Pennsylvania’s UTPCPL was enacted in 1968 and, in addition to prohibiting a host of specific “unfair or deceptive acts,” the law contained a catch-all provision. The catch-all provision, as originally enacted, prohibited “any other fraudulent conduct which creates a likelihood of confusion or of misunderstanding.” 73 P.S. § 201-2(4) (1968). In order for a plaintiff to recover under the original catch-all provision, Pennsylvania courts consistently required proof of common law fraud. See, e.g. Hammer v. Nikol, 659 A.2d 617 (Pa. Commw. Ct. 1995). Common law fraud is dependent upon proof of the actor’s state of mind and requires proof that the actor acted intentionally. As such, UTPCPL claims brought pursuant to the original catch-all provision failed unless the plaintiff could establish that the defendant intentionally engaged in conduct that created a likelihood of confusion.
The UTPCPL and its catch-all provision were amended in 1996, and the catch-all provision now prohibits “engaging in any other fraudulent or deceptive conduct which creates a likelihood of confusion or of misunderstanding.” See 73 P.S. § 201-2(4)(xxi) (emphasis added). Following the amendment, Pennsylvania’s intermediate appellate courts began issuing inconsistent opinions regarding the burden of proof required in order to establish a violation of the catch-all provision. One line of cases, primarily from the Superior Court, continued to hold that a showing of fraud and intentional conduct was required for liability. (Pennsylvania has two intermediate appellate courts—the Superior Court and Commonwealth Court. The Superior Court has jurisdiction over criminal and most civil appeals, whereas the Commonwealth Court has jurisdiction over actions brought against the state and appeals from state agencies.) For example, in Skurnowicz v. Lucci, the Pennsylvania Superior Court explained that “in addition to 20 specifically enumerated practices, the Act provides that ‘engaging in any other fraudulent or deceptive conduct which creates a likelihood of confusion or of misunderstanding’ constitutes an ‘unfair or deceptive act or practice.’ In order to establish a violation of this catchall provision, ‘a plaintiff must prove all of the elements of common-law fraud.’” 798 A.2d 788 (Pa. Super. Ct. 2002); see also Ross v. Foremost Ins. Co., 998 A.2d 648 (Pa. Super. Ct. 2010); Colaizzi v. Beck, 895 A.2d 36 (Pa. Super. Ct. 2006).
But a separate line of cases—primarily from Pennsylvania’s Commonwealth Court—held that the 1996 amendment to the catch-all provision “allow[ed] for liability based on the less restrictive standard of ‘deceptive conduct.’” Commonwealth v. Manson, 903 A.2d 69 (Pa. Commw. Ct. 2006); see also Fazio v. Guardian Life Ins. Co., 62 A.3d 396 (Pa. Super. Ct. 2012); Commonwealth v. TAP Pharmaceutical Prod., Inc., 36 A.3d 1197 (Pa. Commw. Ct. 2011).
Until very recently, however, Pennsylvania’s highest court had not considered the issue and whether the 1996 amendment to the UTPCPL changed the standard. Gregg v. Ameriprise Fin.,Inc., 245 A.3d 637 (Pa. 2021). In Gregg, the plaintiffs sought the expertise of a financial advisor and insurance salesperson for Ameriprise Financial, Inc. The advisor held himself out as someone with skill, training, and expertise in insurance and investment products, and encouraged the plaintiffs to rely upon his advice. Based upon the advisor’s sales pitch, the plaintiffs believed that if they purchased a new life insurance policy and made annual payments, the policy would accrue significant cash value that they could use to fund their retirement. However, the advisor did not allocate the plaintiffs’ payments in a manner consistent with the plaintiffs’ understanding.
The plaintiffs sued the advisor and the life insurance company, asserting claims for negligent misrepresentation, fraudulent misrepresentation, and violation of the catch-all provision of the UTPCPL. Following trial, a verdict was returned in favor of the defendants on the misrepresentation claims but in favor of the plaintiffs on the UTPCPL claim. The defendants appealed, arguing that the verdict in their favor on the misrepresentation claim precluded judgment against them on the UTPCPL claim, because the plaintiffs were required to establish misrepresentation to recover under the catch-all provision of the UTPCPL. The Superior Court upheld the trial court’s decision and the plaintiffs appealed to the Pennsylvania Supreme Court.
In interpreting the catch-all provision, the Supreme Court looked at the intent of the legislature when enacting the UTPCPL and noted that it was an attempt “to place on more equal terms seller and consumer.” The Supreme Court noted that the 1996 amendment of the catch-all provision expanded the definition of unlawful conduct to also prohibit “deceptive” conduct that creates a likelihood of confusion or of misunderstanding.
The Supreme Court analyzed the plain language of the catch-all provision to determine whether a strict liability standard applies to a UTPCPL claim. The Supreme Court found that the addition of “deceptive” to the statute expanded the provision beyond fraudulent conduct. The court held “it is the capacity to deceive rather than the actor’s state of mind that renders conduct actionable under the amended catch-all provision of the [UTPCPL].”
The Supreme Court explained that the test for deceptive conduct is “a lesser, more relaxed standard than that for fraudulent or negligent misrepresentation” and “all that the statute requires the plaintiff to prove is that the acts or practices are capable of being interpreted in a misleading way.” Thus, the Supreme Court concluded that the intermediate appellate court was correct in its characterization of the catch-all provision as a strict liability provision and that a finding of liability did not depend on the defendant’s state of mind. The Supreme Court supported its conclusion by noting that the legislature knows how to add a state of mind requirement to a statute, as it had done in numerous other provisions of the UTPCPL. But the absence of a reference to the actor’s state of mind in the catch-all provision “demonstrates that the legislation did not intend to require proof of the actor’s state of mind.”
The dissenting justice disagreed with application of a strict liability standard, instead opining that a negligence standard was more appropriate because the statute did not expressly impose strict liability. In response, the majority acknowledged that the statute did not contain an explicit strict liability designation, but found that it is the “absence of an intent requirement that imposes a strict liability standard.”
Ultimately, the Pennsylvania Supreme Court held in Gregg that the intermediate appellate court was correct in its characterization of the catch-all provision as a strict liability provision. The trial court’s finding that the insurance company was liable under the catch-all provision without proof of the insurer’s state of mind was therefore affirmed.
In the insurance context, the UTPCPL, which applies to the sale of goods, can apply to conduct involving the sale of an insurance policy. It is not uncommon for insureds in Pennsylvania to assert claims against insurers for violation of the UTPCPL. A frequent assertion is that insureds were confused regarding their coverages because the coverages were not fully explained by the insurance company or insurance agent, or because the explanation was somehow misleading. Gregg significantly lowers the standard for insureds by eliminating the requirement that the insured prove the state of mind of the insurer or agent, instead only requiring a showing that the circumstances of the sale created “a likelihood of confusion or misunderstanding.”
Kathleen P. Dapper is a Member at Burns White. She focuses her practice on litigation. Her experience ranges from handling insurance coverage and extracontractual matters where she represents insurers in a variety of bad faith and coverage disputes, to working with clients as part of the firm’s Transportation and Logistics practice group. She is based out of the firm’s Pittsburgh office.
Daniel J. Twilla is a litigator whose practice focuses on insurance bad faith, insurance coverage, and commercial litigation. He is co-chair of the Insurance Practice and Extracontractual Practice group and a Member at Burns White.