Monthly Archive for October, 2021

UNDERINSURED MOTORIST CARRIER HAS DUTY NOT TO LULL INSURED INTO MISSING THE STATUTE OF LIMITATIONS (New Jersey Appellate Division)

This case centers on a legal malpractice claim against the insured’s personal injury counsel for failing to bring an underinsured motorist claim against the insured’s carrier within the statute of limitations.  The insured did bring suit against the carrier in the malpractice action, but the court affirmed a judgment for the carrier based upon the statute of limitations.

For our purposes, we note the court’s statement concerning the duties of a carrier within the implied covenant of good faith and fair dealing.  Citing New Jersey Supreme Court precedent, this Appellate Division panel observed that underinsured motorist carriers are “required to act in a fair manner and inform plaintiff if there were any deficiencies in his claim or if he needed to file a request for arbitration by a certain date.” The insured cannot “sit back, request and receive various documents over a three[-]and[-]one-half[-]year period, and then deny plaintiff’s claim because he failed to file a complaint in Superior Court or request arbitration prior to the running of the six-year statute of limitations.” Rather in those circumstances, the insurer has “a duty of good faith to notify plaintiff if it disagreed with his understanding that [the insurer] was duly acting upon his filed claim.”

The present facts were completely distinguishable, and did not implicate the same principles or impose these duties on the insurer in this case.

Date of Decision:  October 13, 2021

Barnick v. Kobrin, Superior Court of New Jersey Appellate Division No. A-2543-20, 2021 WL 4771308 (N.J. Super. Ct. App. Div. Oct. 13, 2021) (Accurso, Messano, Rose JJ.)

 

BAD FAITH CLAIM CAN ONLY BE ASSERTED BY INSUREDS (Western District)

The court determined that plaintiff was not an insured in this title insurance matter. Thus, it was not entitled to any title insurance coverage.

Addressing the plaintiff’s bad faith claim, Western District Judge Stickman found:

A claim for statutory bad faith under 42 Pa. C.S. § 8371 requires that “the insurer has acted in bad faith toward the insured.” As explained above, [plaintiff] was not an “Insured” under the Policy. Because [plaintiff] was not an “Insured” it cannot maintain a bad faith claim against Chicago Title. See Seasor v. Liberty Mut. Ins. Co., 941 F. Supp. 488, 491 (E.D. Pa. 1996) (“[I]n order to bring an action for bad faith against an insurer, one must qualify as an “insured” as that term is defined in the policy.”). Accordingly, summary judgment will be entered in favor of [the insurer].

Tithonus partners II, LP v. Chicago Title Insurance Company, U.S. District Court Western District of Pennsylvania No. 2:20-CV-952, 2021 WL 4711284 (W.D. Pa. Oct. 8, 2021) (Stickman, J.)

 

49 CONCLUSORY ALLEGATIONS ACCOMPANIED BY 5 FACTUAL ALLEGATIONS NOT SUFFICIENT TO STATE PLAUSIBLE BAD FAITH CLAIM (Middle District)

This UIM bad faith case was dismissed for failure to state a plausible claim.

The complaint includes 49 bad faith allegations that the court found conclusory.  As such, they have no value to plaintiff in making a plausible claim there is clear and convincing evidence to establish the insurer acted unreasonably and recklessly disregarded that fact.

Stripped of these 49 bare-bones allegations, the court found only 5 facts actually set out in the complaint.  These amounted to the following facts:  the insured was in an accident with a third party tortfeasor; the insured was injured as a result of third party negligence; the insured requested the carrier consent to a settlement with the third party’s insurer, which was granted; the insured made written demand for UIM benefits, accompanied by medical records and other documents; and while the carrier offered to settle, the insured did not find the offer sufficient.

Middle District Judge Saporito these cursory allegations did not make out the elements of a bad faith claim.  There were no facts supporting a plausible claim that the insurer’s conduct was unreasonable, or that the insurer acted knowingly or in reckless disregard of its unreasonable conduct.  Quoting Eastern District Judge Buckwalter’s 2015 Pasqualino opinion, summarized here, the court states:

“While such assertions perhaps suggest that a bad faith claim is possible, they do not allow for any non-speculative inference that a finding of bad faith is plausible.” … Thus, the bad faith claim as presently constructed does not meet the pleading requirements of Iqbal and Twombly. We will, however, grant … leave to file an amended complaint as it is not clear that an amendment would be futile. … Failure to [re-plead a plausible bad faith claim in an amended complaint, however,] will result in the dismissal of this claim with prejudice.

Date of Decision:  October 1, 2021

Allman v. Metropolitan Group Property & Casualty Insurance Company, U.S. District Court Middle District of Pennsylvania No. 3:21-CV-01314, 2021 WL 4502263 (M.D. Pa. Oct. 1, 2021) (Saporito, J.)

BAD FAITH CLAIM SURVIVES WHERE FACTUAL DISPUTE EXISTS OVER REASONABLENESS OF CARRIER’S POSITION IN DENYING LONG TERM DISABILITY BENEFITS TO INSURED WITH MULTIPLE SCLEROSIS (Philadelphia Federal)

The insurer denied long term disability benefits to an insured with multiple sclerosis.  She sued for breach of contract and bad faith, and the insurer sought summary judgment on the bad faith claim.  Eastern District Judge Tucker denied the motion, as factual disputes on the reasonableness of the carrier’s position remained undetermined.

Judge Tucker states that :

[1] [The insured] provided evidence that: (1) she has significant family history of multiple sclerosis (maternal grandmother, maternal aunt, and maternal aunt’s son), (2) that she went through documented, extensive testing and evaluation with neurological specialists and had a well-developed record of positive test results and symptoms indicating a long-term disability, and (3) was even approved for a multiple sclerosis medication.

[2][The insurer] then made insurance policy payment decisions based on internal reports and an independent medical examination where [it] did not provide the examiner with her extensive records and the doctor did not review them before directly contradicting her primary care team.

[3] Further, [the insured’s] initial claims were accepted, and [the insurer’s] claim evaluators approved her symptoms and the initial diagnoses by her doctors as falling within their definition of disability.

[4] Once [the insured] officially qualified for long-term disability, [the insurer] began routinely rejecting her claims and apparently became uncertain about a formal multiple sclerosis diagnosis.

[5] With this in mind, [the insured] puts forth sufficient facts to allow a jury to conclude that [the insurer] acted unreasonably, and accordingly, the Motion to Dismiss Plaintiff’s bad faith claims is denied.

Date of Decision:  September 30, 2021

Young v. The Prudential Insurance Company of America, U.S. District Court Eastern District of Pennsylvania No. CV 17-5702, 2021 WL 4502783 (E.D. Pa. Sept. 30, 2021) (Tucker, J.)

BAD FAITH CLAIM PROCEEDS BASED ON ORIGINAL COMPLAINT, EVEN IF AMENDED COMPLAINTS DID NOT PLEAD COVERED CONDUCT; COURT ADDRESSES LAW OF FAULTY WORKMANSHIP AND COVERAGE (Philadelphia Federal)

This is case involves bad faith claims and Kvaerner coverage issues, based on damages resulting from the installation of a fuel system.  The insured brought breach of contract and bad faith claims, and the insurer moved for judgment on the pleadings.

Judge Surrick sets out the law on faulty workmanship, faulty products, and what constitutes a covered occurrence

Eastern District Judge Surrick does an analysis of the case law on whether faulty workmanship can constitute an occurrence, whether damages solely resulting from faulty products can be an occurrence, and whether the reasonably foreseeable results of faulty workmanship can be an occurrence when the results of that faulty workmanship are damage to other property.

He observes there is no question that faulty workmanship in itself is not an occurrence under Kvaener and its progeny. He also accepts the Indalex principle that damages solely flowing from a faulty product are the result of an occurrence.  Based on clear precedent, however, he rejects the notion that reasonably foreseeable damages to a third party’s property resulting from faulty workmanship constitutes an occurrence.

In the present case, it was unclear whether the damages resulted from a faulty product or faulty workmanship, so the coverage issue could not be determined at the judgment on the pleadings stage.

Bad faith claim allowed to proceed

Judge Surrick likewise found the bad faith claim could not be resolved via a judgment on the pleadings.

The insurer initially denied a defense and coverage, but later issued a reservation of right letter, provided a defense, and brought a declaratory judgment action.  The insurer argued the amended and second amended complaints against the insured provided no basis for coverage, and even if they did, it was still reasonable to deny coverage.

The insured focused on the original complaint, observing that the insurer denied a defense based on the original complaint, before the amended complaints were ever filed.  After the insured protested, the carrier did rescind the original denial and defended under a reservation or rights.  The insured used these facts to support a bad faith claim that the original position was unreasonable.  The insured also asserted the insurer’s investigation “was rushed, incomplete, half-hearted, and faulty, which also supports its claim for bad faith.”

Judge Surrick accepted the insured sufficiently pleaded a bad faith claim based on the insurer’s conduct surrounding the original complaint, and its initial refusal to defend based on the original complaint’s allegations.

 “The Original Complaint, unlike the First or Second Amended Complaints, included various counts and allegations of negligence and gross negligence…. When the complaint asserts an injury which may be within the policy, the insurer is required to defend. … Therefore, where a claim is potentially within the scope of an insurance policy, the insurer who refuses to defend at the outset does so at its peril.”

Date of Decision:  September 30, 2021

Harleysville Worcester Insurance Company v. Gateway Petroleum Technology Inc., U.S. District Court Eastern District of Pennsylvania No. CV 20-4863, 2021 WL 4477149 (E.D. Pa. Sept. 30, 2021) (Surrick, J.)

DURATION OF INVESTIGATION ALONE CANNOT ESTABLISH BAD FAITH; BAD FAITH CLAIM POSSIBLE EVEN WHERE COVERAGE IS EXCLUDED UNDER THE POLICY (Western District)

The carrier denied the insured homeowners’ property damage claim.  They sued for breach of contract and bad faith, and the carrier moved to dismiss.

First, the court found the insureds failed to plead their losses were covered under the policy at issue, and dismissed the breach of contract claim because no coverage was due under the policy.

Moving to the bad faith claim, Western District Judge Hardy found there are two general kinds of statutory bad faith in Pennsylvania:  (i) coverage denial bad faith and (ii) poor claim handling bad faith beyond coverage denial.  The court states:  “However, if bad faith is asserted as to conduct beyond a denial of coverage, the bad faith claim is actionable as to that conduct regardless of whether the contract claim survives.”

[As stated on this Blog again and again over the years, this second point is questionable.  The Supreme Court’s 2007 decision in Toy v. Metropolitan Life indicates that cognizable statutory bad faith claims require denial of a benefit, i.e., denial of coverage in a first party claim or refusal to defend and cover in a third party claim are the sine qua non for section 8371 clams. Under this theory, complaints about poor claim handling practices, where no coverage is due or benefit denied, go to the insurance commissioner.  Examples of such Blog posts can be found on January 28, 2020, March 25, 2020, July 16, 2020, August 10, 2020, August 27, 2020, September 24, 2020, January 19, 2021, March 25, 2021,   and this article detailing our reasoning.]

The court readily found no bad faith claim based on a benefit denial, since the court ruled that no coverage was due under the policy.  The bad faith analysis does not stop there, per the position that poor conduct, even where no benefit is or can be due, might constitute section 8371 bad faith.

Even under that standard, however, these plaintiffs’ claim failed for failing to plead a plausible claim. Thus, the court states, “to the extent that Plaintiffs’ bad faith claim is based on [the  insurer’s] alleged failure to conduct an adequate investigation, Plaintiffs simply do not assert sufficient factual allegations in their Amended Complaint to support such a cognizable bad faith claim.”

The court recites the plaintiffs’ conclusory bad faith pleading, that simply recite elements of the cause of action, rather than facts, as examples of inadequate pleading.  The factual allegation that the insurer’s inspection lasted only ten minutes, and did not include testing or measurement taking, still did not cut the mustard. “Although the duration of an adjuster’s inspection might be relevant to a claim of bad faith, it does not itself demonstrate bad faith.”  Judge Hardy relied upon Western District Judge Wiegand’s 2020 Palek decision, summarized here, and Eastern District Judge McLaughlin’s 2012 Gold decision, summarized here, for the principle that the duration of an investigation or review, by itself, cannot establish a plausible bad faith claim.

Judge Hardy also observed, “since Plaintiffs allege that the damage at issue was visible to the naked eye from the interior of the basement and was not obstructed or concealed from view,” it is not clear that [the] visual inspection of the wall was unreasonable under the circumstances that Plaintiffs describe.”

In sum, “even accepting the cited allegations as true, Plaintiffs have not pled sufficient facts in their Amended Complaint to support a cognizable claim of bad faith for … failure to conduct an adequate investigation.”

Date of Decision:  September 30, 2021

Levine v. State Farm Fire and Casualty Company, U.S. District Court Western District of Pennsylvania No. CV 20-1108, 2021 WL 4480168 (W.D. Pa. Sept. 30, 2021) (Hardy, J.)

TWO BAD FAITH OPINIONS BY PHILADELPHIA FEDERAL JUDGE DARNELL JONES: (1) BARE BONES UIM BAD FAITH CLAIM DISMISSED WITH LEAVE TO AMEND (2) NO DUTY TO DEFEND = NO BAD FAITH (Philadelphia Federal)

Eastern District Judge Darnell Jones recently rendered two bad faith decisions just a few days apart.

CASE 1  – Underinsured Motorist Bad Faith Claim Dismissed Without Prejudice

In the first case, Judge Jones dismissed an underinsured motorist bad faith claim, with leave to amend.

The court focused on the recent Western District decision in Faith, summarized here, to emphasize bad faith can “include a lack of investigation, unnecessary or unfounded investigation, failure to communicate with the insured, or failure to promptly acknowledge or act on claims. Bad faith can also include poor claims-handling, the insurer’s failure to act with diligence or respond to the insured, scattershot investigation, and similar conduct.”

That being said, a UIM bad faith plaintiff “’cannot merely say that an insurer acted unfairly, but instead must describe with specificity what was unfair.’”  Judge Jones relies upon Philadelphia Federal Judge Baylson’s recent O’Brien decision, summarized here, which in turn relied upon Western District Judge Colville’s 2020 Pierchalski decision, summarized here, for this proposition.

Rather, “a Complaint alleging bad faith ‘must specifically include facts to address who, what, where, when, and how the alleged bad faith conduct occurred.’” Bare bones bad faith pleadings in Pennsylvania’s District Courts are routinely dismissed. As examples, Judge Jones cites Eastern District Judge Leeson’s 2020 Shetayh v. State Farm opinion, summarized here, the oft-cited 2012 Third Circuit opinion in Smith v. State Farm, summarized here, Eastern District Magistrate Judge Heffley’s decision in Camp v. NJM, summarized here, Eastern District Judge Slomsky’s 2017 decision in Toner v. GEICO, summarized here, and the Western District decision in Rosenberg v. Amica Mutual, summarized here.

The Complaint fell into the inadequate pleading column, as it was “devoid of facts necessary to infer a plausible bad faith claim.” Other than the accident date, the complaint has no “references to dates or time spans, yet claims several of Defendant’s alleged actions to be untimely.” Plaintiffs allege unreasonableness as to the insurer’s alleged lack of thorough claim assessment, “yet provide[s] no indication as to the manner in which these alleged deficiencies were unreasonable.”

The court cites Judge Baylson’s 2015 Allen v. State Farm case, summarized here, for the proposition that simply reciting that the insurer failed to properly investigate and evaluate a claim, and knew or recklessly disregarded its unreasonable conduct, are conclusory in nature, because all this language does is recite the elements of a bad faith claim, without pleading basic facts to support those elements.

Here, there are no facts pleaded from which the court could draw reasonable inferences supporting a plausible bad faith claim.  The “complaint alleges no factual content to suggest Defendant lacked a reasonable basis for denying the UIM coverage, or that Defendant knew or recklessly disregarded the lack of reasonable basis.”

Dismissal was without prejudice, however, because after the court’s “careful assessment of the allegations set forth in [the bad faith count] of Plaintiffs’ Complaint (as well as those incorporated by reference), this Court is unable to conclude that amendment would be futile.”

Date of Decision:  September 27, 2021

Kelly v. Progressive Advanced Insurance Company, U.S. District Court Eastern District of Pennsylvania No. CV 20-5661, 2021 WL 4399657 (E.D. Pa. Sept. 27, 2021) (Jones, II, J.)

CASE 2 – Bad Faith Not Possible Where No Duty to Defend

In the second case, Judge Jones found no duty to defend the insured, as the claims pleaded against the insured clearly fell within a policy exclusion. Once Judge Jones found coverage obligations absent, he stated the following in a footnote, addressing the bad faith claim:

“[B]ad faith claims cannot survive a determination that there was no duty to defend, because the court’s determination that there was no potential coverage means that the insurer had good cause to refuse to defend.” (internal quotations omitted)

Date of Decision:  October 1, 2021

Jeffers Farms, Inc. v. Liberty Insurance Underwriters, Inc., U.S. District Court Eastern District of Pennsylvania No. CV 20-5475, 2021 WL 4502785 (E.D. Pa. Oct. 1, 2021) (Jones, J.)

(1) BAD FAITH CLAIMS AGAINST INDIVIDUAL ADJUSTERS IMPERMISSIBLE; (2) BENEFIT DENIAL NOT BASIS FOR UTPCPL CLAIMS; (3) STATUTORY BAD FAITH CLAIM PROCEEDS BASED ON ALLEGEDLY EXCESSIVE PEER REVIEWS, AND BENEFIT DENIALS; (4) COMMON LAW BAD FAITH SUBSUMED IN CONTRACT CLAIMS (Philadelphia Federal)

This case involves claims against a carrier for two distinct auto accidents, as well as against two of its individual claim adjusters.  The insured husband alleged serious injuries in the first incident that were exacerbated in the second.  He alleges he was underpaid on the first loss for medical benefits, and raised a UIM claim on the second loss, claiming the same insurer failed to pay benefits due.

The insureds brought breach of contract claims for UIM and first party medical benefits, common law and statutory bad faith claims on the UIM and first party benefits claims, breaches of the Motor Vehicle Financial Responsibility Law (MVFRL), and Unfair Trade Practices and Consumer Protection Law (UTPCPL) claims.

Plaintiffs also brought UTPCPL claims against the two individuals, as well as common law and statutory bad faith claims, and a breach of contract claim against one of them.

The defendants moved to dismiss the bad faith and UTPCPL claims as to all of them, and all claims against the individual defendants.

ALL CLAIMS AGAINST THE INDIVIDUAL ADJUSTERS FAIL

As to the breach of contract claim against the one insurance adjuster, the court observed that “while insurance adjusters have a duty to their principals and should conduct investigations with propriety, this duty does not create a contractual obligation between the adjuster and the insured.” Thus, only the principal, i.e., the insurer, could have contractual liability.

As to the UTPCPL claims, there were no facts pleaded to support any sort of deceptive or fraudulent conduct. Moreover the failure to pay a benefit is not actionable under the UTPCPL.  Finally, statutory bad faith claims against insurance adjusters are impermissible because an adjuster is not party to the insurance contract. The same reasoning makes common law bad faith claims impermissible.

In sum, as to both adjusters, the court dismissed the claims against these individuals with prejudice. Judge Tucker states they both “worked as claims adjusters … and followed the company’s policies and practices. Plaintiffs fail to plead sufficient facts to allege personal misconduct that established reliance between themselves and the Individual Defendants, despite the lack of a contractual relationship between Plaintiffs and the Individual Defendants, and accordingly, those claims must fail.”

COURT FINDS FRAUDULENT JOINDER AND DENIES MOTION TO REMAND

As it was only the presence of one of the individual adjusters that prevented complete diversity, his dismissal from the case created complete diversity, and plaintiff’s motion to remand was denied. Although courts use the term “fraudulent joinder”, this does not mean what one would typically think of as fraudulent conduct.  Rather, “[j]oinder is fraudulent ‘where there is no reasonable basis in fact or colorable ground supporting the claim against the joined defendant, or no real intention in good faith to prosecute the action against the defendants or seek a joint judgment.’” In this case, the court simply held that there were no viable claims stated against the non-diverse party, i.e., no colorable ground supporting a claim.

STATUTORY BAD FAITH CLAIM STATED AGAINST INSURER

As to the substance of the statutory bad faith claims against the insurer, Judge Tucker found a plausible cause of action stated in the Complaint’s allegations. The Complaint alleges the insurer and one of the adjusters “conducted seven Peer Reviews with respect to … treatment in order to challenge causation and deny benefits … which is at odds with the intended use of the procedure and can factually support a claim of bad faith. Plaintiffs’ bad faith claims survive summary judgment because Defendants administratively closed Plaintiff’s first-collision-benefits-claim, despite acknowledging and having medical support that his initial injuries were exacerbated by the second collision, and then denied benefits under Plaintiffs’ second-collision-benefits-claim.” Thus, she denied the motion to dismiss.

COMMON LAW BAD FAITH CLAIMS DISMISSED

The common law bad faith claims were dismissed, as the court found them subsumed in the breach of contract claims.

Date of Decision:  September 27, 2021

Holohan v. Mid-Century Insurance Company, U.S. District Court Eastern District of Pennsylvania No. CV 20-5903, 2021 WL 4399659 (E.D. Pa. Sept. 27, 2021) (Tucker, J.)

Our thanks to attorney Susan J. French for bringing this case to our attention.

IMPLIED COVENANT OF GOOD FAITH AND FAIR DEALING COUNT DUPLICATIVE OF BREACH OF CONTRACT COUNT; NO CFA CLAIM FOR BENEFIT DENIAL (New Jersey Federal)

In this property damage insurance coverage case, the insured brought claims for breach of contract, breach of the implied covenant of good faith and fair dealing, and Consumer Fraud Act claims.  The insured apparently did not bring a claim framed as insurance “bad faith”.  Thus, the court analyzed the complaint solely under cases generally concerning the breach of the covenant of good faith and fair dealing, and not under insurance bad faith case law.

Good Faith and Fair Dealing Count Redundant

The court found the same allegations made in both the breach of contract count and the good faith and fair dealing count.  District Judge Martinotti dismissed the good faith and fair dealing count “[b]ecause Plaintiff’s claim for breach of the implied covenant of good faith and fair dealing is duplicative of his breach of contract claim….”

It is interesting to compare this case to Judge Hillman’s September 1, 2021 801 Asbury Avenue opinion, summarized here, where he dismissed the covenant of good faith and fair dealing count as duplicative, but found a separate insurance bad faith claim adequately pleaded.

No Consumer Fraud Act Claim for Benefit Denial Only

The court then dismissed the insured’s Consumer Fraud Act (CFA) claim because the CFA does not apply to denial of insurance benefits. “Since Plaintiff is seeking damages under the CFA arising from [a] denial of Plaintiff’s appraisal benefit … the CFA is not applicable.” Even if applicable, the insured failed to plead the elements of a CFA action.

Date of Decision:  September 24, 2021

Fox v. State Farm Fire and Casualty Company, U.S. District Court District of New Jersey No. 2:20CV18131BRMESK, 2021 WL 4398740 (D.N.J. Sept. 24, 2021) (Martinotti, J.)

LARGE DISCREPANCY IN OFFER AND DEMAND ALONE NOT BAD FAITH, WITHOUT MORE FACTS/DETAILS SHOWING HOW OFFER WAS MADE IN BAD FAITH (Middle District)

The court granted summary judgment to the insurer in this uninsured motorist bad faith case where the settlement offer was a small fraction of the demand.  Middle District Judge Wilson ruled the record only showed a valuation dispute, and that the insurer had conducted a detailed and timely investigation before making its settlement offers, whatever their size.

The court cited in detail the insurer’s investigative efforts in evaluating the claim. The UM policy had a $300,000 limit.  The insured demanded policy limits, and the carrier offered a small fraction of that to settle, while stating the investigation was ongoing.  The insured sued for breach of contract and bad faith.

Middle District Judge Wilson recited the general bad faith standards governing section 8371.  She further observed that, “A dispute as to the value of an insured’s claim is not unusual and does not, without more, amount to bad faith.” Further, “the failure to immediately accede to a demand for the policy limit cannot, without more, amount to bad faith”.

As to bad faith in claim handling, the court observed the carrier opened a file within 9 days of the accident at issue, and the claim representative “conducted an initial review the following day and was in frequent contact with [the insured] regarding the accident and her injuries until this lawsuit was filed.” The court reiterated the representative’s ongoing investigative efforts, and that the claim valuation was delayed by the need to obtain final records on the insured’s treatment.

After receiving and reviewing those records, the carrier “immediately evaluated [the insured’s] claim and offered her $7,500 to settle the UM claim based on … medical treatment and the aggravation of her degenerative disc disease.” After considering the offer, the insured demanded $300,000, which demand the carrier reviewed. After a subsequent discussion, the insured lowered her demand to $100,000.  A month later, however, the demand was again at $300,000.

The carrier continued following up, and offered $9,000, which was rejected.  The insured gave carrier notice she was going for more medical treatment. The claim representative reviewed the notes of that treatment, once completed, and increased the settlement offer to $11,500.  The demand remained at $300,000, and more medical care followed which the claim representative reviewed.  There were no additional demands before suit was filed.

With no evidentiary support in the record, the insured asserted “there is ‘irrefutable proof’ that [the insurer] acted in bad faith due to the ‘nominal offers’ that ‘fail to align with Plaintiff’s injuries and/or damages.’” Without more, the argument failed on its face, Judge Wilson stating, “the Third Circuit and this court have made clear, a disagreement over the value of [the insured’s] claim and failing to merely offer the policy limits does not equate to bad faith, without more, on the part of [the insurer].

Judge Wilson relies on the Third Circuit’s oft-cited Smith decision, summarized here, and Middle District Judge Caputo’s 2010 Calestini opinion, summarized here.  In, sum, Judge Wilson finds that the insured “has not provided anything more that would cause the court to find that [the insurer] did not have a reasonable basis for denying benefits.

Among recent decisions, it is interesting to compare and contrast this decision  with Judge Pratter’s Brown opinion, summarized here, and Western District Judge Haines’ Professional, Inc. decision, summarized here, applying the same principles to reach a similar result; and Western District Magistrate Judge Kelly’s opinion in Faith, summarized here, where a large discrepancy between an expert report on medical damages ($388,000) and a refusal to pay policy limits ($50,000), combined with an alleged failure to investigate, was sufficient to state a bad faith claim.

Date of Decision:  September 22, 2021

DeLuca v. United Financial Casualty Company, U. S. District Court Middle District of Pennsylvania No. 3:19-CV-01661, 2021 WL 4306119 (M.D. Pa. Sept. 22, 2021) (Wilson, J.)