MAY 2009 BAD FAITH CASES DELAY, ALONE, DOES NOT CONSTITUTE BAD FAITH, ESPECIALLY WHEN THE INSURED’S OWN INACTION CAUSED THE DELAY (Middle District)
In Brown v. Great Northern Insurance Company, the court granted summary judgment for the insurer on the bad faith claim, stating that a delay in processing a claim, without other evidence of bad faith actions, is insufficient to prove bad faith to a clear and convincing standard.
This case arose from an automobile accident in 2001 in which the insured was injured and for which he subsequently made claims for underinsured motorist (“UIM”) and wage loss benefits. The insured alleged bad faith because the insurer did not timely process his claim or offer settlement after he supplied the requested medical records.
The court found, however, that it was the insured’s own failure to act that caused the delay. For his UIM claim, he did not respond to repeated requests for medical records on a pre-existing injury and waited more than six months before permitting access to his first-party benefits claim file. For his wage loss claim, he did not provide documentation until two days before the case was scheduled for arbitration. The insured did not provide any other evidence to prove that the insurer either lacked a reasonable basis for the manner in which it processed his UIM claim and recklessly disregarded that unreasonable basis or that failing to settle the wage loss claim during the seven months between permission to view a file and the arbitration date was a delay amounting to bad faith.
Without additional evidence, the delay did not constitute bad faith.