DECEMBER 2018 BAD FAITH CASES: NO BAD FAITH WHERE NO COVERAGE DUE, CLAIMS HANDLING WAS REASONABLE, AND BAD FAITH DISCOVERY WAS NOT PURSUED (Middle District)

The insurer denied disability benefits because the source of plaintiff’s amputation was diabetes, rather than injury. The insured brought breach of contract and bad faith claims. The court allowed the contract claim to proceed, but granted summary judgment on the bad faith claim.

The court found the insurer “clearly had a reasonable basis” to deny the claim. The insurer had investigated the claim, and this investigation clearly showed that diabetes contributed to the amputation, which provides a reasonable basis to refuse paying the claim. The court did address the argument that bad faith could go beyond the proper denial of a benefit, if there was an inadequate or biased investigation. In this matter, however, the record showed no such inadequacy or bias during the investigation.

It was also significant to the court that the insured never deposed any of the insured’s employees, never requested a copy of the insurer’s claims handling guidelines or standards, and did not seek any admissions concerning how the claim was handled. In short, the insured did not pursue any evidence to establish a bad faith claim.

Date of Decision: November 27, 2018

Long v. Transamerica Life Ins. Co., U.S. District Court Middle District of Pennsylvania CIVIL NO.: 4:16-CV-00139, 2018 U.S. Dist. LEXIS 200451, 2018 WL 6178944 (M.D. Pa. Nov. 27, 2018) (Schwab, M.J.)