NO BAD FAITH FOR DENIAL OF FIRST PARTY MEDICAL BENEFITS (Western District)
In this first party medical benefits case, the insured generally alleged that the carrier breached the policy and failed to pay medical benefits on all the bills submitted. The insured further alleged that the carrier selected a biased doctor to carry out an independent medical peer review.
The court dismissed both the breach of contract and bad faith claims, with leave to amend.
On the breach of contact claim, the Complaint failed to include “the essential terms of that policy including those related to first party benefits.” The insured never averred “why her medical treatments at issue were a result of the … accident and were reasonable and necessary or why [the insurer’s] reliance on an ‘independent medical peer review’ to deny further medical benefits was unreasonable.”
Further, the Complaint did “not sufficiently plead what damages she seeks for [the insurer’s] alleged failure to pay first party benefits. While [the insurer] may have received bills for which payment was denied, the Complaint does not sufficiently specify the scope of services or amount of billing to identify the damages that [the insured] may be seeking in this case. Therefore, without sufficient pleading as to the elements of a breach of contract, [the insured] has not adequately pleaded a breach of contract claim.”
As to the bad faith claim, the complaint only alleged the insurer “failed to complete a prompt and thorough investigation, conducted an unfair and unreasonable investigation, failed to objectively and fairly evaluate her claim, and selected a peer review physician who was biased.” These generic allegations could not meet the Twombly/Iqbal standards. The insured “did not provide any factual support for these legal conclusions,” thus, lacking the specificity to survive the motion to dismiss.
The carrier also moved to dismiss the bad faith claim on the basis that the Motor Vehicle Financial Responsibility Law, 75 Pa.C.S. § 1797, preempts the bad faith statute, 42 Pa.C.S. § 8371.
The court observed Pennsylvania’s Supreme Court has not decided the issue of whether these statutes conflict and when/whether section 1797 preempts section 8371. “However, both the Pennsylvania Superior Court and the Third Circuit have predicted that the specific provisions of § 1797 preempt the general provisions of § 8371.” Pennsylvania’s federal district courts, however, split on the extent of preemption. “While courts agree that § 1797 generally preempts § 8371 in claims for first-party benefits under the MVFRL, ‘[a] robust majority of courts have held that a Section 8371 claim is not preempted when an insurer’s alleged malfeasance goes beyond the scope of Section 1797 or is obviously not amenable to resolution by the procedures set forth in Section 1797(b).’”
The insured did not plead sufficient facts to escape the preemption argument, just as she failed to plead sufficient facts on the breach of contract and bad faith claims. So again, the claim was dismissed with leave to amend.