Monthly Archive for May, 2009

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MAY 2009 BAD FAITH CASES
DELAY, ALONE, DOES NOT CONSTITUTE BAD FAITH, ESPECIALLY WHEN THE INSURED’S OWN INACTION CAUSED THE DELAY (Middle District)

Published on May 5, 2009 in Claims Handling Procedures. Closed

In Brown v. Great Northern Insurance Company, the court granted summary judgment for the insurer on the bad faith claim, stating that a delay in processing a claim, without other evidence of bad faith actions, is insufficient to prove bad faith to a clear and convincing standard. 

This case arose from an automobile accident in 2001 in which the insured was injured and for which he subsequently made claims for underinsured motorist (“UIM”) and wage loss benefits.  The insured alleged bad faith because the insurer did not timely process his claim or offer settlement after he supplied the requested medical records.  The court found, however, that it was the insured’s own failure to act that caused the delay.  For his UIM claim, he did not respond to repeated requests for medical records on a pre-existing injury and waited more than six months before permitting access to his first-party benefits claim file.  For his wage loss claim, he did not provide documentation until two days before the case was scheduled for arbitration.  The insured did not provide any other evidence to prove that the insurer either lacked a reasonable basis for the manner in which it processed his UIM claim and recklessly disregarded that unreasonable basis or that failing to settle the wage loss claim during the seven months between permission to view a file and the arbitration date was a delay amounting to bad faith.  Without additional evidence, the delay did not constitute bad faith.

Date of Decision:  February 23, 2009

Brown v. Great N. Ins. Co., No. 3:07-cv-0322, 2009 U.S. Dist. LEXIS 13758 (M.D. Pa. Feb. 23, 2009)(Caputo, J.)

MAY 2009 BAD FAITH CASES
MISREPRESENTATIONS OCCURRING AFTER THE INSURANCE BINDER IS ISSUED ARE IMMATERIAL AND NOT BASIS TO VOID POLICY (Third Circuit)

Published on May 5, 2009 in Reverse Bad Faith. Closed

In National Grange Mutual Insurance Company v. CRS Auto Parts, Incorporated, the court upheld the lower court’s Findings of Facts and Conclusions of Law against the insurer in a declaratory judgment action.  Nat’l. Grange Mut. Ins. Co. v. CRS Auto Parts, Inc., 2007 U.S. Dist. LEXIS 84833, 2007 WL 4078728 (E.D. Pa. Nov. 16, 2007).  The carrier had attempted to declare the policy void because of alleged misrepresentations in obtaining the policy.  The appeals court observed that: “When attempting to void an insurance policy under Pennsylvania law, the insurer must prove that: (1) the insured made a false representation; (2) the insured knew the representation was false when it was made or the insured made the representation in bad faith; and (3) the representation was material to the risk being insured.”  The appeals court agreed there were no misrepresentations by the insured and any that could have been made would have been immaterial because they would have occurred after the insurer’s agent issued a binder.  The court thus upheld the trial courts finding that policy was thus in effect at the time of the accident for which the insured filed a claim.

Date of Decision:  February 23, 2009

Nat’l. Grange Mut. Ins. Co. v. CRS Auto Parts, Inc., CIVIL ACTION No. 07-4514, 2009 U.S. App. LEXIS 3574 (3d Cir. Feb. 23, 2009)(McKee, J.)

MAY 2009 BAD FAITH CASES
UNREASONABLE REQUEST FOR A MEDICAL EXAMINATION COULD BE BAD FAITH (Philadelphia Federal)

Published on May 1, 2009 in Claims Handling Procedures. Closed

In Williams v. Allstate Insurance Company, the court noted that while an insurance policy that permits the carrier to request a medical examination would not be the basis for a bad faith claim if such a request were reasonable, an unreasonable request for a medical examination could potentially be the basis of a bad faith claim.

Date of Decision:  January 15, 2009

Williams v. Allstate Ins. Co., 595 F.Supp.2d 532 (E.D.Pa. 2009) (Buckwalter, J.)