Thursday, February 7, 2013

Federal Western District Court Reviews Bad Faith Claims in Uninsured Motorist (UM) Context

In her recent January 24, 2013 decision in the case of Katta v. GEICO, No. 2:11-CIV-729 (W.D. Pa. Jan. 24, 2013 Conti, J.), Judge Joy Flowers Conti of the United States District Court For the Western District of Pennsylvania addressed several bad faith issues in the uninsured motorist context.  

By way of background, this matter arose out of a motor vehicle accident during which an uninsured driver was involved in an accident with the Plaintiff’s vehicle.   The Plaintiff filed a claim for uninsured motorist coverage under his insurance policy with GEICO. 

Following an inability to agree upon a valuation of the claims presented, the Plaintiff filed suit claiming several violations of Pennsylvania state law, including a claim for common law bad faith and a violation of the Pennsylvania bad faith statute, 42 Pa. C.S.A. §8371.  

After discovery was completed, the Defendant filed a Motion for Summary Judgment raising two issues.   First, the defense asserted that Pennsylvania did not recognize a common law claim for bad faith.  Secondly, GEICO argued that the agreed upon facts do not support a claim for bad faith pursuant to the Pennsylvania bad faith statute.   The Defendant’s Motion for Summary Judgment was granted in part and denied in part.  

The court denied the Defendant’s GEICO’s Motion for Summary Judgment to the extent that it asserted that Pennsylvania did not recognize a common law claim of bad faith.  To the contrary, the court in this matter found that Pennsylvania does indeed recognize such a common law claim, citing Birth Center v. St. Paul Companies, Inc., 787 A.2d 376 (Pa. 2001).  

However, the court granted the Defendant’s Motion for Summary Judgment with respect to the Plaintiff’s statutory bad faith claim under 42 Pa. C.S.A. §8371.   After thoroughly reviewing the law applicable to statutory bad faith claims, the court found that the Plaintiff did not establish that the Defendant had unreasonably undervalued the Plaintiff’s injuries.   In this regard, the Plaintiff largely relied upon the fact that the Plaintiff alleged that there was a lost wage claim of $17,770, which was approximately 2 ½ times greater than the Defendant’s overall offer of $7,000.00 in settlement.  

The court noted that the evidence presented indicated that the Defendant was not aware of the Plaintiff’s lost wages at the time that offer was made.  

The court otherwise also noted that the Plaintiff failed to identify any relevant legal authority supporting the Plaintiff’s argument that a disagreement over the evaluation of the claim was sufficient to constitute bad faith as a matter of law.  

To the contrary, the court in this matter found that, viewing the record as a whole, the carrier had presented evidence that it had acted reasonably with respect to the handling of the Plaintiff’s claim.

The court also noted that the Plaintiff did not meet his burden of establishing clear and convincing evidence in bad faith.  

More specifically, the records revealed uncertainties surrounding the Plaintiff’s alleged injuries and treatment such that the Defendant was under no affirmative duty to even negotiate a settlement.  

While the Defendant did make an offer based upon its review of the evidence, the Plaintiff failed to present any evidence that the Defendant failed to consider all of the information available to it at the time the offer was made.   The court stated that, even after the Defendant became aware of the Plaintiff’s alleged lost wages, there still remained conflicting evidence about the extent of the Plaintiff’s injuries in light of the IME completed and the evidence of the Plaintiff’s subsequent accidents.   The court reiterated that there was no evidence of bad faith on the part of the Defendant presented in this matter. 

Rather, the facts presented merely reflected a disagreement over the value of the Plaintiff’s claims.   As such, the Defendant’s Motion for Summary Judgment filed against the statutory bad faith claims under 42 Pa. C.S.A. §8371 was granted.  

Anyone wishing to review the Katta v. GEICO decision, may click HERE.


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