Thursday, May 22, 2014

Summary Judgment Granted in UIM Bad Faith Case Out of Western District

In its recent decision in the case of Rowe v. Nationwide Insurance Company, Civil Action No. 3:12-81 (W.D. Pa. March 20, 2014 Gibson, J.), Judge Kim R. Gibson of the Federal District Court for the Western District of Pennsylvania ruled on a Motion for Summary Judgment filed upon bad faith claims in a UIM contract. 

On the insured Plaintiff’s personal injury UIM claims, the carrier initially secured a copy of the police report, inquired as to the status of medical treatment, and spoke with the other driver’s carrier regarding the claim.   According to the Opinion, the UIM adjuster followed up with the insured’s counsel for almost a year and a half, but was unable to fully evaluate the claim due to a lack of the complete medical file.   At one point, the insured’s counsel advised the UIM carrier that even she was unable to estimate a value for the UIM claim until she received additional medical information.  

Thereafter, when a chiropractor’s report was produced, the carrier for the tortfeasor paid the $15,000.00 in bodily injury liability limits.  The insured then turned to Nationwide as the UIM carrier and demanded an additional $313,500.00.  

Nationwide conducted its own internal evaluation of the claims presented and concluded that the Plaintiff’s claims did not reach a value in excess of the $15,000.00 bodily injury credit due to the UIM carrier.   The UIM carrier indicated that it would continue to evaluate the claims with any new additional information provided.

Thereafter, the UIM carrier completed a Statement Under Oath, a records review, and an IME.  

When the carrier offered $5,000.00 to settle the UIM claim, the counter demand was $275,000.00.   The injured insured thereafter brought suit and the UIM claim eventually settled at $50,000.00, the amount of the UIM limits. 

However, the statutory and contractual bad faith claims remained open.   At issue before this court were cross Motions for Summary Judgment.  

According to the Opinion, the basis for the Plaintiff's bad faith claims was the alleged violation of the Unfair Insurance Practices Act (“UIPA”) for refusing to pay claims, not attempting to effectuate a prompt and fair settlement in good faith in a clear liability case, compelling the Plaintiffs to file a lawsuit to recover amount due under the policy, and for allegedly attempting to settle Plaintiffs’ claims for less than what a reasonable person would believe he was entitled to recover.  

On the contractual bad faith claim, the court in Rowe found that the Plaintiff did not show that the UIM carrier’s conduct was unreasonable or negligent by clear and convincing evidence.   The court noted a general rule that, while there may be generally no breach of contract claim where the UIM carrier pays the policy proceeds, an insured may be able to pursue a claim for bad faith related to the carrier’s handling of the claim.   As stated, the court found that the injured insured did not produce any clear and convincing evidence that the carrier’s conduct was unreasonable or negligent.  

In so ruling, the Rowe court stated that the fact that the insured disagreed with the carrier’s claim evaluation was not a proper basis for a contractual bad faith claim where the insureds did not show that the carrier did not breach some contractual duty.   The court in this matter found that the UIM carrier demonstrated a reasonable basis for its conduct and, as such, summary judgment on the contractual bad faith claim was granted in favor in the UIM carrier.  

On the statutory bad faith claim, the court noted that bad faith could include such conduct as an unreasonable delay in the handling of a UIM claim, a frivolous or unfounded refusal to pay, a failure to communicate with the insured, acting in  a dilatory manner, extend settlement offers that bear no reasonable relationship to the insured’s medical treatment and expenses, or conducting an inadequate investigation into the claims presented.  

The court reiterated that clear and convincing evidence was required to support such claims.  

The Rowe court also stated that, at the summary judgment stage on a statutory bad faith claim, the insured’s burden is to meet this high level of evidence required.  However, if the court found that a reasonable jury could find that the carrier did not have a reasonable basis for denying benefits under the policy and move, or recklessly disregarded this fact, summary judgment would not be appropriate.

Reviewing the evidence against this standard lead the court to also enter summary judgment in favor of the carrier in a statutory bad faith claim.   Of note, is the court’s finding that the Plaintiff’s claims that the carrier failed to provide 30 days/45 day updates as required by the Pennsylvania Code, even if accepted as true, was not the type of negligence that amounted to bad faith in the context of this case where the record was otherwise replete with evidence of regular written and oral communications from the carrier to the insureds and their lawyers regarding the status and progress of the investigation.  

Anyone wishing to review a copy of this Opinion may click HERE.

 
I send thanks to the excellent writers of the Pennsylvania and New Jersey Insurance Bad Faith Case Law Blog at the Philadelphia law firm of Fineman, Krekstein & Harris (including Attorney Lee Applebaum, Esquire) for publicizing this case.  

 

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