SEPTEMBER 2009 BAD FAITH CASES DELAYS IN CLAIMS HANDLING PROCESS AND PAYMENT ATTRIBUTABLE TO INSURED OR REASONABLE NOT BASIS FOR BAD FAITH CLAIM (Philadelphia Federal)
In Crawford v. Allstate Insurance Company, Plaintiff sued Defendant for bad faith even though Allstate had paid her the policy’s full $100,000 uninsured motorist policy limit and its entire $5,000 wage loss policy limit. Plaintiff’s bad faith claim was based, in part, on the following allegations: (1) Defendant unreasonably delayed the processing of the claim; (2) Defendant’s initial settlement offer was unreasonable; (3) Defendant’s subsequent delay in issuing the $100,000 settlement check was unreasonable; and (4) Defendant used an unfair doctor and arbitrator. While Defendant did not settle Plaintiff’s uninsured motorist claim until almost two years after Plaintiff filed the claim, the U. S. District Court for the Eastern District of Pennsylvania granted Defendant’s motion for summary judgment.
The Court found that the carrier promptly took action following Plaintiff’s accident when, within four days of being notified of the accident, Allstate wrote Plaintiff explaining Plaintiff’s benefits and providing the necessary paperwork, including a medical authorization form. Additionally, the carrier continued to pay for Plaintiff’s medical coverage even though Plaintiff did not submit any forms to Defendant. The Court found that the reason for the delay in processing the claim was due to Plaintiff’s failure to provide Defendant with any medical records for an entire year. When Plaintiff finally provided medical records, the records did not contain complete information regarding Plaintiff’s hospitalization after an automobile accident that had occurred five years earlier.
The court held that the insurer “had a reasonable, good-faith basis for delaying settlement” because for over a year it received no medical records from Plaintiff. Further, any delay was based on an effort to conduct a reasonable and thorough investigation of Plaintiff’s injuries and potential pre-existing conditions. The Court found that the insurer’s initial settlement offer of $75,000 was not unreasonable and that the medical records did not provide clear and convincing evidence that the case was worth more than this offer.
The Court found that the three-week delay in issuing the settlement payment was justified because Plaintiff’s counsel did not check with Allstate before revising its release and Allstate could not issue the check until it had received the insured’s taxpayer I.D. Finally, the Court found that Plaintiff’s claims that Defendant used an unfair doctor and arbitrator were baseless and had no support in the record.
Date of Decision: August 31, 2009
Crawford v. Allstate Ins. Co., U.S. District Court, Eastern District of Pennsylvania, Civil Action No. 07-3758, 2009 U.S. Dist. LEXIS 79200 (E.D. Pa. Aug. 31, 2009) (Buckwalter, S.J.)