PNC Financial Services Group suing to recoup millions
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PNC Financial Services Group is suing two insurance companies to recover millions it agreed to pay last year to settle a class-action lawsuit over the bank's overdraft practices.
The complaint, filed in federal court in Pittsburgh Wednesday, accuses Houston Casualty Co. of Houston, Texas, and Axis Insurance Co., based in Alpharetta, Ga., of breach of contract for improperly denying coverage.
Each insurer "failed to honor its contractual obligation to reimburse PNC for the defense costs and settlement amounts," the complaint states.
The suit also is seeking coverage for costs incurred in two similar overdraft cases, one that PNC settled for $13.8 million in 2010 and one that hasn't been settled.
Last year, PNC agreed to pay $90 million to settle the class action in U.S. District Court in Miami that accused a number of big banks nationwide of improperly manipulating debit card purchases by clearing them from highest amount to lowest. That practice tends to drain an account more quickly and trigger the most overdraft fees.
In December, PNC stopped reordering checks and debit card transactions from high to low and now processes them in the order they come in.
Besides reimbursement for defense and settlement costs, the bank is seeking unspecified damages from the insurers.
Spokespeople for the insurance companies declined comment, citing policies against talking about pending litigation. PNC likewise declined comment.
Citizens Bank, the No. 2 bank in the Pittsburgh region behind PNC, also settled in the Florida class action last year, agreeing to pay $137.5 million.
The Rhode Island-based bank also said it would start processing debit card transactions in chronological order instead of high to low, but hasn't said specifically whether the change would extend to paper checks.
The Pittsburgh region's third biggest retail bank, First National Bank of Pennsylvania, last month agreed to settle for $3 million in a separate overdraft case filed in U.S. District Court in Pittsburgh.
As part of that settlement, FNB agreed to improve customer disclosures but has said it would not change its policy of processing check and debit card transactions from high to low.
First Published March 8, 2013 12:00 am