Third Circuit: Fraud Reports to Law Enforcement Are Absolutely Privileged and Do Not Create Specific Personal Jurisdiction; Personal-Jurisdiction Dismissals Must Be Without Prejudice

I. Introduction

In Jonathan Blecher v. Progressive Casualty Insurance Co. (3d Cir. July 20, 2026) (nonprecedential), pro se appellants Alan P. Blecher and Jonathan D. Blecher—both attorneys—challenged the dismissal of their amended complaint against Progressive Select Insurance Company (“Progressive Select”), Progressive Casualty Insurance Company (“Progressive Casualty”), and The Progressive Corporation (“Progressive”).

The dispute arose after Alan Blecher purchased an auto policy underwritten by Progressive Select using a Florida address and representing that the vehicle was garaged in Florida more than 50% of the time. When the vehicle was stolen in Philadelphia (before Alan allegedly moved to Florida), Progressive denied coverage for “Fraud and Misrepresentation at the time of policy inception” and reported suspected fraud to the Pennsylvania Attorney General. The Blechers sued for breach of contract, insurance bad faith, defamation, and sought declaratory relief.

The appeal presented three core issues: (1) whether Pennsylvania courts could exercise specific personal jurisdiction over Progressive Select; (2) whether Progressive Casualty or Progressive could be liable for breach/bad faith absent a pleaded insurer-insured relationship or contractual privity; and (3) whether reporting suspected insurance fraud to law enforcement (and related communications) could support defamation liability.

II. Summary of the Opinion

The Third Circuit largely affirmed the dismissal. It held that:

  • No specific personal jurisdiction over Progressive Select was shown because issuing a Florida policy based on a Florida address and garaging representation was not “purposeful direction” toward Pennsylvania; a later fraud report to the Pennsylvania Attorney General was treated as a reaction after the dispute reached Pennsylvania, not a Pennsylvania-directed business contact.
  • The Blechers failed to state breach of contract and bad faith claims against Progressive Casualty and Progressive because they did not adequately plead that either entity was their insurer or otherwise owed contractual obligations under the policy; conclusory assertions of corporate control and claim-handling assignment were insufficient.
  • The defamation claim failed because reports to law enforcement made to instigate charges are absolutely privileged under Pennsylvania law; speculative allegations of internal or third-party “publication” also were not plausibly pleaded.
  • The court modified the judgment to clarify that dismissal of Progressive Select for lack of personal jurisdiction must be without prejudice, and affirmed the judgment as modified.

III. Analysis

A. Precedents Cited

1. Pleading and review standards

  • Fowler v. UPMC Shadyside and Warren Gen. Hosp. v. Amgen Inc. framed de novo review of Rule 12(b)(6) dismissals and the “facial plausibility” requirement, signaling that conclusory allegations—especially regarding corporate relationships and claim handling— would not suffice.
  • Bell Atl. Corp. v. Twombly provided the decisive pleading lens for the claims against Progressive: broad assertions that the parent “controlled policies” or “allowed claim assignment,” without concrete factual content tying those actions to contractual liability, were treated as insufficiently plausible.
  • Miller Yacht Sales, Inc. v. Smith supported de novo review of personal-jurisdiction rulings, which mattered because the panel independently evaluated the asserted Pennsylvania contacts.
  • Fairview Township v. EPA underscored the appellate court’s ability to affirm on any record-supported basis.
  • In re Wettach was used to deem forfeited issues not developed on appeal (here, general personal jurisdiction and declaratory relief).

2. Specific personal jurisdiction framework

  • Burger King Corp. v. Rudzewicz supplied the “purposeful direction” requirement and the “fair play and substantial justice” backstop. The court’s application emphasized that a defendant’s forum contacts must be intentional and defendant-created—not merely the plaintiff’s location or unilateral decision to bring a claim in a forum.
  • Helicopteros Nacionales de Colombia, S.A. v. Hall contributed the “arise out of or relate to” requirement, reinforcing that even if some connection to Pennsylvania existed, it must be meaningfully connected to Progressive Select’s forum-directed conduct.
  • Marten v. Godwin both allocated the burden to the plaintiff to establish jurisdiction and articulated the Third Circuit’s formulation of the Calder v. Jones “effects test.”
  • Calder v. Jones was invoked by the Blechers to argue that an intentional tort (defamation) caused in-forum harm; the panel declined to apply it because the underlying defamation theory failed on the merits (absolute privilege and lack of publication).

3. Contract/privity and delegation principles

  • Hudock v. Donegal Mut. Ins. Co. did the heavy lifting on the contract theory: even if an insurer delegates claims-handling duties, that delegation may create duties between the insurer and its adjusters/agents, but it does not automatically create a contract (or direct contractual liability) between the delegate and the insured. The court used Hudock to reject the idea that Progressive Casualty’s investigation or claim involvement alone established contractual privity with the Blechers.

4. Pennsylvania insurance bad faith

  • Rancosky v. Washington Nat'l Ins. Co. supplied the Pennsylvania Section 8371 test: lack of a reasonable basis for denial plus knowing or reckless disregard, proven by clear and convincing evidence. The court relied on the threshold point that the Blechers did not plausibly plead that Progressive Casualty or Progressive was their “insurer,” and separately noted they did not plausibly allege an unreasonable denial even if insurer status were assumed.

5. Participation theory (tort) and corporate actors

  • Wicks v. Milzoco Builders, Inc. was cited by the Blechers for Pennsylvania’s “participation theory,” but the panel explained it is a doctrine for personal liability of corporate officers who personally participate in a tort. Because the Blechers sued corporate entities (not individual officers) and failed to plead a viable tort predicate, Wicks did not advance their claims.

6. Defamation and privilege for reports to law enforcement

  • Pawlowski v. Smorto and Marino v. Fava were central: Pennsylvania recognizes an absolute privilege for reports to law enforcement made for the purpose of instigating criminal charges. The panel used these cases to hold that even false or maliciously motivated reports to the Pennsylvania Attorney General cannot support defamation liability.

7. Personal-jurisdiction dismissals must be without prejudice

  • EF Operating Corp. v. Am. Bldgs. required the modification: dismissal for lack of personal jurisdiction is procedural, not a decision on the merits, and therefore must be without prejudice—leaving the plaintiff free to refile in an appropriate forum.

B. Legal Reasoning

1. Why Progressive Select was not subject to specific jurisdiction in Pennsylvania

The court applied the traditional three-part specific-jurisdiction test. It found the first step—purposeful direction—missing: Progressive Select issued a Florida automobile policy to an applicant who provided a Florida address and affirmed Florida garaging. That conduct, as pleaded, was directed to Florida underwriting risk, not Pennsylvania commerce.

The Blechers leaned on two asserted Pennsylvania contacts: (1) a fraud report to the Pennsylvania Attorney General and (2) claim investigation activity. The court treated the Attorney General referral as responsive conduct following the theft and claim dispute, not evidence that Progressive Select purposefully targeted Pennsylvania as a forum for its business. The investigation point failed for a second reason: the Blechers did not plausibly connect Progressive Select to the allegedly Pennsylvania-based investigation (they attributed investigation to Progressive Casualty) and offered only conclusory statements as to how such post hoc conduct would create jurisdiction over Progressive Select.

2. Why the “effects test” did not supply jurisdiction

The Blechers attempted to use Calder v. Jones as implemented in Marten v. Godwin. But the “effects test” requires a viable intentional tort and conduct expressly aimed at the forum. The panel concluded the defamation theory failed because the challenged statements to law enforcement were absolutely privileged and allegations of other actionable publication were speculative. Without a plausible intentional tort, Calder could not provide a jurisdictional hook.

3. Why breach of contract and bad faith claims failed against Progressive Casualty and Progressive

For Progressive Casualty, the court focused on the absence of a pleaded contractual relationship. Even accepting that Progressive Casualty investigated the claim, that does not equate to becoming a contracting insurer. Hudock v. Donegal Mut. Ins. Co. foreclosed the Blechers’ theory that delegated duties or claims handling creates contractual privity with the insured.

For Progressive (the parent corporation), the court rejected liability-by-label: alleging the parent “controlled policies” or “stopped the claims process” to decide assignment, without specific facts tying those actions to an enforceable promise to the insureds, did not meet Twombly plausibility.

On bad faith, the court noted two independent pleading gaps: (1) the Blechers did not plausibly plead that Progressive Casualty or Progressive was “the insurer” for Section 8371 purposes; and (2) even if insurer status were assumed, the complaint did not plausibly negate a reasonable basis for denial or allege knowing/reckless disregard as required by Rancosky v. Washington Nat'l Ins. Co..

4. Why defamation failed: absolute privilege and lack of publication

The court treated the core alleged defamation—reporting suspected fraud to the Pennsylvania Attorney General—as absolutely privileged under Pennsylvania law, relying on Pawlowski v. Smorto and Marino v. Fava. Absolute privilege is decisive because it is not defeated by allegations of malice or falsity; it is a categorical bar designed to encourage reporting suspected crimes without fear of civil defamation liability.

The Blechers argued that statutes displaced the privilege. The panel rejected that contention: 40 P.S. 474.1 expressly preserves prior immunities (“Nothing in this section is intended to abrogate or modify a common law or statutory immunity heretofore enjoyed by any person.”), and 75 Pa. C.S. § 1795(a)(1) was deemed inapplicable on its face to the alleged fraud scenario as pled.

As to alleged communications beyond law enforcement (e.g., internal discussions or communications with unnamed entities), the court found the allegations too speculative and, in any event, noted the plaintiff’s burden to prove “publication” under 42 Pa.C.S. § 8343(a)(2).

5. Why the judgment had to be modified

The panel corrected the form of the dismissal as to Progressive Select. Under EF Operating Corp. v. Am. Bldgs., a dismissal for lack of personal jurisdiction cannot be “with prejudice” because it is not an adjudication on the merits. The modification preserves the plaintiffs’ ability to sue Progressive Select in a forum that can properly exercise jurisdiction.

C. Impact

  • Defamation claims tied to fraud referrals face a high barrier in Pennsylvania: The decision reinforces that statements made to law enforcement to instigate charges are insulated by absolute privilege. Litigants seeking to challenge allegedly false fraud referrals must look to non-defamation theories (if any), and must overcome statutory and common-law immunities that are designed to protect crime reporting.
  • Jurisdiction cannot be manufactured from a dispute’s aftermath: The court’s treatment of the Attorney General report as reactive rather than “purposefully directed” cautions plaintiffs against relying on post-incident communications within the forum to establish jurisdiction over an out-of-state insurer. A defendant’s forum contacts must be defendant-created, not merely the place where the plaintiff experiences consequences.
  • Corporate structure and claim handling do not automatically create contractual liability: The reliance on Hudock highlights that plaintiffs must plead the actual insurer, the policy’s contracting party, and a legally cognizable theory connecting other entities to contractual obligations—especially in multi-entity insurance groups.
  • Procedural precision matters: The modification to “without prejudice” underscores a practical point for litigators and courts: personal-jurisdiction dismissals should preserve refiling options and avoid merits-like preclusive effects.

IV. Complex Concepts Simplified

  • Specific personal jurisdiction: A court may hear a case against an out-of-state defendant only if the defendant deliberately engaged with the forum (not just with the plaintiff) and the lawsuit is connected to those forum-directed actions.
  • “Purposefully directed” activity: The defendant must choose to reach into the forum (e.g., marketing, contracting, performing obligations there). A defendant’s response to events that happen to occur in the forum is often treated as insufficient.
  • Calder “effects test”: For intentional torts, a plaintiff may sometimes establish jurisdiction where the harm is felt—but only if the tort is plausibly alleged and the conduct was expressly aimed at the forum.
  • Contractual privity: Generally, only parties to a contract (or those in a legally recognized substitute relationship) can sue each other for breach. A company that merely investigates a claim is not necessarily the contracting “insurer.”
  • Delegation of duties: Even if a contracting party delegates performance to another, that does not automatically create a new contract between the delegate and the counterparty.
  • Insurance bad faith (Pennsylvania Section 8371): The insured must show the insurer lacked a reasonable basis to deny benefits and knowingly or recklessly disregarded that lack of a reasonable basis—by clear and convincing evidence.
  • Absolute privilege (defamation): Some communications are fully protected to serve public policy goals (here, encouraging reports of suspected crime). If the privilege applies, defamation liability is barred even if the statement was malicious or false.
  • Dismissal “without prejudice”: The case is dismissed, but the plaintiff may refile elsewhere. This is the required disposition when the court lacks personal jurisdiction.

V. Conclusion

Although designated “Not Precedential,” the opinion consolidates several practically important rules for insurance and tort pleadings in federal court applying Pennsylvania law: (1) an out-of-state insurer’s issuance of an out-of-state policy based on the insured’s representations does not, without more, establish specific personal jurisdiction in Pennsylvania; (2) claim handling by a related entity does not automatically create contractual privity or insurer status for breach and bad-faith purposes; (3) Pennsylvania’s absolute privilege for reports to law enforcement forecloses defamation claims premised on fraud referrals; and (4) dismissals for lack of personal jurisdiction must be without prejudice. Together, these holdings emphasize careful pleading of forum contacts, party identity, contractual relationships, and actionable (non-privileged) publications.