Archive for the 'PA – Claims Handling Procedures' Category

2014 BAD FATIH CASES: COURT FINDS: (1) PLEADING OF CLAIMS HANDLING ADEQUATE TO SURVIVE TWOMBLY CHALLENGE; (2) NO SUFFICIENTLY CLEAR CLAIM DENIAL TO TRIGGER STATUTE OF LIMITATIONS; (3) CLAIMS OF FALSE ADVERTISING PRIOR TO INCEPTION OF POLICY NOT ACTIONABLE UNDER BAD FAITH STATUTE; (4) CLAIM OF BREACH OF FIDUCIARY OBLIGATION NOT MATERIAL ELEMENT OF SECTION 8371 CLAIM; (5) CLAIM OF “INDIFFERENCE” TO POLICY HOLDERS GENERALLY STRICKEN WHERE CASE WAS NOT A CLASS ACTION; (6) ALLEGATIONS CONCERNING RESERVES COULD BE MATERIAL; AND (7) CLAIMS OF UIPA VIOLATIONS WERE TO BE STRICKEN, THOUGH BASIS MAY HAVE BEEN LACK OF OPPOSITION BY INSUREDS (Middle District)

Print Friendly

In Clemens v. New York Cent. Mut. Fire Ins. Co., the Court addressed a UIM case, where the accident arose in August 2009, plaintiff gave notice of a possible UIM claim in April 2010, and the carrier gave plaintiff consent to settle against the third party’s carrier in July 2011.  Plaintiff alleges numerous conversations between April of 2010 and July 15, 2013, and items of correspondence were exchanged with the insurer’s agents concerning Plaintiff’s efforts (1) to obtain a status report from the Defendant regarding its claim investigation; (2) to schedule an arbitration of the UIM claim, and (3) to schedule Plaintiff’s “Statement Under Oath”. On May 25, 2011, during the time the aforementioned matters were being discussed by the parties, Plaintiffs submitted a demand letter to Defendant detailing their injuries and supporting documentation including medical records, photographs and authorizations requested by Defendant.  On August 26, 2013, Plaintiffs brought suit.

The carrier moved to dismiss the bad faith claim, and strike certain other allegations.  It argued plaintiffs did not plead their bad faith claim with “the requisite level of facts to properly state a claim upon which relief may be granted.” The Court disagreed, finding that the various factual allegations at could be plausibly read to indicate a possibility that there was a duplicitous delay by an insurer in the claims handling process.
The court also rejected a statute of limitations argument. The carrier argued that because the Plaintiffs’ brief indicates that the medical records it submitted should have been sufficient to convince the insurer to pay the claim, and because the docket indicates that those records were provided more than two years before the Complaint was filed, the case should be dismissed.  The court found that this did not constitute the kind of clear notice existing in prior precedent triggering the statute. In this case, the parties were still attempting to resolve this matter well into the year 2013 or, at least, that Defendant was sending signals that it was actively considering the claim. Thus, the insurer had not provided the type of clear notice that the claim was being denied within the two years immediately preceding the filing of the Complaint as required by the Third Circuit.

The court did agree to strike Plaintiffs allegation that the carrier’s failure to act to help their insureds was inimical to the advertising through which the Defendant solicited policyholders. Section 8371 does not provide relief for false advertising in the procurement of an insurance policy. The carrier also sought to strike allegations of a fiduciary obligation from the Complaint; however, the court essentially found that the phrase had no functional effect on the bad faith, and denied the motion to strike as the term was basically irrelevant to the case. The court did agree to strike the allegation that the carrier was indifferent toward its policyholders generally, as it was not a class action.
The insurer also moved to strike an allegation that it set a grossly inadequate reserve for Plaintiffs’ claim, as a source of bad faith. The Court recognized that a great discrepancy between the size of a reserve and the amount offered in settlement of a claim is not, without other evidence, proof positive of bad faith on an insurer’s part, it believed that the presentation of such evidence is potentially germane to the determination of the bad faith issue. It thus denied the motion to strike.
The insurer also moved to strike allegations relating to alleged violations of the Unfair Insurance Practices Act.  The carrier cited numerous cases holding that, unless and until the Pennsylvania Supreme Court holds otherwise, evidence of violations of portions of UIPA are irrelevant to the maintenance of a bad faith claim. The insureds did not respond to Defendant’s argument in this regard, and those allegations were stricken and the Court stated that it would not admit evidence directed to establishing violations of UIPA. Interestingly, this same court followed Pennsylvania Superior Court precedent in a case decided 10 days earlier, permitting consideration of UIPA violations, which as observed in that case summary, is different that the position taken by many federal courts in the absence of a Pennsylvania Supreme Court ruling.

Dated:  February 24, 2014
Clemens v. New York Cent. Mut. Fire Ins. Co., Case No. 3:13-CV-2447, 2014 U.S. Dist. LEXIS 22534 (M.D. Pa. February 24, 2014) (Conaboy, J.)

2014 BAD FAITH CASES: COURT DENIES CARRIER’S SUMMARY JUDGMENT MOTION BECAUSE INSURED ALLEGED CONDUCT WHICH A JURY COULD FIND AMOUNTS TO BAD FAITH (Middle District)

Print Friendly

In Universal Underwriters Ins. Co. v. J. Murray Co., an insured automotive dealer, service center, and financier purchased an insurance policy from the defendant-carrier to insure property at its place of business.  During Tropical Storm Lee in September 2011, the insured suffered $1,700,000 in storm damage, notified its carrier of the damages and received assurances from an authorized representative of the carrier that the policy would indemnify them for the loss. However, the carrier halted the inspection of the insured’s property and informed the insured that the policy contained an explicit coverage exclusion for damage due to storms.

Magistrate Judge Arbuckle, III recommended, and Judge Brann adopted, a decision denying the carrier’s motion for summary judgment.  The court held that evidence presented by both sides raised questions for a jury to resolve at trial.  Moreover, the court determined that the insured provided enough evidence that a reasonable jury may find clear and convincing evidence that the carrier acted in bad faith in denying insurance coverage to its insured by virtue of the way the policy was amended to include a storm damage exclusion.

The court also noted that several acts undertaken by the carrier that could reveal bad faith: (1) the alleged unilateral change to the Policy and (2) the alleged failure to notify or even attempts to mislead the insureds about the extent of their flood coverage.

Date of Decisions:   October 28, 2013 by Magistrate Judge, and January 29, 2014 by District Judge

Universal Underwriters Ins. Co. v. J. Murray Co., CIVIL NO. 4:11-CV-1851Civ., 2013 U.S. Dist. LEXIS 184474 (M.D. Pa. Oct. 28, 2013) (Arbuckle, III, M.J.)

Adopted in full in, Universal Underwriters Ins. Co. v. J. Murray Co., CIVIL NO. 4:11-CV-1851Civ., 2014 U.S. Dist. LEXIS 10761 (M.D.Pa. Jan. 29, 2014 (Brann, J.)

2014 BAD FAITH CASES: COURT WOULD NOT DISMISS BAD FAITH CLAIM AT PLEADING STAGE BASED ON INSURER’S CLAIM THAT IT RELIED UPON EXPERT REPORT (Middle District)

Print Friendly

In Aldsworth v. State Farm Fire & Casualty Co., the insured initially claimed that they suffered water infiltration in their home after a wind and rain storm damaged the roof.  The insurer sent out an engineer.  The engineer concluded that the cause of the loss was a construction defect on the part of a roofing contractor who had performed work on Plaintiffs’ roof in 2002. Plaintiffs had retained a public adjuster who amended the claim to being a claim for collapse based on Defendant’s engineer’s report. Defendant’s engineer had concluded that it was snow loads that exceeded the load capacity of the roof that caused the collapse. The collapse caused by weight of ice, snow or sleet is a covered loss under the policy. The carrier denied the claim. The insured brought claims for breach of contract and bad faith.

The court set out a very broad statement on bad faith, based on Pennsylvania Superior Court opinions, e.g., bad faith during the pendency of litigation may be considered as evidence of bad faith; bad faith is not restricted to an insurer’s denial of benefits and includes a wide variety of objectionable conduct including lack of good faith investigation and failure to communicate with a client; a claim for bad faith may be based on an alleged violation of the Unfair Insurance Practices Act (this later position being frequently rejected by other District Courts). The court did state that negligence or bad judgment do not constitute bad faith, and to support a finding of bad faith, the insurer’s conduct must be such as to “import a dishonest purpose,” and the plaintiff must show that the insurer breached its duty of good faith through some motive of self-interest or ill will.

The insurer sought to dismiss the bad faith claim on the basis that it obtained an expert report from an engineer.  The insured took the position, that even assuming everything the engineer said was true, under its view of coverage, the insurer should still have covered the claim.  The court agreed with the insurer that the parties have a difference of opinion regarding coverage of the claim. However, it looked to the insured’s averment that “[u]nder the terms of the policy, assuming arguendo that the engineer’s conclusions are accurate, the loss remains covered”, the reasonableness of Defendant’s basis for denying coverage is an issue. In other words, if the engineer’s conclusions do not eliminate coverage under the policy, Defendant’s interpretation of those conclusions is at issue and, at this stage of the proceedings, it cannot avoid a bad faith claim based on its reliance on the engineer’s report.
In light of Defendant’s motion to dismiss burden and the facts and circumstances presented here, we conclude that dismissal of Plaintiffs’ bad faith claim would be premature. While discovery may not provide Plaintiffs with the required clear and convincing evidence that Defendant “(1) did not have a reasonable basis for denying benefits under the policy; and (2) knew or recklessly disregarded its lack of a reasonable basis in denying the claim,” a determination on these matters is not properly made on the record before us. Therefore, Defendant’s motion to dismiss Plaintiffs’ bad faith claim is properly denied.

Date of Decision: February 14, 2014

Aldsworth v. State Farm Fire & Cas. Co., CIVIL ACTION NO. 3:13-CV-2941, 2014 U.S. Dist. LEXIS 18656 (M.D. Pa. February 14, 2014) (Conaboy, J.)

2014 BAD FAITH CASES: SUMMARY JUDGMENT GRANTED ON BAD FAITH CLAIM WHERE INVESTIGATION WAS REASONABLE, DELAYS ATTRIBUTABLE TO BOTH PARTIES, AND WHERE INSURER ENGAGED EXPERTS THAT RESOLVED ANY CONTRADICTION BY ITS PRIOR EXPERT ON NEED FOR REPLACMENT OVER REPAIR (Middle District)

Print Friendly

Moran Industries v. The Netherlands Insurance Company involved numerous disputes between the insured and the insurer over the extent of fire damage to a building and the terms of an insurance policy.  The carrier claimed there was a contractual two year limitations period for bringing a claim, and the insured denied ever receiving that endorsement, and so denied it was part of the contract.  There were additional disputes between experts over whether the fire requirement roof repair or replacement.  The carrier sought summary judgment on the breach of contract and bad faith counts.

The court found an issue of fact existed as to the actual insurance policy between the parties, including the contractual limitations endorsement.  However, the court found that if such a term did exist it would be enforceable as it was not unconscionable or in violation of public policy; was not barred by estoppel; and did not require a prior showing of prejudice.

The court did grant summary judgment on the bad faith claim.  It observed that an insurer may defeat a bad faith claim by showing it had a reasonable basis for its actions, and may do so by demonstrating it conducted a sufficiently thorough review or investigation, which it used as a foundation for its subsequent decisions. The insurer need not show that its investigation “yielded the correct conclusion or even that its conclusion more likely than not was accurate,” only that its actions were reasonable.
The insured presented no evidence that a reasonable jury could find the insurer acted in bad faith by a clear and convincing standard. The insured alleged delay in investigating the claim and finalizing its position; the carrier’s communications failures; and that the insurer’s expert expressed the opinion the roof may need to be replaced, rather than repaired—a fact the insurer disputed. The court found that the insurer demonstrated that it had a reasonable basis for its actions with respect to each of these allegations. It started its investigation within two days of the formal claim and acted with reasonable diligence throughout the investigation of the claim. It also made payment on the claim and gave the insured notice of its final position on the claim with reasonable diligence and well before the limitations period expired.
Second, regarding communication failures, the record did demonstrate some lapses in communication between the parties. The most significant communication difficulties occurred during the two-month period in which the parties attempted to arrange a meeting of their roofing consultants. The record further demonstrates, however, that the communication lapses were due to failures by both parties. Moreover, the record shows that the insurer acted with reasonable diligence following up missed communications and was conscious of the relative urgency. The insured offered no evidence demonstrating an ill-will, self-interest, or dishonest purpose on this point, and did not provide other evidence with which a reasonable jury could find bad faith by the clear and convincing standard.
Third, the insured’s allegation that the insurer disregarded its own expert’s alleged belief that the roof needed to be replaced does not establish bad faith by clear and convincing evidence, because the insurer demonstrated other reasonable bases for its actions. Even taking the facts in the light most favorable to the non-moving party and assuming the expert did manifest that the roof needed to be replaced, the insurer followed up on it expert’s assessment with a second assessment by an architect and engineer, whose report indicated an opinion that only a subsection of the roof needed to be repaired or replaced, not the entire portion of the roof as Moran contends.
Date of Decision:  February 19, 2014

Moran Indus. v. Neth. Ins., Co., Case No. 4:12-cv-01435, 2014 U.S. Dist. LEXIS 20081 (M.D. Pa. February 19, 2014) (Brann, J.)

2014 BAD FAITH: BAD FAITH CLAIM SURVIVES SUMMARY JUDGMENT WHERE DENIAL OF COVERAGE BASED ON NON-COOPERATION HAD MATERIAL ISSUES OF FACT OPEN AS TO THE SUBSTANTIALITY OR PREJUDICE OF MATTERS ON WHICH INSURED DID NOT TIMELY PROVIDE INFORMATION (Philadelphia Federal)

Print Friendly

In Page v. Infinity Indemnity Insurance Company, the insured’s car was destroyed in a fire, which resulted from arson.  The insurer investigated the claim at great length, on the possibility that the insured’s were responsible for the fire, including pursuit of financial records and the insured’s history of shopping for a new vehicle.  The court found that the investigation itself could not be the basis for a bad faith claim.  However, at one point, the carrier denied the claim for failure to cooperate in producing certain information, with a statement that the claim could be reopened if there was future cooperation.

The insured was deposed, and later provided bank statements and a police report, and the carrier spoke with representatives of car dealerships identified by plaintiffs.  The carrier ultimately paid the claim.  The insured still brought a bad faith claim.  The court allowed the bad faith claim to proceed on the basis of the denial for non-cooperation.  The court observed that the non-cooperation had to be both substantial and prejudicial to provide a legitimate basis to deny a claim.  The court found there was an issue for the trier of fact on the substantial and prejudicial nature of the putative failures to provide the bank statements and police report; but that the failure to identify car dealerships was not substantial non-cooperation as a matter of law.  Thus, the carrier motion for summary judgment on the bad faith claim was denied.

Date of Decision:  January 31, 2014

Page v. Infinity Indemnity Insurance Company, CIVIL ACTION No. 13-1118, 2014 U.S. Dist. LEXIS 13790 (E.D. Pa. Jan. 31, 2014) (Shapiro, J.)

2014 BAD FAITH CASES: COURT GRANTS MOTION FOR SUMMARY JUDGMENT WHERE PLAINTIFF FAILED TO SUBMIT TO INDEPENDENT MEDICAL EXAMINATION BASED ON VIOLATION OF COOPERATION CLAUSE IN INSURANCE POLICY (Philadelphia Federal)

Print Friendly

In Goddard v. State Farm, plaintiff brought suit against his insurer alleging breach of contract and bad faith arising from the insurer’s refusal to pay UM/UIM benefits to plaintiff for an accident which took place on August 6, 1998.  Although the claim was timely submitted to the insurer, plaintiff refused or failed to submit to an independent medical examination following his submission of the claim.  In 2001, plaintiff filed a motion to compel arbitration.  An arbitrator was selected for the case in June of 2005.  At the time the arbitrator was selected, the insurer conditioned the arbitration on plaintiff’s completion of a medical examination.  Between September 2005 and February 2007, the insurer continued its attempts to acquire a medical examination of plaintiff to no avail. Plaintiff obtained a new attorney in February 2007, who requested to proceed to arbitration, but the insurer instead denied the claim and closed the file, citing plaintiff’s failure to submit to a medical exam, and the insurer’s belief the statute of limitations on plaintiff’s claim had expired.  Plaintiff did not file suit until October of 2011.

The insurer filed a motion for summary judgment, asserting plaintiff violated the cooperation clause in his policy by refusing to submit to a medical examination after the accident.  The insurer further asserted it had been deprived of its opportunity to assess plaintiff’s condition following the accident, determine the legitimacy of his injuries, and in the interim between the accident and closing of the file, had lost the ability to determine whether any separate injuries might have occurred.  The insurer also asserted plaintiff’s bad faith claim was time barred by the two-year statute of limitations on such claims, because the alleged bad faith action took place in 2007, and plaintiff did not file his cause until October 7, 2011.  Plaintiff argued his motion to compel arbitration tolled the statute of limitations on the claim.

While the parties argued about which action triggered the statue of limitations, the judge considered such a determination irrelevant, as plaintiff’s motion to compel arbitration in 2001 effectively tolled the statute of limitations, regardless of when it was triggered.  Therefore, the statute of limitations had not run, and there were no grounds to grant summary judgment on that issue.  The court did, however, grant summary judgment on the issue of plaintiff’s breach of the cooperation clause in his insurance policy.  The court found prejudice as a matter of law because the insurer was irrevocably denied the opportunity to evaluate the state of plaintiff’s health at the time of his claim, as well as the opportunity to determine whether all of the conditions for which he sought treatment were from the accident.  Furthermore, plaintiff’s refusal to participate in the examination prevented the insurer from determining whether it could seek contribution under the policy, and resulted in prejudice to the insurer.  Therefore, the court granted defendant’s motion for summary judgment.

Date of Decision: January 16, 2014

Goddard v. State Farm Mut. Auto. Ins. Co., Civil Action No. 11-6309, 2014 U.S. Dist. LEXIS 5974 (E.D. Pa. Jan. 16, 2014) (O’Neill, Jr., J.).

2014 BAD FAITH CASES: WHERE PLAINTIFF FAILS TO SHOW HOW ADDITIONAL INVESTIGATION WOULD HAVE ALTERED THE INSURER’S CONDUCT OR VALUATION, THERE CAN BE NO BAD FAITH; INVESTIGATION ADEQUATE AND APPROPRIATE IN UIM CLAIM (Middle District)

Print Friendly

In Miezejewski v. Infinity Auto Ins. Co., the insured was injured in an auto accident, and not only suffered physical injury, but alleged her physical condition deteriorated over time, causing her to be laid off.  She claim that the carrier’s claim evaluation was too low, and failed to consider lost wages.  The carrier sought partial summary judgment on the statutory bad faith claim.

The insured claimed the carrier’s investigation was done in bad faith; specifically in failing to review the first party medical file, not requesting permission to speak with the plaintiff, and not reviewing any of the pre-accident medical records. The court rejected these arguments.  The plaintiff failed to make any clear argument as to how review of those documents would have made any difference in the defendant’s valuation. Plaintiffs had provided the defendant with extensive medical records related to the accident, and there was nothing before the court indicating that they even sought to have the first-party file reviewed; nor did they offer anything to show what was included in that file or how it would have affected the adjustors determination.

Quoting earlier Middle District case law, citing Pennsylvania’s Superior Court, previously summarized on this site: “A plaintiff in a bad faith claim must show that the outcome of the case would have been different if the insurer had done what the insured wanted done.” The “record contained no evidence that the plaintiffs communicated this desire to the defendant or any indication of how those records would impact the valuation of the claim, this argument fails.”
Next, the court turned it attention to the argument that it is bad faith for the defendant not to request permission to speak with the plaintiffs.  However,  the defendant did speak with plaintiffs’ counsel and knew plaintiffs’ position via their attorney.  The insureds failed to articulate a reason or cite a case in support to explain how this failure demonstrates bad faith. They were represented by counsel throughout the claim process and counsel regularly communicated with the defendant. If they wished to testify in support of their position that that the settlement offers were too low, there was nothing in the record indicating the carrier would have refused the request.  The court then added that the adjustor was in fact continually asking for additional information. And again, the plaintiffs failed to articulate how this would have altered the defendant’s evaluation or offer. “Failure to request permission to speak with the plaintiffs does not constitute bad faith in this case.”
As to the pre-accident medical records, there was abundant evidence the carrier requested this information from the plaintiffs, which were not provided; and even if reviewed would have only revealed the injured plaintiff’s pre-existing conditions. “As with the previous two allegations of an inadequate investigation, the failure to review pre-accident records that were requested by the defendant, but not provided by the plaintiffs, does not indicate bad faith.”
Even combining these three factors was not bad faith: “There is no legal requirement that insurance companies conduct perfect investigations. ‘An insurance company simply must show it conducted a review or investigation sufficiently thorough to yield a reasonable foundation for its action.’”
The final issue was the failure to include the wage loss claim. The plaintiffs claimed that the supervisor’s testimony conclusively established bad faith as “uncontroverted evidence” that plaintiff lost her job because of injuries stemming from her car accident. They also claimed that the insurer raised the settled offer at the initiation of the suit with no change in facts. The court observed a change in fact that could justify the later.  As to the former, there were other potential physical issues that could have affected the inability to work, and the carrier was deemed reasonable in investigating these issues to value the claim, and not simply concluding that the plaintiff’s deterioration and termination was solely from the accident.  Once re-evaluated, it was reasonable to raise the settlement offer.  In sum, there was no bad faith here either.
Date of Decision January 22, 2014

Miezejewski v. Infinity Auto Ins. Co., NO. 3:12-1000, 2014 U.S. Dist. LEXIS 7425 (M.D. Pa. January 22, 2014) (Mannion, J.)

2014 BAD FAITH CASES: WHERE CARRIER INVESTIGATED CLAIM AND THERE WERE FACTS SUPPORTED TWO POTENTIAL CAUSES OF LOSS, ONE COVERED AND ONE NOT COVERED, SUMMARY JUDGMENT COULD NOT BE GRANTED ON COVERAGE, BUT COULD BE GRANTED ON BAD FAITH AS REASONABLENESS OF INSURER’S ACTIONS COULD NOT MEET EXACTING BAD FAITH STANDARDS (Middle District)

Print Friendly

In Kojsza v. Scottsdale Ins. Co., personal property insurance was at issue, in connection with a burglary claim. The insured and the carrier’s investigator disputed over whether there were signs of forced entry, the policy’s the critical language being: Theft, including attempted theft and loss of property provided theft is a result of burglary and visible signs of forced entry are evidence. Mysterious disappearance will not be considered as theft.”  The court analyzed the record closely, and found three areas of disputed facts which precluded the carrier’s summary judgment motion on the coverage claim.  However, the close nature of the disputed facts established that the carrier could not be found liable under the bad faith statute’s exacting standards, and that claim was dismissed. The court could not find “clear, direct, weighty and convincing” evidence to establish by clear and convincing evidence that Defendant acted in bad faith in denying coverage.”  The undisputed evidence showed that the investigator did conduct an investigation in which he scrutinized the premises for signs of physical damage, indicating a break-in.  The police report found no physical evidence of a break-in, but he officer deduced a break in from other circumstances (ransacking of the premises). As such, the Court found a reasonable basis for denying coverage when the carrier relied on both the investigator and the police report.

Date of Decision:  January 15, 2014

Kojsza v. Scottsdale Ins. Co., 3:12-CV-1602, 2014 U.S. Dist. LEXIS 5286 (M.D. Pa. Jan. 15, 2014) (Mariani, J.)

2014 BAD FAITH CASES: COMPLAINT SUFFICIENTLY PLEADED THAT CARRIER ENGAGED BIASED DOCTOR FOR IME IN MAKING OUT BAD FAITH CLAIM (Middle District)

Print Friendly

In Neal v. State Farm Mut. Auto. Ins., the plaintiff sought relief on the basis that she was denied benefits based on a biased independent medical examination (IME), and that the insurer abused the IME process.  Defendant moved to dismiss for a a failure to adequately plead under Twombly, and because any claims of bias are directly solely to the doctor, and not the carrier engaging him.
The court considered the following allegation boilerplate:  “Plaintiff’s complaint makes general, conclusory allegations of bad faith concerning Defendant’s failure to pay benefits due, failure to effectuate prompt, fair and equitable coverage, failure to evaluate Plaintiff’s claim, compelling Plaintiff to institute litigation in order to recover amounts due, and failure to use an approved Peer Review Organization in exploring Plaintiff’s claim.” However, the following paragraphs were sufficient to make out a claim for bad faith based on a biased IME.

 

40. It is believed, and therefore averred, that Defendant employed [the doctor] to perform the independent medical examination in bad faith.

41. [The doctor] had previously split from a joint practice with [another doctor who was] Plaintiff’s primary physician.

42. Moreover, it is believed, and therefore averred, that [the IME doctor] does a substantial amount of work for Defendant and other insurance companies, and has, or may have been, continuously providing negative [IME] reports to Defendant and other insurance companies for the purposes of maintaining a steady source of business.

 

The court found it reasonable to infer that the carrier was aware of the doctor’s alleged bias and providing negative reports, and that he was engaged for a bad faith purpose.

Date of Decision: February 18, 2014

Neal v. State Farm Mut. Auto. Ins. Co., No. 1:13-cv-02309, 2014 U.S. Dist. LEXIS 20017 (M.D. Pa. Feb. 18, 2014) (Kane, J.)

2014 BAD FAITH CASES: COURT DENIES CARRIER’S MOTION TO DISMISS WHERE IT WAS ALLEGED THAT THE CARRIER UTILIZED A CONTRACTOR TO OBTAIN A LOWER VALUATION OF THE INSUREDS’ LOSS (Philadelphia Federal)

Print Friendly

In Williamson v. Chubb Indem. Ins. Co., the insureds sought benefits under their homeowner’s insurance policy after incurring damage to their home.  After notifying the carrier of their claim, the carrier acknowledged that the damage was covered under the policy. The carrier retained an independent contractor to assess the amount of the insureds’ loss, determining that the loss was $193,270.43.  The carrier paid this amount to its insureds.

However, the carrier normally conducted damage estimates itself using an estimating program called Symbility. The contractor hired to estimate the value of the insureds’ loss used an estimating program called Xactimate, which assigns lower costs than Symbility, the program that the carrier normally uses. According to the insureds, the carrier utilized a contractor to obtain a lower estimate and justify underpaying the insureds’ claim.

The carrier filed a motion to dismiss, but the court denied the motion.  Instead, the court found that the insureds had stated a claim for bad faith and that the carrier’s argument that it acted reasonably was not convincing.

Date of Decision December 19, 2013

Williamson v. Chubb Indem. Ins. Co., No. 11-cv-6476, 2013 U.S. Dist. LEXIS 178022 (E.D. Pa. Dec. 19, 2013) (Baylson, J.)