. 1999); Zimnoch v.
ITT Hartford, 2000 WL 283845 (E.D. Pa. 03/14/00); Norris v. Continental Casualty Company,
2000 WL 877040 (E.D. Pa. 06/28/00); Miller v. Aetna Healthcare, 2001 WL 1609681 (E.D. Pa.
2001); Brown v. Paul Revere Life Insurance Company, 2002 WL 1019021 (E.D. Pa. 2002);
Sopak v. Highmark, Inc., 2002 WL 1271366 (W.D. Pa. 2002).
Recently, however, Senior Judge Newcomer departed from his brethren and with his own
prior decisions in Zimnoch and Stead, supra, to hold that ERISA’s savings clause, 29 U.S.C.
§1144(b)(2)(A), saves from preemption actions arising out of the Pennsylvania bad faith statute.
Rosenbaum v. UNUM Life Insurance Company of America, 2002 WL 1769899 (E.D. Pa.
07/29/02). Judge Newcomer concluded that the Pennsylvania bad faith statute “regulates
insurance” under both the common sense view of ERISA’s savings clause and the McCarren –
Fergusen Test. In particular, Judge Newcomer concluded that §8371 became an “obvious
contractual requirement” which was an “integral part of the policy relationship,” between the
insurer and insured.
Judge Newcomer’s decision thus far stands alone among the district courts of
Pennsylvania. That it did not signal a U-turn among the judges of the Eastern District was