MAY 2018 BAD FAITH CASES: ISSUES OF MATERIAL FACT ON UIM CLAIMS HANDLING AND SETTLEMENT NEGOTIATIONS PREVENT SUMMARY JUDGMENT FOR EITHER PARTY (Western District of Pennsylvania)
This UIM action began after the insured suffered a serious head injury in an auto accident. The claims-handling process spanned a two-and-a-half year period. The insured demanded the $100,000 policy limits, and insurer initially offered to settle for $17,000. Eventually, the insurer paid policy limits.
The insured sued for bad faith, among other claims. The insured alleged bad faith in the delay of payment of benefits. Both parties moved for summary judgment on bad faith. The Court found genuine issues of material fact existed on bad faith, precluded relief to either party.
The Court reasoned that the insured’s attorney did not demand settlement of the claim for nearly two years after its filing, and once he did, the insurer acted promptly. The Court further reasoned that a jury could conclude that the initial $17,000 offer was reasonable, because the insured admitted that her special damages were only $15,000 at one point during the claims handling process, and testimony was given stating “head injuries are particularly difficult to evaluate. . . .”
However, the Court also denied insurer summary judgment because a jury could conclude there was an unreasonable delay in paying benefits, and that the $17,000 offer was a low-ball offer. A jury could find the insurer failed to conduct a meaningful investigation or attempted settlement between the time of filing and the time when the insured’s attorney demanded settlement 18 months later. Further, an argument could be made that the $17,000 was a low-ball offer because the insurer had valued the claim between $46,800 and $61,800.
[It is interesting to compare this result to New Jersey’s fairly debatable standard on bad faith, where an insured’s inability to obtain summary judgment on bad faith means there can be no bad faith.]