Oklahoma Bad Faith Basics
By Phil R. Richards

The court noted that an insurer’s obligation upon presentation of a proper claim is not limited to the payment of money alone,3 but includes an implied duty of the insurer to “deal fairly and act in good faith with its insured” for the violation of which tort liability could be imposed.4 The court recognized that an insurer would not be deemed in bad faith simply because it disputed its insured’s claim even to the point of litigation, but rather would be subject to such liability only upon a “clear showing” that the insurer unreasonably and in bad faith withheld payment of its insured’s claim.5

For many years, the Supreme Court discussed bad faith in the context of an intentional tort.6 Thus, in its 1981 decision in McCorkle v. Great Atlantic Ins. Co., the court commented that “the essence of the intentional tort of bad faith with regard to the insurance industry is the insurer’s unreasonable, bad-faith conduct.”7 Again in 1991 the court reiterated that “the plaintiff carries the burden of proof and must plead the elements of this intentional tort, the essence of the tort being the unreasonable bad-faith conduct of the insurer.”8 However, the court repudiated this language and that of similar decisions in its 2005 opinion in Badillo v. Mid Century Ins. Co., when it held that “the minimum level of culpability necessary for liability against an insurer to attach is more than simple negligence, but less than the reckless conduct necessary to sanction a punitive damage award against an insurer.”9 Curiously this decision, issued on rehearing after the composition of the court changed and it withdrew a previously issued decision reaching precisely the opposite result, suggested that prior use by the court of the term “intentional tort of bad faith” was a “short hand reference” to such tortious conduct and was not meant to convey that such required that the insured must “prove the insurer intended to harm or deceive its insured.”10 Thus, it appears that pending further illumination by the court, the standard of proof of a bad faith claim at present lies somewhere in the undefined territory between negligence and recklessness.11

COMPENSATORY DAMAGES

The compensatory damages recoverable in a bad faith case include those for financial losses, embarrassment and loss of reputation, and emotional distress proximately resulting from the insurer’s improper conduct.12 Financial losses typically include those that result from the failure of the insurer to honor its policy obligations. Thus, in a bad faith case resulting from the failure of the insurer to pay a first-party claim, such as for property loss, the financial losses would be the value of the property damaged or lost up to the limits of the policy. As regards a case which arises from an uninsured or underinsured motorist claim, the financial losses would be the value of the underlying tort claim up to the limit of the UM/UIM coverage under the policy. In a case involving the wrongful failure to defend and indemnify the insured from a third-party claim, the financial losses would include the cost of defense of the claim, irrespective of the limit of coverage unless the policy was a “wasting” policy,13 and the amount of any resulting judgment or settlement up to the limit of the policy. Where the bad faith claim arose from the wrongful failure of the insurer to settle a third- party liability claim within the limits of the policy’s coverage when an opportunity to do so was presented, the financial losses would include the amount of any verdict in excess of the coverage limit of the policy.

Damages for embarrassment and loss of reputation seem rarely to be a significant factor in bad faith cases in this author’s experience. Principally this has been because most plaintiffs have conceded either that those who have an opinion of them do not know that they had an insurance claim denied or do not think less of them because such occurred. However, by way of example, it is certainly conceivable that the delay or denial of an insurance claim could place an insured in a precarious financial position which might injure the insured’s reputation in the community or be a source of embarrassment to the insured.

Damages for emotional distress are available where the insured is an individual or partnership. These damages are something of a wild card in bad faith litigation, since it is difficult to predict the amount that a jury will award. Such damages should compensate for the distress proximately resulting from the handling of the insurance claim, rather than for the underlying injury which gave rise to the claim. Thus, in a case involving the wrongful denial of health insurance benefits for cancer treatment, it is the emotional distress arising from the denial of the insurance benefits rather than the emotional trauma associated with the cancer that is to be compensated (assuming, of course, that the evidence does not establish that the claim denial prevented the insured from obtaining treatment or otherwise aggravated the cancer). In practice, however, the distinction between the two is often blurred. Thus, the insured’s lawyer may seek to emphasize that the insult of having a claim wrongfully denied was all the more damaging where the insured was already afflicted with the emotional trauma of a cancer diagnosis, while the insurer’s attorney may urge that the emotional issues related to the insurance claim were negligible next to those with which the insured dealt in relation to the cancer diagnosis and prognosis.

Emotional distress damages should not be available in certain types of bad faith cases. For instance, a corporate insured cannot suffer emotional distress by reason of the wrongful delay or denial of its insurance claim.14 Similarly, where the insured dies as a result of the insured event before the insurer is given notice of it through submission of a claim, no emotional distress could have resulted to the insured from a wrongful delay or denial of the claim since the insured had no knowledge of it. Thus, for instance, where an uninsured motorist claim for the death of the insured in an auto accident is wrongfully denied when submitted by the insured’s estate, no emotional distress damages would be recoverable by the estate since none were suffered by the insured in relation to the insurance claim.

BAD FAITH LIABILITY

As noted above, the Christian court viewed the tort of bad faith as one arising from a breach by the insurer of a duty of good faith and fair dealing which constituted an implicit term of the insurance contract.15 As a contract-based duty, an action for its breach is available to an insured as a party to the contract, against the insurer with whom the insured contracted. However, even though both the insurer and insured have mutual obligations under the terms of the insurance contract, in its decision in First Bank of Turley v. Fidelity and Deposit Ins. Co. of Maryland, the Supreme Court held that Oklahoma law does not permit the insurer to bring such an action against its insured.16 In short, Oklahoma does not recognize “reverse bad faith” as a actionable claim. For the breach of an obligation of the insurance contract, including presumably the implied duty of good faith and fair dealing, the insurer is permitted only a total or partial defense to the insured’s claim.17

WORKERS’ COMPENSATION CLAIMS

The court has, however, expanded the scope of liability for bad faith beyond that of traditional first-party insurers. The tort of bad faith is available not only against property and casualty, health, life and disability insurers in Oklahoma. To the contrary, decisions of Oklahoma’s appellate courts in recent years have broadened the scope of that exposure.

For instance, for almost a decade the Oklahoma Supreme Court left unanswered the question of whether a workers’ compensation claimant may sue a workers’ compensation insurer for bad faith under any circumstances. Such a claimant is, by statute, deemed an insured under the workers’ compensation policy.18 Thus, the claimant is not a stranger to the insurance contract. However, insofar as the insurer is legally obligated to defend the employer against whom the claimant asserts a workers’ compensation claim, the relationship between claimant and insurer is certainly not a traditional first-party insurance relationship.

In Whitson v. Okla. Farmers Union Mut. Insur. Co.,19 the Oklahoma Supreme Court rejected a claimant’s attempt to impose bad faith liability upon his employer for the manner in which a workers’ compensation claim was defended, but left open the possibility that such a claim might lie against a workers’ compensation insurer. Thereafter, in Anderson v. United States Fidelity & Guarantee Co.,20 the court held that insurers were exempt from liability to workers’ compensation claimants for conduct which occurred prior to the issuance of an award, but left open the possibility that post-award conduct of the insurer might give rise to such liability. The result was a confused state of litigation as to whether such liability would lie and, if so, which rulings of the workers’ compensation court would constitute an “award” which would trigger the insurer’s obligation of good faith and fair dealing, if such existed.

These questions appeared to have been finally answered by the court in its decision in Deanda v. AIU Insur.21 In that case, the court held that imposing bad faith tort liability upon workers’ compensation carriers would be inconsistent with the legislative scheme which established the workers’ compensation system.22 The court found that remedies against an insurer and employer were available to a workers’ compensation claimant for failure to satisfy awards of the workers’ compensation court, and that the adequacy of those remedies was purely a matter within the province of the legislature. Thus, the court concluded that “Oklahoma does not recognize the tort of bad faith against a workers’ compensation insurance carrier for post-award conduct.”23

However, two years later in Sizemore v. Continental Casualty Company24 the court reconsidered its holding in Deanda and overruled it. In doing so, the court made two significant rulings. The first concerned the question of whether an employer which was “self-insured” for purposes of workers’ compensation coverage could be held liable for bad faith as an insurer. The court noted that the Workers’ Compensation Act had been amended to include within its definition of an “insurance carrier” those employers which were individual self-insureds or members of a group self-insurance association, and thus found that such a self-insured employer was subject to the same tort liability as was an insurance company.25

The second ruling was that an insurer or self-insured employer would be subject to bad faith liability for the failure to pay a workers’ compensation award, although the Sizemore decision included some language suggesting that such liability would only arise where the workers’ compensation claimant had first followed the procedure set forth within 85 O.S. Ann., § 42(A) providing for the filing of the award as a judgment with the district court.26 Significantly, the court discussed the procedure under that statute as one providing a remedy for “late payment” of workers’ compensation benefits, although the procedure is available where the benefits are not paid within 10 days.27 Thus, it is at least arguable that, under the authority of the Sizemore decision, the failure to pay a workers’ compensation award within 10 days of its issuance is a sufficient basis upon which to predicate a bad faith claim.

THIRD-PARTY ADMINISTRATORS

The court has also imposed liability for bad faith, in some instances, upon third-party administrators. Third-party administrators, or TPAs, are independent companies that provide claims administration services for insurance companies. A TPA, under the terms of its contract with an insurance company, may perform some or all of the claims service functions that would otherwise be handled by the claim department of the insurer. This can include the receipt, investigation and processing of claims, claims adjudication, claim payment and appeal adjudication. Depending upon the nature of the TPA, compensation for these services can be based upon a flat fee, a per capita fee based upon the number of insureds, an adjustable fee based upon claim volume or a percentage fee based upon claim payments. A TPA which is affiliated with an insurance company may also either underwrite or assume some part of the risk. These companies are perhaps most often utilized in the context of health insurance claims; nonetheless, they can also be found handling property and casualty claims, typically for smaller insurers.

Historically, the Oklahoma Supreme Court has held that since the duty of good faith and fair dealing arises from an implied covenant of the insurance contract, liability for the breach of that duty can only be imposed upon the insurer. Thus, those acting as its agents in discharging the insurer’s non-delegable duties, as strangers to the insurance contract, are not subject to bad faith liability.28 However, in 1995 the 10th Circuit Court of Appeals, in Wolf v. Prudential Insur. Co. of America,29 predicted that the Oklahoma Supreme Court would expand tort liability for bad faith to include third-party administrators under circumstances where the TPA was sufficiently involved in the claim process to be acting as a de facto insurer.

It was not until January 2004, in Wathor v. Mutual Assur. Admin. Inc.,30 that the Oklahoma Supreme Court finally reached this issue. In Wathor, the Supreme Court adopted the reasoning of the 10th Circuit in Wolf, and expanded bad faith liability to include TPAs under certain limited circumstances. Specifically, the court held that:

In a situation where a plan administrator performs many of the tasks of an insurance company, has a compensation package that is contingent on the approval or denial of claims, and bears some of the financial risk of loss for the claims, the administrator has a duty of good faith and fair dealing to the insured.31 

However, absent such special circumstances, the court reaffirmed the general rule that normally liability should not be imposed upon a TPA since it is not a party to the insurance contract.32

The Wathor decision is best understood by its comparison of the duties of the TPA sued in Wolf to those of the TPA in the case before it. In Wolf, the 10th Circuit noted that the TPA “had primary control over benefit determinations (including some intermediate appeals)” and “received a percentage of the premiums paid for participant coverage” which “increased as losses decreased” and, after losses reached a certain level, the TPA “had to share the risk” until, after a point, the TPA “had to underwrite the entire risk.”33 Thus, the 10th Circuit concluded that the TPA had a “special relationship” with the insured equivalent to that which the insured would have with an insurer upon which bad faith liability might be imposed.34

By contrast, although the TPA in Wathor was required to initially determine “whether any particular claim for benefits qualifies for payment under the Plan,” it did not have final authority to approve or deny claims or adjudicate appeals, was “compensated by a flat fee based solely on the number of participants in the plan,” and “assume[d] no risk for any claims filed under the plan.”35 Under these circumstances, the Supreme Court found that bad faith liability would not extend to the TPA. Although it performed some of the claim handling tasks for which an insurance company is traditionally responsible, its compensation was not tied to the outcome of its claim adjudications and it did not share in the risk of loss. As such, the court found that the TPA “had neither the power, the motive, nor the opportunity to act unscrupulously,”36 and thus should not be excepted from the general rule that bad faith liability will not fall upon those who are strangers to the insurance contract.

Wathor is significant in affirming that while bad faith liability is typically confined to the insurer, it can extend to a third-party administrator under limited circumstances where the TPA has a financial stake in the outcome of its claims adjudications which might provide a motive to act unscrupulously. While this basis for liability is narrow, where it exists the liability would appear to be co-extensive with that of the insurer for which it acts.

RECENT DEVELOPMENTS

Perhaps one of the most interesting, and potentially significant, expansions of bad faith liability in recent years was the result of a decision of the Oklahoma Court of Civil Appeals. In June 2004, that court issued its decision in Worldlogics Corp. v. Chatham Reinsur. Corp.,37 which extended tort liability for bad faith to sureties.

Worldlogics was the owner of a construction project, on which Chatham had issued a performance bond. When the contractor failed to satisfactorily perform under the construction contract, Worldlogics made demand upon Chatham to take over the project and complete construction as required by its bond. Chatham allegedly refused to do so, or even to conduct a timely or adequate investigation of the contractor’s alleged breach. Worldlogics then sued the contractor for breach of the construction contract and sued Chatham upon its bond.

The matter was submitted to arbitration, with the result that an award was entered against the contractor for breach of contract, and against Chatham upon its bond. Worldlogics then amended its petition to additionally assert a claim of bad faith against Chatham, for failing to perform a timely and adequate investigation and for unreasonably denying Worldlogics’ claim. The issue presented on appeal was whether such a claim of bad faith would lie against a surety.

The Court of Civil Appeals considered whether a suretyship contract presented one of the limited circumstances in which a breach of the duty of good faith and fair dealing, implied in every Oklahoma contract as noted above, would give rise to bad faith tort liability. In deciding this issue, the court noted that suretyship contracts are included within the definition of an insurance contract under the Oklahoma Insurance Code, that sureties are subject to the Oklahoma Unfair Claim Settlement Practices Act, and that Oklahoma law has consistently interpreted the obligations of a surety by reference to the laws governing the interpretation of policies of insurance.38 Moreover, the court concluded that parties do not enter into contracts with sureties to obtain a commercial advantage, but rather to obtain security or protection similar to that provided by an insurance policy.39 The court thus determined that imposition of tort liability for a breach of the obligations of the surety would be appropriate, in order to deter sureties who might be inclined to delay payment of obligations due upon their surety contract.40

Of particular interest in this decision is the court’s recognition of the potential dilemma which the imposition of bad faith liability creates for the surety. In arguing against such liability, Chatham noted that the demands upon a surety are often inconsistent, as the project owner seeks the assumption and completion of the project by the surety as the bond obligee, while the contractor, the principal on the bond, may insist that it is not in breach and thus intervention by the surety is inappropriate. The Court of Civil Appeals noted that the Colorado Supreme Court had acknowledged this problem in stating:

We recognize that the commercial surety is put in an awkward position in handling simultaneous claims made by the principal and the obligee . . . Although the commercial surety’s obligation may be more complex than those of an insurer, this complexity does not authorize a commercial surety to disregard its obligation to act in good faith.41

The Oklahoma Court of Civil Appeals held that “a surety can act in good faith towards both parties; acting in good faith toward one party does not necessitate acting in bad faith toward the other.”42 Thus, the court found that a surety owes a duty of good faith and fair dealing to both the principal and the obligee upon its surety bond, and subjected the surety to liability for a breach of that duty as to either the obligee or the principal.

It would seem that the Worldlogics case may prove to be of considerable significance, assuming that the Oklahoma Supreme Court does not reach a contrary conclusion should it address this issue in the future. As the Worldlogics court recognized, when a surety is called upon by an obligee to perform upon its contract, it can be assumed that the relationship between the obligee and the surety’s principal has deteriorated. At that point the obligee is claiming that the principal has breached its contract, although the principal may well assert that it has performed or that its ability to perform has been impaired by the obligee. Under these circumstances, the duty of good faith and fair dealing would presumably require that the surety perform an investigation and reach a conclusion as to whether a breach of the principal contract has occurred. Yet it seems clear that either the principal or the obligee will be dissatisfied with the conclusion reached by the surety. Worldlogics makes the surety subject to a claim of bad faith by, and potential bad faith liability to, the dissatisfied party. Thus, the Worldlogics decision would seem to create the potential for a vast new area of bad faith litigation.

ERISA

In the face of this seeming expansion of bad faith liability in recent years, ERISA has been the one area in which such liability has been precluded, although such was on the basis of federal, rather than state, law. The Employee Retirement Income Security Act, or ERISA, was passed by Congress to encourage employers to provide welfare and retirement benefits to employees. Among the incentives utilized by ERISA to encourage employers to provide these benefits was a limitation on the liability which employers might face for implementing such a program. In effect, ERISA limits employers’ liability where payments are wrongfully withheld to an obligation to make the payments due and precludes the imposition of other tort or contractual liability. This liability protection is not only extended to the employer but also to others acting on behalf of the ERISA plan in its administration.

Because ERISA is a federal law, virtually all cases involving an ERISA plan land in federal court. For years, a split of authority existed among the Oklahoma federal bench as to whether the protection from liability afforded by ERISA extended to an insurance company whose policy is purchased to fund all or part of an ERISA plan. However, in 2004 the 10th Circuit Court of Appeals addressed this issue in the case of Allison v. UNUM Life Insur. Co. of America,43 and concluded that certain U.S. Supreme Court decisions made clear that Oklahoma’s bad faith tort had, indeed, been preempted by ERISA. While the circuit’s analysis is more legally complex than it is interesting, the court essentially held that although Oklahoma’s bad faith law was directed toward the insurance industry, it did not regulate the spreading of policyholder risk, which it interpreted as meaning affecting a change in the distribution of risk between the insured and insurer based upon the substantive terms of the insurance contract.44 Since the savings provision of ERISA exempts from its pre-emptive effect only those state laws which regulate the insurance industry, in the sense that they are both directed toward the insurance industry and affect the distribution of risk between an insurer and an insured, pre-emption would apply to preclude the imposition of bad faith liability based upon the handling of a claim for employee welfare benefits under an ERISA plan.45

CONCLUSION

In any event, it would now appear to be settled that insurers participating in an ERISA plan are not subject to bad faith liability. Indeed, their liability is limited to an obligation to pay benefits which were wrongfully withheld.

Although bad faith has existed as an independent tort under Oklahoma law since 1977, there is still much unsettled about the definition and scope of this theory of recovery. As noted above, as recently as the Badillo decision in 2005, the court redefined this “intentional” tort as one requiring proof of something between negligence and recklessness. Only a year before had the court expanded bad faith liability to include third-party administrators, and a year after it reversed its earlier decision precluding the imposition of bad faith liability upon workers’ compensation insurers and permitted recovery upon such claims. It has yet to pass upon the Court of Civil Appeals expansion of bad faith liability to include sureties, but there appears little reason to believe that such liability will not be affirmed. Although there remains much that is unsettled in the law governing this tort, it appears clear that it will remain an expanding part of Oklahoma’s tort law for the foreseeable future.

1. Boling v. New Amsterdam Cas. Co. 1935 OK 587, 46 P.2d 916.
2. 1977 OK 141, 577 P.2d 899.
3. Id. at ¶ 19.
4. Id. at ¶ 25.
5. Id. at ¶ 26.
6. Goodwin v. Old Republic Ins. Co., 1992 OK 34, ¶¶ 8, 14, 828 P.2d 431, 433, 435; Buzzard v. Farmers Ins. Co. (Buzzard II), 1991 OK 127, ¶ 12, 824 P.2d 1105, 1109; Buzzard v. McDanel (Buzzard I), 1987 OK 28, ¶ 9, 736 P.2d 157, 159; Manis v. Hartford Fire Ins. Co., 1984 OK 25, ¶¶ 6-13, 681 P.2d 760, 761-62; McCorkle v. Great Atlantic Ins. Co., 1981 OK 128, ¶ 21, 637 P.2d 583, 587.
7. McCorkle, supra., at ¶ 21.
8. Buzzard II, supra., at ¶ 12.
9. Badillo v. Mid Century Ins. Co., 2005 OK 48, ¶ 28, 121 P.3d 1080.
10. Id. at note 6; citing McCorkle, supra.
11. It should be noted that the current Oklahoma Uniform Jury Instructions — Civil do not conform to this standard of proof. For example, OUJI-Civ 22.2, which defines bad faith in the context of a first party insurer’s failure to pay a claim, requires only a finding by the jury that the refusal to pay was “unreasonable under the circumstances” for liability to attach. Similarly, OUJI-Civ 22.3, concerning bad faith liability to an insured in relation to the handling of a third party liability claim, allows liability to attach if the insurer’s actions were “unreasonable under the circumstances” so long as the other elements are satisfied. Nowhere do the pattern instructions define “unreasonable” conduct as being that which is more than negligent, but less than reckless. Such a standard is, in fact, strikingly similar to the definitions of negligence and ordinary care set forth within OUJI-Civ 9.2 and 9.3, respectively. 
12. See OUJI-Civ 22.4.
13. The types of liability policies most familiar to the practitioner, such as personal and commercial auto policies and commercial general liability policies, typically provide that the insurer has the right and duty to defend claims covered under the policy. Generally, this obligation continues regardless of the expense incurred, even where it exceeds that of the coverage limit of the policy, so long as the policy limit is not exhausted through settlement or payment upon a judgment. However, some types of liability policies, such as Directors and Officers policies and many professional liability policies, provide that the cost of defense of a claim against the insured comes out of, and diminishes, the policy’s coverage limit. This type of policy is referred to by various terms, including as a “wasting” policy.
14. However, in such a case the rough equivalent of such damages may be available in the form of damages for loss of reputation. Thus, where a wrongful claim denial impairs the ability of a small corporation to provide its product or services to its customers on a timely basis, such may form the basis for a claim of reputational injury which may result in an award similar to that granted the individual insured for emotional distress.
15. Christian, supra., 1977 OK 141 at ¶ 25; see also Wathor v. Mut. Assurance Admr’s Inc., 2004 OK 2 ¶ 5, 87 P.3d 559.
16. 1996 OK 105 ¶¶ 24, 26, 928 P.2d 298.
17. Id.
18. 85 O.S. 1978, § 65.3 provides that “Every contract of insurance issued by an insurance carrier for the purpose of insuring an employer against liability under the Workers’ Compensation Act shall be conclusively presumed to be a contract for the benefit of each and every person upon whom insurance premiums are paid, collected, or whose employment is considered or used in determination of the amount of premium collected upon such policy . . . which contract may be enforced by such employee as the beneficiary thereof.”
19. 1995 OK 4, 889 P.2d 285.
20. 1997 OK 124, 948 P.2d 1216.
21. 2004 OK 54, 98 P.3d 1080.
22. Id. at ¶ 18.
23. Id. at ¶ 24.
24. 2006 OK 36, 142 P.3d 47.
25. Id. at ¶ 17. It is interesting to note that the definition of an “insurer” in the Oklahoma Insurance Code is somewhat different than that contained within the Workers’ Compensation Act referenced in Sizemore. The Insurance Code defines an “insurer” as including “every person engaged in the business of making contracts of insurance or indemnity.” 36 O.S. Ann., § 103(A). It would thus appear that a “self-insured” outside of the context of workers’ compensation would not be subject to bad faith liability under the rationale of Sizemore, and the author is not aware of any Oklahoma Supreme Court decision that would impose such liability.
26. Id. at ¶¶ 28, 29.
27. Sizemore, supra., at ¶ 26.
28. See Timmons v. Royal Globe Insur. Co., 1982 OK 97, 653 P.2d 907.
29. 50 F.3d 793 (10th Cir. 1995).
30. 2004 OK 2, 87 P.3d 559.
31. Wathor, 2004 OK 2 at ¶ 12.
32. Wathor, 2004 OK 2 at ¶ 18.
33. Wathor, 2004 OK 2 at ¶ 10.
34. Wathor, 2004 OK 2 at ¶ 11.
35. Id. at ¶ 1.
36. Id. at ¶ 13 (citations omitted).
37. 2005 OK CIV APP 16, 108 P.3d 5, cert. denied 2005.
38. Id. at ¶ 12; citing the Oklahoma Unfair Claim Settlement Practices Act, 36 O.S. 1997, § 1250.1 et seq.
39. Id. at ¶ 13.
40. Id. at ¶ 14.
41. Id. at ¶ 16, quoting Trans. America Premier Insur. Co. v. Brighton School District 27J, 940 P.2d 348, 353 n. 4 (Colo. 1997).
42. Worldlogics, 2005 OK CIV APP 16 at ¶ 16.
43. 381 F.3d 1015 (10th Cir. 2004).
44. Id. at 1027.
45. It is interesting to note that, in response to a certified question of law from Judge Holmes, the Oklahoma Supreme Court reached a similar conclusion the year before Allison in the case of Hollaway v. UNUM Life Insur. Co. of America, 2003 OK 90, 89 P.3d 1022.  However, as the Tenth Circuit noted in Allison, the application of ERISA’s preemption clause and its saving provision presents a pure question of federal law, and hence the decision of the Oklahoma Supreme Court was merely persuasive rather than binding. Indeed, the analysis of the 10th Circuit essentially ignored the Hollaway decision in reaching its conclusion, other than to acknowledge in a footnote that the decision had been issued.

About The Author

Phil Richards is a partner in the Tulsa law firm of Richards & Connor. A trial lawyer whose practice includes insurance coverage litigation and insurance bad faith defense, he is a Fellow of the American College of Trial Lawyers and is the current chair of the Extra-Contractual Liability Section of the international Federation of Defense and Corporate Counsel.

Oklahoma Bad Faith Basics
Published 79 OBJ 1757 (August 9, 2008)