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The insured failed to adequately plead a bad faith claim in this UIM case, but was given leave to amend. Most of the allegations were conclusory, and the one allegation that was factual in nature did not make out a bad faith claim.

The court set out the method for determining whether a pleading is adequate under the federal rules.

  1. Separate out the factual and legal elements of the claim.

  2. Accept all well-pleaded facts.

  3. Disregard all legal conclusions.

  4. Determine if the well-pleaded facts make out a plausible claim for relief.

“Where a complaint pleads facts that are merely consistent with’ a defendant’s liability, it stops short of the line between possibility and plausibility of ‘entitlement to relief.”

The court found the following averment to be well-pleaded:

“failing to make a reasonable settlement offer to Plaintiffs despite receipt of medical specials which supported tender of the full policy limit in Plaintiffs’ third-party claim….”

However, merely alleging an insured provided documents and the insurer failed to make a reasonable settlement offer “does not support an inference of bad faith without additional factual support such as the complexity of the claim and the time passed between the date Plaintiffs supplied the necessary information and the date the complaint was filed.”

The court also gave some scrutiny to an averment that the insurer failed to pay a covered loss in a prompt and timely matter. It found this to be a conclusory legal allegation, rather than a fact, because no facts were pleaded that would explain why the delay was unreasonable under the circumstances.

The court recognized the difficulty in pleading facts of an insurer’s internal processes, but still ruled that an insured had to plead some facts or the claim could not survive. Pleading a few months long delay by itself is not sufficient, without more details to fill out the nature of the claims handling that was allegedly unreasonable.

In sum, “Plaintiffs’ factual averments amount to no more than an allegation that Defendant failed to communicate or issue benefits within three months of Plaintiffs providing medical documentation and a written request for benefits. Plaintiffs point to no facts that suggest that this delay was unreasonable or dilatory. As such, the facts alleged in the complaint cannot suffice to raise a cause of action for bad faith under Pennsylvania law. Because it is not clear that an amendment would be futile, however, Plaintiffs will be given leave to amend their complaint if they are able to add factual allegations that would support their bad faith claims.”

Date of Decision: November 6, 2018

Rickell v. USAA Casualty Insurance Co., U. S. District Court for the Middle District of Pennsylvania No 18-cv-1279, 2018 U.S. Dist. LEXIS 189257 (M.D. Pa. Nov. 6, 2018) (Rambo, J.)

Other examples of conclusory pleading in this case are:

failing to evaluate Plaintiffs’ claim objectively and fairly;

failing to complete a prompt and thorough investigation of Plaintiffs’ claim;

conducting an unfair and unreasonable investigation of Plaintiffs’ claim;

violating the fiduciary duty owed to Plaintiffs;

failing to reasonably and adequately evaluate or review the medical documentation in Defendant’s possession;

failing to keep Plaintiffs or their representatives fairly and adequately advised as to the status of the claim;

unreasonably valuing the loss and failing to fairly negotiate the amount of the loss with Plaintiffs or their representatives;

unreasonably withholding policy benefits;

acting unreasonably and unfairly in response to Plaintiffs’ claim; and

unnecessarily and unreasonably compelling Plaintiff to initiate this lawsuit to obtain policy benefits for a covered loss that Defendant should have paid promptly and without the necessity of litigation.