OCTOBER 2018 BAD FAITH CASES: $10,000 OFFER ON CLAIM IN EXCESS OF $200,000 NOT FRIVOLOUS OR UNFOUNDED WHERE ALTERNATE CAUSE OF LOSS WOULD NOT BE COVERED (Middle District)

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In this UIM bad faith case, the insured received $15,000 from the tortfeasor, and was offered $10,000 by his own insurer, on a $200,000 policy. The insurer had already paid $5,000 in medical bills on the claim. The insured brought breach of contract and bad faith claims. The insurer successfully moved for summary judgment on the bad faith claim.

The insured claimed $180,000 to $230,000 in lost income. On medical bills, the court found that the actual costs to date were less than $15,000 and the insurer had already paid $5,000 of that sum, though the insured’s expert said he might need future surgery. Thus, $20,000 was paid to date, with another $10,000 on the table for plaintiff.

The key issue on bad faith was causation. Both the insured’s and insurer’s medical experts found that the insured’s pre-existing medical condition contributed to his ailments. Thus, while the insurer’s $10,000 offer did not satisfy the insured’s six figure demand, the insurer “was not prohibited from considering the doctors’ opinions regarding alternate causation.” Thus, the court ruled: “On balance, while minds may differ as to the true sum of the … loss, it cannot be said that [the insurer’s] estimate was ‘frivolous or unfounded.’”

Date of Decision: October 12, 2018

Newhouse v. Geico Casualty Company, U.S. District Court Middle District of Pennsylvania No. 17-cv-477, 2018 U.S. Dist. LEXIS 175785 (M.D. Pa. Oct. 12, 2018) (Brann, J.)

Our thanks to Dan Cummins of the excellent Tort Talk Blog for bringing this case to our attention.

The court previously denied a motion to sever and stay the bad faith claim.

 

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