NOVEMBER 2017 BAD FAITH CASES: PLAUSIBLE BAD FAITH CLAIM BASED ON ALLEGED DILATORY CONDUCT AND UNDER-EVALUATION (Middle District)

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This UIM bad faith case was previously dismissed for failure to set out a plausible claim. Given leave to amend, the insured successfully defeated a second motion to dismiss, now adequately alleging bad faith investigation and claim evaluation. The insured alleged the following.

The insured gave notice of his uninsured motorist claim, supplying the insurer with a police report and requesting copies of property damage photos in the insured’s files. One month later the insured provided treatment information and medical records, and a workers’ compensation decision finding the insured was entitled to benefits. Very shortly after that, the insured submitted to an orthopedic IME, with the doctor concluding the insured was in guarded condition and injured in the accident at issue. Three months later, the insurer provided updated treatment records.

Eight months after initial notice the insured provided a “specific and detailed liability and damages package, including hundreds of pages of Plaintiff’s medical records, which went without a response.” One month later the insured asked for a status report, which was promised but was not provided. Another request was made an ignored later that same month, and the following month, the insured gave the insurer permission to obtain investigation records.

Status was again requested, and the adjuster promised to get back to the insured, but did not do so with an actual report on the status. Additional status requests were made without any definitive responses, though the insurer did supply a copy of its investigative file over one year after the notice of claim was first made.

The insured went to the adjuster’s supervisor to ask for a settlement offer, which was made in the amount of $225,000. The existing medical lien and wage loss claims at the time were $122,000 and increasing. The insurer increased its settlement offer and ultimately retained counsel, who arranged for 3 additional medical examinations. These occurred over the following month.

The insured made a policy limits demand, and alleged that the insurer wrote back “setting forth falsities designed to devalue Plaintiff’s claim, including that he delayed in reporting the accident, that Plaintiff had a ‘significant medical history’, that there was only ‘minor property damage’, and that there were ‘other relevant factors’ that Defendant failed to identify.” The insured alleges that a response rebutting these errors was made the next day, “and to request a more reasonable offer in light of Plaintiff’s injuries.”

The court refused to dismiss the statutory bad faith claim, finding these allegations went beyond the bare bones and conclusory averments in the original complaint. Rather, “the Amended Complaint sets forth factual support pertaining to Defendant’s alleged refusal to promptly communicate with Plaintiff, its repeated misrepresentations to Plaintiff, and its failure to comply with various insurance regulations.”

The court then found that the averments could constitute bad faith. “With respect to the claimed lack of prompt communication with Defendant, Plaintiff pleads with specificity numerous instances where he contacted Defendant regarding the status of his uninsured motorist claim and his inquiries were either ignored or dealt with in a cursory, non-responsive manner.”

“Third, the Amended Complaint supplies additional facts regarding Defendant’s bad faith in connection with its initial settlement offer by alleging that, at the time the offer was made, Defendant knew Plaintiff, nearly thirty (30) months after the hit-in-run accident, was still unable to work and undergoing continued medical treatment. As a result, Defendant knew that Plaintiff’s medical and wage loss liens were rapidly increasing. Viewing these facts in the light most favorable to Plaintiff, he alleges plausible bad faith claims.”

“Fourth, the Amended Complaint contains adequate allegations calling into question the sufficiency and timeliness of Defendant’s investigation and evaluation of Plaintiff’s uninsured motorist claim. In particular, despite repeated requests from Plaintiff to evaluate his claim and consider the claim for review, Defendant’s adjuster seemingly ignored those requests and did not get the claim scheduled for review for over two (2) months. These allegations provide further factual support of plausible bad faith conduct.”

“Finally, where, as here, bad faith claims are based on ‘an entire course of alleged dilatory conduct, rather than on a particular incident or denial of a claim, the finder of fact will have to consider the entire course of conduct in order to determine whether the Defendant’s handling of [Plaintiff’s uninsured motorist] claim was conducted in bad faith.’”

Date of Decision: October 10, 2017

Meyers v. Protective Ins. Co., NO. 3:16-CV-01821, 2017 U.S. Dist. LEXIS 166955 (M.D. Pa. Oct. 10, 2017) (Caputo, J.)

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