JUNE 2015 BAD FAITH CASES: BAD FAITH UIM CASE PROPERLY PLEADED WHERE INSURED DETAILED HISTORY OF COOPERATION WITH INSURER, AND INSURER REFUSED TO PAY POLICY LIMITS (Western District)
In Vankirk v. State Farm Mutual Automobile Insurance Company, the Court found that the insurer was not entitled to Rule 12(b)(6) dismissal of the insured’s bad faith claim.
The case arose out of a car accident in which the insured was struck by another motorist insured by the same carrier. During litigation against the other driver for her insurance policy limits, the insured provided her own medical records. She and her treating physician were both deposed. The tortfeasor was underinsured.
The insured demanded the policy limits and provided her insurer with updated medical records and documentation. The insurer requested, and was provided with, a Statement under Oath, an additional deposition of the insured, another expert report from the insured’s treating physician concerning ongoing treatment and a second surgery, and additional imaging studies. After the insurer only offered $5,000, below the coverage limit of $25,000, the insured filed an action for underinsured motorist (“UIM”) benefits and damages for bad faith.
The insurer argued that the insured’s bad faith claim should be dismissed because she failed to plead sufficient facts to support such a claim. The Court disagreed, and noted the insured’s Amended Complaint provided specific information as to the insurer’s “five-year involvement in this case, the nature of [the insured’s] injuries, the medical evidence provided, the chronology of events, the parties’ course of conduct, and the factual bases for [the insured’s] allegation of statutory bad faith as to [the insurer’s] handling of her UIM claim.”
The insurer further maintained that “allegations regarding the underlying litigation should be stricken because (a) Pennsylvania is not a “direct action” state (i.e., an injured party cannot directly sue the insurance company of the alleged tortfeasor) and an injured party may not “bring a direct action for bad faith against the tortfeasor’s liability carrier.” The Court held this argument to be facially inapposite, and concluded that an assessment into the handling of the UIM claim must be properly informed by a “factual understanding of its conduct, an understanding which necessarily includes, e.g., the history of [the insurer’s] knowledge regarding [the insured’s] injury and treatment.” The Court let the case go forward.