In the case of Shaffer v. State Farm Mutual Automobile Insurance Company, No. 15-1196 (3d. Cir. March 10, 2016 Jordon, McKie, Vanaski, J.J.) (Not Precedential), the Third Circuit Court of Appeals affirmed the trial court’s summary judgment ruling in favor of the UIM carrier on the Plaintiff’s claim that the carrier had acted in bad faith in handling the UIM claim. The Third Circuit agreed with the trial court that, viewing the record in a light most favorable to the Plaintiff, no reasonable juror could conclude that there was “clear and convincing” evidence that the carrier acted in bad faith.
During the lower court proceedings in this matter, when the district court granted summary judgment in favor of the carrier on the bad faith claim, the separate breach of contract claim eventually proceeded to trial and the jury awarded the Plaintiffs a verdict. The Plaintiff then appealed the summary judgment ruling in favor of the carrier on the issue of bad faith.
In reviewing the Plaintiff’s claims regarding a delay between the demand for UIM benefits and the insurer’s determination of whether or not to pay a claim, the Third Circuit agreed with the trial court that a delay, in and of itself, does not necessarily constitute bad faith. The appellate court noted that, rather than focusing solely on the length of the delay, the courts addressing bad faith issues have considered “the degree to which a Defendant insurer knew that it had no basis to deny the claim.” The Third Circuit went on to note that, “[i]f delay is attributable to the need to investigate further or even to simple negligence, bad faith has not been shown.”
In its Opinion, the Third Circuit noted that the Plaintiff did not present any evidence to support their claims that the carrier’s insistence on obtaining a complete medical file was undertaken purposefully to delay the resolution of the claim.
The court also rejected the Plaintiff’s argument that State Farm retained a consultant position to review the claim as a pretext to deny the claim without a reasonable foundation. The court noted that, although the carrier’s management of the claim may have been flawed, the Plaintiffs failed to present evidence that the carrier’s delay or intentions were anything other than an attempt to further investigate the Plaintiff’s medical history to determine the value of the UIM claim.
The Third Circuit also rejected the Plaintiff’s argument that the fact that the Plaintiff later received a substantial jury verdict discredited the carrier’s medical expert and thereby supported a conclusion that the carrier acted in bad faith. The court noted that a jury’s later determination regarding the credibility of the carrier’s medical review did not affect the reasonableness of the carrier’s earlier reliance upon that review.
The court also noted that the fact that the UIM carrier’s settlement offer was much lower than the amount the jury ultimately awarded would also not necessarily affect the reasonableness of the carrier’s reliance upon the medical review in making that settlement offer.
The Third Circuit Court of Appeals also rejected the Plaintiff’s claim that the carrier acted in bad faith by questioning the causal relationship of Plaintiff’s medical condition to the motor vehicle accident even though the same carrier did not do so when it paid all medical expenses under the first party benefits coverage following the accident. In this regard, the Plaintiff admitted that the inconsistency between the how the claims were handled was, in and of itself, not sufficient to show bad faith.
The court also rejected the Plaintiff’s argument that the carrier’s bad faith was evidenced by its assertion in the UIM case that the Plaintiff was partially responsible for the accident. The court found this argument to be “meritless.” There was no evidence provided that the carrier considered this defense in a frivolous attempt to limit its liability for UIM benefits.
The appellate court also found no error in the district court’s alleged ignoring the Plaintiff’s insurance expert’s report on the issue of bad faith. The appellate court noted that the expert review provided legal conclusions without adding any additional facts and, therefore, providing no factual evidence to support a claim of bad faith.
For these reasons, the appellate court affirmed the trial court’s grant of summary judgment in favor of the UIM carrier on the bad faith issue in this non-precedential Opinion.
Anyone wishing to review this Opinion may click this LINK.
I send thanks to the writers of the Pennsylvania and New Jersey Insurance Bad Faith Case Law Blog Pennsylvania and New Jersey Insurance Bad Faith Case Law Blog for bringing this case to my attention.