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New Hampshire Supreme Court Ruling That Insurance Companies Are Not Subject to Claims Under the Consumer Protection Act RSA 358-AMemorandum to Insurance Clients and Friends 3/27/2001 Executive Summary On March 26, 2001, the New Hampshire Supreme Court confirmed the longstanding position of insurance companies that they are not subject to liability under the New Hampshire Consumer Protection Act RSA 358-A:1 et seq. In a case captioned Bell v. Liberty Mutual Insurance Company (March 26, 2001), the supreme court held that insurance companies fall within certain exemptions contained in the statute for regulated industries. As a result of this ruling breach of contract coverage disputes and declaratory judgment actions against insurers may not be pursued as consumer protection actions with the specter of treble damages and attorneys’ fees. New Hampshire’s Consumer Protection Statute RSA 358-A RSA 358-A makes it unlawful for “[a]ny person to use any unfair method of competition or any unfair or deceptive act or practice in the conduct of any trade or commerce within this state.” The statute provides both for an action by the New Hampshire attorney general, RSA 358-A:4, as well as a private right of action for aggrieved parties under RSA 358-A:4. If the court finds willful or knowing violations of the statute, “[I]t shall award as much as three times, but not less than two times” the greater of actual or statutory damages. A prevailing plaintiff is entitled to recover attorneys’ fees and costs expended in bringing the action. The Court’s Decision in Bell v. Liberty Mutual In Bell, the court recognized that under RSA 358-A:3, the legislature provided an exemption to “[t]rade or commerce otherwise permitted under laws administered by any regulatory board or officer acting under statutory authority of this state or of the United States.” The court held that New Hampshire’s insurance regulatory scheme, found at RSA 400-A through 420-J, constituted the requisite comprehensive regulation and regulatory oversight to trigger the application of the exemption found at RSA 358-A:3, I. The court recognized that consumers adversely affected by certain alleged unfair insurance practices may have a private right of action for damages against the insurer pursuant to RSA 417:19 (1998). However, under that statutory scheme, the private right of action only ripens once a practice is found by the commissioner of insurance to violate that chapter. It is also worth noting that the court once again expressly declined to overrule Lawtron v. Great Southwest Fire Ins. Co., 118 N.H. 607 (1978), and recognize a tort claim for bad faith delay or refusal to settle a first-party insurance. Conclusion The Bell decision provides insurers who are facing claims of unfair and deceptive trade practices under the Consumer Protection Act RSA 358-A, with opportunity to successfully dispose of these claims and the accompanying threat of treble damages and attorneys’ fees. If you have questions about how this decision may impact cases involving Consumer Protection Act claims, or you would like further information about this decision, the applicable New Hampshire insurance regulatory scheme which was the basis of the exemption or the Consumer Protection Act RSA 358-A generally, you may contact:
The foregoing has been prepared for the general information of clients and friends of the firm. It is not meant to provide legal advice with respect to any specific matter and should not be acted upon without professional counsel. If you have any questions or require any further information regarding these or other related matters, please contact your regular Nixon Peabody LLP representative. This material may be considered advertising under certain rules of professional conduct. The foregoing has been prepared for the general information of clients and friends of the firm. It is not meant to provide legal advice with respect to any specific matter and should not be acted upon without professional counsel. If you have any questions or require any further information regarding these or other related matters, please contact your regular Nixon Peabody LLP representative. This material may be considered advertising under certain rules of professional conduct. |
Author(s)Kevin M. FitzgeraldJames V. Hatem Scott O'Connell ServicesInsurance |
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