Monthly Archive for September, 2009

SEPTEMBER 2009 BAD FAITH CASES
DELAYS IN CLAIMS HANDLING PROCESS AND PAYMENT ATTRIBUTABLE TO INSURED OR REASONABLE NOT BASIS FOR BAD FAITH CLAIM (Philadelphia Federal)

In Crawford v. Allstate Insurance Company, Plaintiff sued Defendant for bad faith even though Allstate had paid her the policy’s full $100,000 uninsured motorist policy limit and its entire $5,000 wage loss policy limit. Plaintiff’s bad faith claim was based, in part, on the following allegations: (1) Defendant unreasonably delayed the processing of the claim; (2) Defendant’s initial settlement offer was unreasonable; (3) Defendant’s subsequent delay in issuing the $100,000 settlement check was unreasonable; and (4) Defendant used an unfair doctor and arbitrator.  While Defendant did not settle Plaintiff’s uninsured motorist claim until almost two years after Plaintiff filed the claim, the U. S. District Court for the Eastern District of Pennsylvania granted Defendant’s motion for summary judgment.

The Court found that the carrier promptly took action following Plaintiff’s accident when, within four days of being notified of the accident, Allstate wrote Plaintiff explaining Plaintiff’s benefits and providing the necessary paperwork, including a medical authorization form.  Additionally, the carrier continued to pay for Plaintiff’s medical coverage even though Plaintiff did not submit any forms to Defendant.  The Court found that the reason for the delay in processing the claim was due to Plaintiff’s failure to provide Defendant with any medical records for an entire year.  When Plaintiff finally provided medical records, the records did not contain complete information regarding Plaintiff’s hospitalization after an automobile accident that had occurred five years earlier.

The court held that the insurer “had a reasonable, good-faith basis for delaying settlement” because for over a year it received no medical records from Plaintiff.  Further, any delay was based on an effort to conduct a reasonable and thorough investigation of Plaintiff’s injuries and potential pre-existing conditions.  The Court found that the insurer’s initial settlement offer of $75,000 was not unreasonable and that the medical records did not provide clear and convincing evidence that the case was worth more than this offer.

The Court found that the three-week delay in issuing the settlement payment was justified because Plaintiff’s counsel did not check with Allstate before revising its release and Allstate could not issue the check until it had received the insured’s taxpayer I.D.  Finally, the Court found that Plaintiff’s claims that Defendant used an unfair doctor and arbitrator were baseless and had no support in the record.

Date of Decision: August 31, 2009

Crawford v. Allstate Ins. Co., U.S. District Court, Eastern District of Pennsylvania, Civil Action No. 07-3758, 2009 U.S. Dist. LEXIS 79200 (E.D. Pa. Aug. 31, 2009) (Buckwalter, S.J.)

SEPTEMBER 2009 BAD FAITH CASES
JUDGE WETTICK GIVES ROADMAP ON DISCOVERY AND TRIAL STAYS IN UIM BAD FAITH CASES

Judge Wettick, of the Court of Common Pleas of Allegheny County – one of the most respected and influential Judges in Pennsylvania – revisited issues that were before him in Gunn v. The Automobile Insurance Company of Hartford, which ultimately went to the Superior Court of Pennsylvania, summarized on this Blog. That case involved the issues of staying discovery on a bad faith claim and severing the bad faith and breach of contract cases.

In this case, State Farm was the carrier in a UIM action, where the insured claimed breach of contract for failure to pay UIM benefits and bad faith for that alleged failure to pay.  State Farm sought to stay discovery on the bad faith claim, pending the outcome of the breach of contract claim.  State Farm argued that requiring it to furnish information as to the values it placed on the UIM claim, how it reached those values and its opinions on the strengths and weaknesses of the UIM claim would be akin to forcing the defense in a football game to turn over its formation for the upcoming play before the offense selected a play.

Judge Wettick agreed that State Farm should not be required to furnish that information until after the UIM claim went to the jury.  However, as soon as the case went to the jury, State Farm had to provide the discovery and once the jury returned its verdict, the trial court judge would begin trying the bad faith claim.  [It should be observed here that at this time, bad faith claims go to juries in federal court, but are tried only by judges in Pennsylvania state courts.]

If an instance arises where a plaintiff believes the bad faith claim cannot immediately go to trial because of the postponement of discovery until the time of jury deliberations, then that plaintiff should file a motion under Pennsylvania Rule of Civil Procedure 213 to stay the bad faith trial.  Such a motion must be filed promptly on the basis that there was not adequate time to prepare for the bad faith trial.

In addition, the court might postpone the bad faith trial if plaintiff, on receiving the discovery, offers a compelling explanation as to why the trial cannot proceed at that time, and as to why the request for a later trial was not made shortly after the court issued the order delaying the discovery.

Date of Decision:  September 9, 2009

Wutz v. Smith and State Farm Insurance Company, No. GD07-021766 (Court of Common Pleas, Allegheny County Sept. 9, 2009) (Wettick, J.)