Update: February 4, 2019 In March 2018 a state court in Washington allowed bad-faith suits against insurer employees. In a recent report by some members of The Coalition Against Insurance Fraud have expressed concern that this ruling will cause a chilling effect to fraud fighting by discouraging insurers and their employees from thoroughly investigating suspicious claims and sending referrals to law enforcement for prosecution.

Often bad faith claims are filed when an insurance company wrongfully denies a claim without a reasonable basis for that denial. The case at hand is out of Washington, facts and details are in the original article. No other state extends bad faith to individual insurance employees to the degree found in Keodalah. The Keodalah court found that investigators and other insurance personnel involved in a claim can be personally sued, when a claims adjuster in a crash-injury case was held personally liable for bad faith and forced to pay treble damages and attorney fees.

The Coalition agrees that insurers should be held to a high standard of good faith, and should be encouraged to pay legitimate claims fairly and properly. When insurers fail to do so, courts should have the authority to punish them for that failure. But, the Coalition says, investigators and claims handlers should not have to decide between fighting fraud and protecting their own personal finances. Unfortunately, even when a suit is later dismissed it can have a hugely negative effect on an investigator's or adjuster's life, including their personal credit and their ability to obtain a mortgage. A suit against them could also affect them professionally, causing them to lose jobs, professional licenses, and promotions if a civil action appears on a background check.