JANUARY 2011 BAD FAITH CASES BAD FAITH CLAIM SURVIVES SUMMARY JUDGMENT WHEN ALLEGATIONS SUPPORT NOTION THAT INSURER DID NOT HAVE REASONABLE BASIS TO DECREASE A SETTLEMENT OFFER BUT DID SO (Middle District)
The insured suffered injuries when he was run over by a pickup truck while kneeling down to tie his shoe in the street. He suffered a compression fracture and a right MCL/ACL meniscus tear. The insured wore a back brace and underwent physical therapy, but he initially did not have surgery.
The insured notified the insurer of the accident four days after it occurred. Because the driver of the pickup truck was never identified, the insured eventually commenced an attempt to collect uninsured motorist benefits from his insurer. The insured’s attorney and the insurer corresponded often over the next few months, as the insured provided medical records and other information to the insurer in order for the insurer to properly assess the uninsured motorist claim. Eventually, despite the insured requesting the policy limits of $100,000, the insurer offered the insured $28,300 to settle the claim. The insured also had surgery on his knee two months after the insurer made its offer.
The insured then filed an action for uninsured motorist benefits and a breach of Pennsylvania’s Bad Faith statute, 42 Pa. Con. Stat. Ann. § 8371. The insurer filed a motion for summary judgment on the bad faith claim. He had alleged that the insurer (1) improperly reduced its settlement offer based on a comparison of the insured’s and the driver’s levels of fault, (2) ignored the insured’s meniscus tear in calculating the offer, and (3) failed to account for the insured’s expected upcoming knee surgery when making the offer.
The court addressed only the first allegation, and it recognized that the insured had properly cited precedent where the Eastern District determined that “where a defendant is found to have acted with reckless disregard of safety, a plaintiff’s own contributory negligence is not a defense.” The insurer’s claims specialist had admitted that a comparison of fault factored into her claim evaluation to reduce the amount of money offered to the insured. When the court viewed the evidence in the light most favorable to the insured (which is required when determining motions by an insurer for summary judgment), it assumed that the insurer knew that the driver was reckless and therefore that the insured’s negligence was immaterial. It concluded that a reasonable jury could conclude that the insurer knew it did not have a reasonable basis to reduce its settlement offer but reduced the offer anyway, and it therefore denied the insurer’s motion for summary judgment.
Date of Decision: December 16, 2010
Zintel v. Progressive N. Ins. Co., No. 3:09cv2577, United States District Court for the Middle District of Pennsylvania, 2010 U.S. Dist. LEXIS 133170, (Dec.16, 2010) (Munley, J.)