In Harnick v. State Farm Mutual Automobile Insurance Company, the insured argued that the insurer’s proration of deductibles recovered by insurers through subrogation was improper as it did not make the insured whole, and that the insurance department regulation permitting such proration is beyond the department’s powers.  The court rejected that argument.  As the insurer acted in reasonable reliance on a valid statute, it could not be said to have acted in bad faith. 

Date of Decision:  March 6, 2009

Harnick v. State Farm Mut. Auto. Ins. Co., CIVIL ACTION NO. 08-5752, UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA, 2009 U.S. Dist. LEXIS 43126 (E.D.Pa. Mar. 6. 2009) (McLaughlin, J.)

In Dolley v. Allstate Insurance Company, the Court of Common Pleas of Philadelphia dismissed the insured’s breach of contract claim on the basis that the insured failed to bring the claim within the one year contractual period required to bring any claim.  As to the bad faith count, the Court did not rely on that contractual term, but after stating the standard for showing bad faith, and that it must be proved by clear and convincing evidence, found that the insured failed to plead facts sufficient to establish that the insurer “acted in bad faith, with improper motive, or recklessness by denying Plaintiff's claim.”  This decision was not in Philadelphia’s Commerce Court.  

Date of Decision:  January 13, 2009

Dolley v. Allstate Ins. Co., April Term 2008, No. 577, COURT OF COMMON PLEAS OF PHILADELPHIA COUNTY, PENNSYLVANIA, 2009 Phila. Ct. Com. Pl. LEXIS 27 (C.C.P. Phila. Jan. 13, 2009) (DiVito, J.)

In Miller v. Allstate Fire & Casualty Insurance Company, the court enforced the subpoena for records related to a bad faith claim, but ordered costs to be shared by or shifted to the insured.

A nonparty moved for a protective order to avoid complying with certain document subpoenaed in connection with a bad faith claim.  The consulting company that provided the medical reviewer who evaluated the insured’s file asserted that:  four requests for documents were irrelevant; three were privileged under HIPAA; that producing any of them could portray the company in a false light; and that production would be overly burdensome.  The company argued on the last two issues that having to comply could put the company out of business.

The court found that all of the requests fell within the scope for discovery (relevant, not privileged, and admissible or reasonably calculated to lead to admissible evidence) under Fed. R. Civ. P. 26(b)(1).  They all were relevant to the insured’s bad faith claim that alleges abuse of the Peer Review Organization (“PRO”) process; and the information requested was not privileged under HIPAA privacy regulations because the consulting company is not a covered entity (health plan, health care clearinghouse, or health care provider). Further, even if HIPAA did apply, the documents could be produced because of the instant court order or because the insured was willing to accept redacted documents to remove the personal identification.

In applying a balancing test, the court noted that the requests were limited in scope (one for records prepared by a specific peer reviewer,  the others for peer review activities -- contractual items, Service Forms, and reports for other Pennsylvania claims -- with this insurer, all for a specific time period), but ordered that the insured share the cost of production for the first request, and pay the entire cost for the other three requests so that the insured could determine how aggressively to pursue these requests.

Date of Decision:  March 17, 2009

Miller v. Allstate Fire & Cas. Ins. Co., CIVIL ACTION No. 07-260, 2009 U.S. Dist. LEXIS 21225 (W.D. Pa. Mar. 17, 2009)(Gibson, J.)