MARCH 2016 BAD FAITH CASES: NO BAD FAITH IN DELAYING PAYMENT OF MEDICAL BENEFITS UNDER MVFRL, WHERE NO NEGLIGENCE OR PREJUDICE IN INVESTIGATIVE PROCESS (Philadelphia Court of Common Pleas)

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In Freedom Medical Supply v. Allstate Fire & Casualty Insurance Company, the court addressed alleged bad faith concerning medical payments under Pennsylvania’s Motor Vehicle Financial Responsibility Law.

The court observed that a delay in paying such a benefit is “a relevant factor in determining whether bad faith has occurred”.  However, “a long period of time between demand and settlement does not, on its own, necessarily constitute bad faith …. [I]f delay is attributable to the need to investigate further or even to simple negligence, no bad faith has occurred.”

In this case, there was no bad faith.  The insurer kept in regular communication with the insured and the insured’s attorney during the investigation process, and there was no prejudice from any failure to send regular updates. Negligence in failing to keep relevant parties informed of the investigation’s progress in the precise manner required under Pennsylvania’s Unfair Insurance Practices Act did not constitute bad faith in the case at hand.

The court looked to case precedent addressing section 8371 bad faith in reaching its conclusion on this issue.

Date of Decision: December 29, 2015

Freedom Med. Supply v. Allstate Fire & Cas. Ins. Co., 2015 Phila. Ct. Com. Pl. LEXIS 449 (Phila. C.C.P. Dec. 29, 2015) (Powell, J.)

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