Bad Faith Claim Dismissed in Federal Middle District Court Case

In his recent decision in the case of Sayles v. Allstate Ins. Co., No. 3:16-cv-01534 (M.D. Pa. May 10, 2017 Caputo, J.), Judge A. Richard Caputo dismissed a claim for bad faith in a case where the insured claimed that the requirements to undergo an IME, along with a refusal by the carrier to pay first party medical benefits before the IME took place, were violations of the bad faith statute.  

In this matter, the insurance policy required the insured to submit to an independent medical examination after making a bodily injury claim for medical benefits arising out of auto accident. The policy stated that the carrier did not have to make payments prior to that examination.  

Judge Caputo noted that a federal judge in the Eastern District Federal Court had ruled in 2009 that these kinds of policy terms were enforceable and not inconsistent with the Motor Vehicle Financial Responsibility Law, relying upon case law from the Pennsylvania Superior Court.  However, a judge in the Middle District Court came to a different conclusion in 2017, finding the provisions to be unenforceable.   

 

The court rejected the Plaintiff’s claims of bad faith after finding that the carrier had a reasonable basis for denying medical benefits where the Pennsylvania Supreme Court had not decided the issue and where another federal court had found that the policy language was enforceable.   Judge Caputo found that it was reasonable for the carrier to have relied upon the earlier opinion where the status of the law was in a state of flux.  

Anyone wishing to review this decision may click this LINK.

I send thanks to Attorney Lee Applebaum of the Philadelphia law firm of Fineman Krekstein & Harris and the writer of the Pennsylvania and New Jersey Insurance Bad Faith Case Law blog.