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The court granted summary judgment to the insurer in this uninsured motorist bad faith case where the settlement offer was a small fraction of the demand.  Middle District Judge Wilson ruled the record only showed a valuation dispute, and that the insurer had conducted a detailed and timely investigation before making its settlement offers, whatever their size.

The court cited in detail the insurer’s investigative efforts in evaluating the claim. The UM policy had a $300,000 limit.  The insured demanded policy limits, and the carrier offered a small fraction of that to settle, while stating the investigation was ongoing.  The insured sued for breach of contract and bad faith.

Middle District Judge Wilson recited the general bad faith standards governing section 8371.  She further observed that, “A dispute as to the value of an insured’s claim is not unusual and does not, without more, amount to bad faith.” Further, “the failure to immediately accede to a demand for the policy limit cannot, without more, amount to bad faith”.

As to bad faith in claim handling, the court observed the carrier opened a file within 9 days of the accident at issue, and the claim representative “conducted an initial review the following day and was in frequent contact with [the insured] regarding the accident and her injuries until this lawsuit was filed.” The court reiterated the representative’s ongoing investigative efforts, and that the claim valuation was delayed by the need to obtain final records on the insured’s treatment.

After receiving and reviewing those records, the carrier “immediately evaluated [the insured’s] claim and offered her $7,500 to settle the UM claim based on … medical treatment and the aggravation of her degenerative disc disease.” After considering the offer, the insured demanded $300,000, which demand the carrier reviewed. After a subsequent discussion, the insured lowered her demand to $100,000.  A month later, however, the demand was again at $300,000.

The carrier continued following up, and offered $9,000, which was rejected.  The insured gave carrier notice she was going for more medical treatment. The claim representative reviewed the notes of that treatment, once completed, and increased the settlement offer to $11,500.  The demand remained at $300,000, and more medical care followed which the claim representative reviewed.  There were no additional demands before suit was filed.

With no evidentiary support in the record, the insured asserted “there is ‘irrefutable proof’ that [the insurer] acted in bad faith due to the ‘nominal offers’ that ‘fail to align with Plaintiff’s injuries and/or damages.’” Without more, the argument failed on its face, Judge Wilson stating, “the Third Circuit and this court have made clear, a disagreement over the value of [the insured’s] claim and failing to merely offer the policy limits does not equate to bad faith, without more, on the part of [the insurer].

Judge Wilson relies on the Third Circuit’s oft-cited Smith decision, summarized here, and Middle District Judge Caputo’s 2010 Calestini opinion, summarized here.  In, sum, Judge Wilson finds that the insured “has not provided anything more that would cause the court to find that [the insurer] did not have a reasonable basis for denying benefits.

Among recent decisions, it is interesting to compare and contrast this decision  with Judge Pratter’s Brown opinion, summarized here, and Western District Judge Haines’ Professional, Inc. decision, summarized here, applying the same principles to reach a similar result; and Western District Magistrate Judge Kelly’s opinion in Faith, summarized here, where a large discrepancy between an expert report on medical damages ($388,000) and a refusal to pay policy limits ($50,000), combined with an alleged failure to investigate, was sufficient to state a bad faith claim.

Date of Decision:  September 22, 2021

DeLuca v. United Financial Casualty Company, U. S. District Court Middle District of Pennsylvania No. 3:19-CV-01661, 2021 WL 4306119 (M.D. Pa. Sept. 22, 2021) (Wilson, J.)