JUNE 2009 BAD FAITH CASES JUDGMENT GRANTED WHEN INSURED PROVIDES NO EVIDENCE OF DELIBERATE DELAY & A PROPERLY EXECUTED IME IS RELIED UPON TO DENY BENEFITS (Philadelphia Federal)
In Spinelli v. State Farm Mutual Automobile Insurance Company, the court granted summary judgment to the insurer on a statutory bad faith claim because there was no evidence the insurer purposely delayed arbitration and because the insurer had a reasonable basis for its actions.
The insured was injured in a car accident in 1994, thus beginning an extended sequence of events that ended with an arbitration award in 2006. This case was filed slightly over a year after the insurer paid what it owed of that award. The insured asserted statutory bad faith for delay in the arbitration and denial of underinsured motorist bodily injury benefits, and asserted breach of contract.
The court found that there was no evidence that the insurer deliberately delayed arbitration. Instead, the insurer tried to reschedule sessions when it had to cancel due to other court appearances and tried to find a second neutral arbitrator after the insured found the first one unsatisfactory. There was no evidence of collusion between the first arbitrator and the insurer, and the only evidence that the insurer did not reassign the claim, after the original adjustor left, came from the deposition testimony of the insured’s own counsel.
The court also found that the insurer had a reasonable basis for its actions so it had not acted in bad faith. Acknowledging precedent, the court noted that a denial is reasonable when a thorough investigation is used as its basis and that the insurer may rely on an independent medical examination (“IME”) performed in the “usual and customary manner” by a qualified professional if the insurer provides the examiner with all relevant documents. Despite the insured’s assertion, the IME did consider specific medical records allegedly ignored when it reached a contrary opinion as to the cause of the insured’s physical condition.
Summary judgment was also granted to the insurer on the breach of contract claim because the insured did not provide any example of a breach and the fact that the arbitration took place was, in itself, proof that the insurer complied with the contract terms.