In the case of Ridolfi v. State Farm Mut. Auto. Ins. Co., No. 15-859 (M.D. Pa. April 10, 2017 Carlson, M.J.), Federal Magistrate Judge Carlson of the Middle District granted a carrier’s Motion for Summary Judgment in a UIM bad faith case.
The Plaintiff had alleged bad faith based upon several allegations including an alleged misstatement of the policy limits, alleged delays in claims processing, insistence by the UIM carrier on a sworn statement under oath even though a deposition had previously been completed two (2) years before in the third party matter, the carrier's persistence in collecting medical records, and a failure on the part of the carrier to comply with insurance regulations regarding period status notices to the insured.
The court granted summary judgment finding that, “while both parties indulge in occasional missteps in the process of reviewing and litigating this claim, the essentially uncontested evidence does not meet the demanding, concise and exacting legal standards prescribed under Pennsylvania law for a bad faith insurance processing claim.”
The court reiterated the “well-established” principle law “that it is not bad faith for any insurance company to ‘conduct a thorough investigation into a questionable claim.’”
The court additionally noted that a carrier can be successful in defending against the bad faith claims by showing that there were “red flags” warranting further investigation into the claims presented. Accordingly, the court found that delay alone does not amount to bad faith. Rather, the court found that an inference of possible bad faith only arises when time passes as a part of pattern of a knowing or reckless delay in processing a meritorious insurance claim.
As part of the decision, Judge Carlson found that there was nothing wrong with the UIM carrier seeking a sworn statement under oath from the Plaintiff in light of the fact that the medical information previously secured or exchanged was in complete. The court did not accept the Plaintiff’s argument that no sworn statement was necessary as the insured had been deposed two (2) years earlier in the underlying third party litigation.
The court also noted that the claim against the third party tortfeasor settled for less than the policy limits, a factor that was properly included in the UIM carrier’s evaluation of the claims presented. The court also noted that the insured had originally demanded over double the UIM policy limits to settle before coming down a policy limits demand.
Judge Carlson otherwise rejected the Plaintiff’s allegations of violations of the Pennsylvania Unfair Claims Settlement Practices Act and the Unfair Insurance Practices Act, specifically with respect to the regulatory requirement that a UIM carrier provide 45 day updates on the status of insurance claims. The court recognized that, while violations of this insurance rules can be considered when examining a bad faith claim under §8371, the violations of these Acts in and of themselves do not amount to a per se violation of the bad faith standard.
As stated, the court entered summary judgment in favor of the UIM carrier and bad faith claims.
Anyone wishing to review this decision by Federal Magistrate Judge Carlson may click this LINK.
I send thanks to Attorney Lee Applebaum of the Philadelphia law firm of Fineman, Krekstein & Harris and also the writer of the excellent Pennsylvania and New Jersey Insurance Bad Faith Case Law blog.