A court in the United States District Court Eastern Division of Missouri severely limited the testimony of the plaintiff’s expert and discussed the scope of a retained expert’s ability to testify concerning insurance industry standards and the degree to which an expert can opine on “ultimate issues”. In Scobee vs USAA Cas. Ins. Co 4:22 CV-488-JAR the court clearly rejected plaintiff’s argument that the expert can disguise legal conclusions and/or ultimate as admissible opinion. This case was decided by District Court Judge John Ross, sitting in Missouri, although applying Kentucky substantive tort/contract law. However, the law on admissibility of expert opinion is the same in Missouri and Kentucky, and the Court relied on cases arising from Missouri law in arriving at its decision.
Plaintiff alleged a claim for bad faith refusal to settle. Kentucky, like Missouri, has an unfair claims practices act, KRS § 304.12-230 (KUCSPA) and both state’s statutes set forth similar, if not identical, standards for fair claim handling. Kentucky also has a statute that allows an insured to bring a bad faith action, the evidence of which can be violation of the Unfair Claims Practices Act. Both statutes generally codify industry-wide standards governing claim handling.
USAA moved to exclude the following opinions of the Plaintiff’s expert which in part mirror unfair claims practices codified in both KRS § 304.12-230 and Missouri’s UFCPA, RSMo. §375.1005
- Under Kentucky law, “refusal to pay claims without conducting a reasonable investigation is an unfair claim settlement practice,”
- USAA’s “actions and handling were inconsistent with various unfair claims settlement provisions in Kentucky,”
- USAA “failed to act reasonably promptly with its communications,”
- USAA “failed to conduct a reasonable investigation as a basis to refuse to pay the claim
- USAA’s decision was a “bad faith failure to effectuate a prompt, fair and equitable settlement which forced the Scobees to institute litigation during which USAA has been stubbornly litigious,”
- USAA’s “conduct was … unfair and deceptive and inconsistent with … the minimum standards established” under the KUCSPA,”
In ruling on the motion to strike these opinions the Court held “The Court agrees that Mr. Hildebrand’s testimony regarding the standards of claim handling in the insurance industry and opinions as to whether USAA’s performance complied with those standards would be admissible.” So, here the Court is saying that if an expert testifies that the standard in the “industry” is, for instance, that a reasonable investigation is required before refusing to pay a claim” the expert can then testify that it is their opinion a reasonable investigation was not performed.
Keeping in mind that performing a reasonable investigation is a statutory duty imposed on insurers in both Kentucky and Missouri. The insured’s counsel wanted to beef up their expert’s opinions by eliciting testimony that the carrier violated state law. However, the Court explained this type of testimony would be an inadmissible legal conclusion. The Court explained, “…Mr. Hildebrand’s testimony regarding the ultimate issues in this case must be limited. Mr. Hildebrand cannot reach the ultimate issue of whether USAA’s performance violated the KUCSPA. Indisputably, Mr. Hildebrand cannot conclude that an action was violative or inconsistent with the KUCSPA because that is a legal conclusion.”
Further limiting the scope of Plaintiff’s expert, and relying on federal precedent in Missouri cases, the Court held, “Mr. Hildebrand cannot offer opinions that USAA’s claims handling was in bad faith, or it acted in a way that was “unreasonable,” “unfair,” “deceptive,” or “reckless” because all of these are elements of a KUCSPA claim. Similarly, the Court holds that Mr. Hildebrand’s conclusion that USAA acted “with no reasonable basis” or “with reckless disregard” would not be admissible.” The court held that these types of opinions are inadmissible since they are the ultimate issue that the jury decides after being instructed on the law by the court.
Use of this case and the precedent cited therein will substantially limit Plaintiff’s expert’s testimony in insurance bad faith litigation and put the issue as to what is the law in the hands of the court to instruct upon and the conclusion as to the facts into the hands of the jury, not some paid retained expert. Likewise, it sets out clear guidelines to use in assessing the admissibility of your defense expert’s opinions.