NOVEMBER 2017 BAD FAITH CASES: JURY MUST DECIDE IF BASIS FOR DELAY IN PAYING BENEFITS WAS AN INNOCENT MISTAKE AND PART OF A STRATAGEM TO UNDERPAY THE INSURED (Middle District)
In this UIM bad faith case, the insurer paid the demand of $35,000 four months after demand was made. The insured asserted bad faith conduct during this period. The insured alleged unreasonable and intentional delays in payment, that should have been paid without delay. The key issue was whether the size of a workers’ compensation lien revealed that the insurer should have paid the demand immediately.
There was an issue over whether the claims handler innocently or knowingly misstated the size of the workers compensation lien. The court found this was a jury question: “If the jurors determine that there was an intentional effort to mislead Plaintiff into settling his case for less than the policy limits, an award of bad faith could be a reasonable result here. If the jurors determine that [the claims handler’s] misstatement regarding the size of the lien was a result of honest mistake, the jurors might reasonably conclude no bad faith was present.” Thus, summary judgment was denied.