A federal district court in Oklahoma held that insurance policies are not subject to claims under the Oklahoma Consumer Protection Act (“OCPA”), and that insureds’ claims for breach of fiduciary duty were subject to dismissal as Oklahoma law does not recognize the existence of such duty between an insured and insurer. Western Medical Park Owners v. U.S. Liability Ins. Group, 2014 WL 6674305 (W.D. Okla. Nov. 24, 2014); Rivera v. Hartford Ins. Co. of the Midwest, 2014 WL 7335320 (W.D. Okla. Dec. 19, 2014).
In cases involving identical issues, the same district court dismissed all of insureds’ claims except breach of contract because Oklahoma only recognizes fiduciary duty of insurer to insured in limited circumstances evincing a “special relationship,” and held the OCPA does not apply to insurer’s conduct and that an insurer has no duty to advise an insured with respect to their insurance needs.
Oklahoma Statute section 754(2) provides in part, “[n]othing in this act shall apply to: …Actions or transactions regulated under laws administered by the Corporation Commission or any other regulatory body or officer acting under statutory authority of this state or the United States….” In both cases, the district court found that under the OCPA, accepting premiums, refusing to pay benefits, offering a product that provides illusory coverage, and other actions related to adjustment of a claim were in fact regulated by the Oklahoma Department of Insurance and subject to the exception under the OCPA that applies to: (1) misrepresentation of policy terms; (2) failure to disclose policy information; and (3) accepting insurance premiums but refusing without reasonable basis to pay benefits due and owing. The court found the crux of the insureds’ allegations to involve investigation practices or the sale of property insurance and adjustment activities, which fall within the regulatory authority of the Insurance Commission which enforces provisions prohibiting insurers from (1) knowingly misrepresenting to claimants pertinent facts or policy provisions relating to coverage at issue; (2) failing to adopt and implement reasonable standards for prompt investigation of claims arising under its insurance policies or insurance contracts; and (3) not attempting in good faith to effectuate prompt, fair and equitable settlement of claims submitted in which liability has become reasonably clear.
The court further held that Oklahoma law does not recognize the existence of a fiduciary duty between an insured and an insurer and found that the insureds failed to cite authority recognizing a fiduciary duty by an insurer and failed to plead facts showing a “special relationship,” rather than an arms’ length relationship, between an insurer and insured. It held that broad allegations regarding unequal bargaining power, unscrupulous exploitation and the existence of a fiduciary relationship are inadequate to support a breach of fiduciary duty claim.