My learned friend Parks Chastain recently posted here that Tennessee law provides for a reverse bad faith penalty of not more than 25% of the amount claimed when a policyholder does not bring an action in good faith.  Parks’ use of the adage "what’s good for the goose is good for the gander" is right on point.  I agree that a policyholder that files a clearly fraudulent claim should be held accountable.  For example, if an insured files a claim for theft that is clearly proven to be staged and fraudulent, a reverse bad faith penalty is appropriate.  

However, the facts necessary to bring such a claim are not commonplace, and if alleged in the wrong case, could prove catastrophic for the insurance company.  If a jury finds in favor of the insured and believes he or she to be truthful, the fact that the insurance company has added insult to injury by filing a counterclaim will just add fuel to the fire as to the insured’s bad faith or Consumer Protection Act claim against the insurer.