JULY 2008 BAD FAITH CASES INSURER’S MOTION TO DISMISS DENIED BECAUSE COURT FOUND THAT THE INSURED HAD TIMELY FILED THE CLAIM (Middle District)
This bad faith claim arose from an automobile accident involving Bowers and another driver. Bowers was struck by another car and sustained severe and permanent injuries leaving him disabled and unable to work. Bowers had an automobile policy with the insurer. Bowers suffered damages in excess of $800,000 yet the other driver had liability insurance with a limit of $15,000.
Bowers filed a claim with the insurer for underinsured motorist benefits. Bowers sought $500,000 in coverage which was the limit available under his policy. The insurer offered $35,000. Bowers agreed to mediate the claim but the mediation was unsuccessful. Bowers then agreed to settle the claim for $300,000 but again the insurer continued to only offer $35,000. Bowers then instituted litigation seeking to recover $500,000 in underinsured motorist benefits. The matter went before an arbitration panel and Bowers was awarded $551,673.
After obtaining this award, Bowers filed a complaint alleging that the insurer acted in bad faith by failing to conduct a reasonable investigation before engaging in procedures to resolve his claim. Bowers claimed that the insurer’s medical investigation of his condition was insufficient and they relied on an economic expert who was unqualified. Bowers filed a motion of removal and then filed a motion to dismiss or in the alternative to strike portions of the complaint.
The insurer argued that the claim should be dismissed because the statute of limitations had run on the insurer’s action because it had been more than two years. The insurer claimed that the statute of limitations accrued either in November 2004 or January 2005. Bowers responded that at the time of the 2004 mediation, he was not aware that the insurer had acted in bad faith. Only at the hearing in March 2005 did Bowers become aware of the insurer’s potential bad faith. Therefore Bowers claimed that the statute of limitations accrued when he realized the insurer had made no effort to examine his allegations.
The court found that the appropriate statute of limitations for a PA statutory bad faith claim is two years. The court stated that such a claim accrues when the insurer denies liability because this is when the refusal to pay first occurs. The court found that the insurer’s offer of $35,000 did not amount to a denial of coverage that would cause the statute of limitations to begin to run. The insurer’s position could not be considered final and therefore the claim did not begin to accrue during the 2004 mediation.
In addition the letter from Bowers counsel in January 2005, which complained of the insurer’s unwillingness to offer more than $35,000 to settle the claim, failed to provide conclusive evidence that the insurer had refused coverage. The court held that the claim had not accrued after either of these incidents but instead accrued at Bowers arbitration hearing in March 2005.
The court found that even if the initial claims based on the initial refusal by the insurer were time barred , the insurer’s actions at the arbitration hearing gave rise to a claim for bad faith unrelated to the initial refusal which was not time barred. Therefore the court found that Bowers claim was timely filed and denied the insurer’s motion to dismiss.
The court also denied the insurer’s motion to strike portions of the complaint because the insurer’s motion to did not provide proper grounds for such a motion and instead alleged incorrect statements of law by Bowers, which the insurer can address when answering the complaint.
Date of Decision: January 18, 2008
Bowers v. Nationwide Ins. Co., U.S. District Court Middle District of Pennsylvania No. 07-cv-1134, 2008 U.S. Dist. LEXIS 4025 (M.D. Pa. Jan. 18, 2008)(Munley, J.)