JULY 2008 BAD FAITH CASES
PLAINTIFF SUFFICIENTLY PLEADED BAD FAITH CLAIMS TO SURVIVE AS TO MOTIVE AND INVESTIGATION (Philadelphia Federal)

Plaintiff filed a first party income loss claim in connection with a motor vehicle accident in which plaintiff suffered injuries. Plaintiff was the driver of a vehicle that was rear ended. Plaintiff’s policy provided coverage for first party medical expenses up to the amount of $10,000, and for first party income loss benefits in the amount of $50,000.

Plaintiff made a claim for first party medical expenses which were paid by the insurer. However, plaintiff’s claim for income loss coverage was not paid.

The insurer’s claims adjustor admitted that she failed to send forms for wage verification to the insured’s treating physicians and did not request the exact dates of disability from the doctors. She also failed to send the insureds’ tax return to a claims auditor after being on notice that the insureds were submitting the return in an attempt to prove wage loss. Two years later, the insureds counsel contacted the insurer and requested that it pay the wage loss claim. A new claims adjustor was assigned, but the claim remained unresolved.

Plaintiff filed a bad faith and breach of contract claim. The insurer filed a motion for summary judgment and argued that it acted in full compliance with the terms of its policy, and properly investigated and paid expenses to this claim.

For the Breach of Contract claim, the insurer argued for summary judgment because plaintiff had not presented evidence of specific days of work missed, or actual loss of gross income, to support her claim. However, the court found that the plaintiff had presented evidence in support of her claim that she lost real income.

The court stated that when analyzing a motion for summary judgment the court must view the facts in the light most favorable to the non moving party. Based on the evidence presented by the plaintiff, a reasonable jury could conclude that as a result of the accident the plaintiff suffered an actual loss of gross income. Therefore, the court denied the insurer’s motion for summary judgment on the breach of contract claim.

For the Bad faith claim, the court also held that there was a genuine issue of material fact as to the insurer’s motives, and that the long delay and mishandling of the income loss claim could rise above mere negligence to bad faith. Therefore since a reasonable jury could find that the insurer acted in bad faith, the insurer’s motion for summary judgment with regard to the bad faith claim was denied.

Date of Decision: March 26, 2008

Brown v. Liberty Mut. Fire Ins., 2008 U.S. Dist. LEXIS 24215 (E.D. Pa. Mar. 26, 2008)(Stengel, J.)

J.M.A.