OFFERING 15% OF UIM POLICY LIMIT DEMAND 17 MONTHS AFTER INITIAL DEMAND STATES BAD FAITH CLAIM HANDLING ACTION; UTPCPL CLAIM DISMISSED (Middle District)

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The UIM bad faith plaintiff pleaded sufficient facts to survive a motion to dismiss her bad faith claim.  Her Unfair Trade Practices and Consumer Protection Law (UTPCPL) claim was dismissed.

The insured had $50,000 in stacked UIM coverage.  The tortfeasor’s insurer had $100,000 in coverage which was tendered to plaintiff and her carrier agreed to that payment.

On the UIM claim, the insured assented to a review of her medical records, and later sent those records, accompanied by a policy limits demand.  Months later, the carrier’s adjuster stated she was unaware of the policy limits demand, and agreed to get back to the insured in two weeks.

Well over a month later, the insurer demanded an examination under oath, and the insured agreed to sit for an EUO.  The EUO was twice delayed by the carrier, and did not take place until three months after the insurer first requested the EUO.  Five months after the EUO, the carrier also insisted on an independent medical examination (IME).  At this point, it has been nearly one year since the original policy limits demand.  The IME was scheduled nearly two months from that point.

Finally, “[o]n December 22, 2020, [the insurer] responded to plaintiff’s July 31, 2019 settlement demand by offering $7,500.”  Thus, nearly 17 months had passed before the insurer made its first offer, constituting 15% of the policy limits demand.

Bad Faith Claim Stated

In light of the foregoing facts, Judge Mannion found the insured adequately pleaded a bad faith claim.  He rejected the notion that this was merely a valuation dispute.

Judge Mannion specifically found the following allegations adequate to make out a UIM claim handling bad faith action, in light of the foregoing facts:

a.) In failing to entirely and appropriately evaluate and investigate Plaintiffs’ claim;

b.) In failing to promptly resolve Plaintiff’s claims for amount within the policy limits;

c.) In failing to adopt reasonable standards with a complete investigation of Plaintiff’s claim arising under the policies and in failing to completely investigate;

d.) In refusing to pay the claim without conducting a reasonable investigation based upon all available information;

e.) In failing to attempt in good faith to provide a fair and equitable settlement of this claim in particular and claims in general in which the company’s liability has become reasonably clear;

f.) In compelling Plaintiff, in particular, and persons in general to institute litigation to recover amounts rightfully due under the policy;

g.) By offering substantially less than the amounts due and ultimately recoverable in actions brought by such litigation;

h.) In failing to promptly request a sworn statement;

i.) In failing to promptly request a defense medical examination; j.) In failing to promptly and fairly evaluate this claim and make an offer corresponding thereto;

k.) In failing to set a timely proper reserve for this claim so as to allow fair and equitable settlement in a prompt and timely manner;

l.) In failing to comply with State promulgated insurance regulations in the adjustment of claims and communications with plaintiff;

m.) Unreasonably under valuing the loss;

n.) In undertraining and overworking its adjusters so as to unreasonably delay the investigation of claims and require the involvement of outside assistance of litigation counsel to perform claims personnel responsibilities; and

o.) In unreasonably relying upon litigation counsel to investigate claims in which insured’s are fully cooperating and thereby creating an adversarial nature to a claim for benefits for which its insured has contracted and paid for.

UTPCPL Claim Dismissed

Judge Mannion did dismiss the UTPCPL claim, stating:

Here, plaintiff claims that she relied on defendant’s holding itself out as “providing expertise in claim handling, focusing on quality and customer service and working with assurance to manage claims in a fair and timely manner.” Plaintiff alleges she relied on defendant’s representation in purchasing insurance from defendant. These allegations are merely a recitation of the elements of a claim for violation of the UTPCPL. They do not change the fact that the true crux of plaintiff’s complaint is the allegedly untimely manner in which defendant has handled her claim. Indeed, the plaintiff alleges as to this claim that the defendant’s personnel failed to “properly conduct a timely investigation of Plaintiff’s claim resulting in unreasonable delay.” But a claim for failure to act on an insurance claim in a timely manner is not actionable under the UTPCPL, as it is a claim for nonfeasance.

Date of Decision: March 21, 2022

Defuso v. State Farm Mut. Auto. Ins. Co., U.S. District Court Middle District of Pennsylvania No. CV 3:21-507, 2022 WL 837491 (M.D. Pa. Mar. 21, 2022) (Mannion, J.)