On October 22, 2019, the Oklahoma Supreme Court issued its opinion in Loven v. Church Mutual Insurance Company.
Oklahoma City, OK -- (ReleaseWire) -- 11/12/2019 --This case addressed a claim for "intentional interference with a prospective economic business advantage." The justices held, for the first time, that such claims require a "showing of bad faith."
Lisa Gaye Loven worked as a general contractor.
In 2012, she was hired to repair several buildings owned by Edmond Christian Church (ECC) and Chisholm Creek Baptist Church (CCBC). In both cases, Loven "intervened" with the client's insurer, Church Mutual, to secure higher payments for the repair work.
Three years later, Loven applied to become a public insurance adjuster.
In her application, she disclosed that a former client was suing her. This prompted the Oklahoma Insurance Department to open an anti-fraud investigation. Department investigators spoke with Church Mutual employees about the 2012 repair work. Based on the information provided, the Department found Loven had "acted as an unlicensed adjuster" and "received inflated compensation" for her work.
Accordingly, the Department denied Loven's application to become an adjuster. The State of Oklahoma subsequently charged Loven with felony insurance fraud related to the CCBC repair work. These charges were later dismissed.
In 2016, Loven sued Church Mutual and one of its adjusters.
She accused the defendants of intentionally interfering with her "prospective business opportunity/economic advantage." In other words, she argued Church Mutual retaliated against her by telling the Department about the alleged 2012 overcharges. This in turn caused the Department to deny her an adjuster's license.
The defendants moved to dismiss Loven's lawsuit.
Under Oklahoma law, an insurer and its employees are immune from suit arising from statements made in the course of an insurance fraud investigation. Loven replied this immunity did not apply to her application to become a public adjuster.
The trial court agreed the defendants were immune and dismissed the case.
The Supreme Court later agreed to consider whether Loven's specific allegations of intentional interference required proof of "bad faith." The Court said that it did. The justices explained that civil immunity protected Church Mutual "as long as they, themselves, [did] not act … in bad faith." Since Loven never offered any evidence of bad faith, the trial court was correct to dismiss her lawsuit.
Oklahoma insurance bad faith attorney Tony Gould said the Supreme Court's decision does not mark a dramatic departure from existing law.
"Bad faith requires proof of malice or reckless disregard for the truth. In this case, an insurance company provided information in response to an existing state investigation. There was no suggestion the information provided was false or misleading. The fact this information proved harmful to the subject of the investigation did not, in the court's view, make this a case of bad faith."