On the topic of whether independent adjusters should be held liable under the Tennessee Consumer Protection Act (see my prior post here and Parks’ rebuttal here), a case commonly cited by defendant insurance companies and adjusters is Crossley Const. Corp. v. National Fire Ins. Co. of Hartford, 237 S.W.2d 652 (Tenn. Ct. App. 2007). Although Crossley does hold that the TCPA does not apply to the claims handling process, the opinion is somewhat of an aberration in that it is completely out of line with other decisions of the Tennessee Court of Appeals and the Tennessee Supreme Court. For example, in Gaston v. Tenn. Farmers Mut. Ins. Co., 120 S.W.3d 815 (Tenn. 2003), the Tennessee Supreme Court encountered the issue of whether an insurer can be held liable under the Tennessee Consumer Protection Act for unfair and deceitful actions in the handling of an insured’s claim. In that case, the insurance adjuster withheld important information from the insureds concerning how the insureds needed to proceed during the claims process. The insurance company argued that the TCPA does not apply to insurance companies in the handling of claims, but this argument was flatly rejected by the Tennessee Supreme Court. See also Newman v. Allstate Ins. Co., 42 S.W.3d 920 (Tenn. Ct. App. 2000); Stooksbury v. Am. Nat’l. Prop. & Cas. Co., 126 S.W.3d 505 (Tenn. Ct. App. 2003).
In my opinion, the Crossley decision was simply not an accurate application of binding Tennessee law. The purpose of the TCPA is to protect consumers from those who engage in unfair or deceptive acts or practices of any trade or commerce, and it must be construed broadly to effectuate that purpose. As a result, it would be contradictory to public policy and the stated intent of the legislature if unfair or deceptive actions of adjusters, whether employees or independent, were punishable only up until the point of contract formation. Everything is usually rosy and nice at the front end when the policy is first obtained. Its what happens when a claim is filed that demands attention.