COURT STRIKES ALLEGATIONS THAT INFER DUTIES OUTSIDE THE POLICY, BUT PERMITS ALLEGATIONS OF PRESENT OR PAST BENEFIT DENIALS (Middle District)

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Offering a different take on the usual challenge to federal pleadings, the insurer moved to strike portions of this UIM bad faith complaint as immaterial and impertinent, rather than to dismiss the entire complaint.

The complaint pleaded the insurer’s alleged refusal to pay full medical benefits, and the alleged consequences of that refusal vis-à-vis the insured and third parties. The insurer focused its motion on striking four specific paragraphs of the complaint.

The first two paragraphs raised the insurer’s advertisements directed to members of the military. The insured, a long serving Army veteran, alleged that he relied on representations and warranties made in these advertisements, which the insurer breached. The court agreed to strike these two paragraphs as irrelevant to the issue of whether the insurer breached a duty under the policy itself, or violated the bad faith statute. In addition, the court found these warranty averments prejudicial, as they could lead a jury to believe the insurer owed duties outside the policy.

The court, however, refused to strike the other two paragraphs at issue.

One of these paragraphs included an averment that the insurer refused to pay a benefit due, while also mentioning grievances directed at third parties. The alleged refusal to pay the insured was enough to preserve this paragraph, even though the allegations regarding third parties may not be actionable.

As to the final paragraph at issue, the insurer took the position that the injuries at issue did not arise from the accident. The insured argued the ramifications of this erroneous position posed a variety of detriments to him, with simultaneous advantages to the insurer. While the paragraph did have some focus on contingent future conduct, it still alleged the insurer had already refused to pay for medical treatment, and how this refusal might be used by the insurer to its advantage in limiting payments or evidence. The court held: “These averments could bear some possible relation to whether Defendant … breached a duty owed under the Policy or imposed by Pennsylvania’s bad faith statute. See Rancosky v. Wash. Nat’l Ins. Co., 642 Pa. 153, 170 A.3d 364, 365 (Pa. 2017) (finding that evidence of an insurance company’s motive of self-interest or ill-will may be probative of a bad faith claim).”

Date of Decision: May 6, 2018

Bacon v. USAA Casualty Insurance Co., U. S. District Court Middle District of Pennsylvania No. 1:18-cv-01686, 2019 U.S. Dist. LEXIS 76218, 2019 WL 1988214 (M.D. Pa. May 6, 2019) (Kane, J.)

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