The Pennsylvania Supreme Court, in a precedent-setting 8-2 decision, has upheld a $3 million award against Erie Insurance Exchange for bad faith handling of an auto injury claim.

In its ruling earlier this week, the high court supported the finding that the plaintiff did not need to "prove malice, vindictiveness, or wanton disregard of the rights of others," which can be a requirement in fraud cases, in order to recover punitive damages for bad faith.

The Supreme Court decision rejected an appeal by the Erie, Pa.-based insurer, which contested a 2004 ruling by Pennsylvania's Superior Court. That court found in part that in order to recover punitive damages, a policyholder need not prove anything more than bad faith.

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