JUNE 2012 BAD FAITH CASES: COURT RULES THAT CARRIER’S DENIAL OF CLAIM BASED ON UPON SINGLE MEDICAL EXPERT RAISES INFERENCE OF BAD FAITH SUFFICIENT TO DEFEAT MOTION TO DISMISS (Middle District)

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In Goshorn v. Westfield Ins. Co., the insured brought breach of contract and bad faith allegations against her automobile insurer for denying underinsured motorist (“UIM”) benefits. In 2009, the insured was involved in a car accident with a third party, sustaining injuries that required surgery to correct. The insured settled with the third party for $97,000, an amount sufficient to cover the policy limits, but insufficient to wholly cover the insured’s injuries. As a result, she filed a UIM claim with her carrier.

In early 2011, the insured began sending her medical and police records to the carrier. After a month, her attorney contacted the assigned claims adjuster, who said that the insured’s claim was “on the pile.” Throughout the summer of 2011, the insured’s attorney repeatedly left messages for the adjuster, but received no response. In September 2011, the adjuster called the insured’s counsel and said that he would be sending the medical records to an expert. In October, the carrier denied the insured’s UIM claim, stating that its medical expert determined that the insured had not suffered injuries related to the car accident. The carrier never responded to subsequent letters from the insured’s attorney.

The insured thereafter filed suit in the York County Court of Common Pleas and the carrier removed to federal court, filing a motion to dismiss. In a brief opinion, the court reasoned that the insured has properly pled a claim for bad faith, by alleging that the carrier frivolously and unfoundedly failed to pay proceeds under the policy on the basis of one medical expert’s opinion. While the court did express concern that the insured’s burden would be “quite high” going forward, noting that a claim for bad faith cannot be premised upon “negligence or bad judgment,” it nonetheless ruled that the suit should proceed.

Date of Decision May 4, 2012

Goshorn v. Westfield Ins. Co., No. 1:12-cv-0517, 2012 U.S. Dist. LEXIS 63191, U.S. District Court for the Middle District of Pennsylvania (M.D. Pa. May 4, 2012) (Rambo, J.)

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