Court Addresses Various Breach of Contract and Bad Faith Allegations in a First Party Medical Benefits Case

In the case of Castellani v. Travelers Ins. Co., No. 2025-CV-3425 (C.P. Lacka. Co. May 18, 2026 Nealon, J.), the court addressed various issues raised in a claim for breach of contract and bad faith in a first party medical benefits case.

The Plaintiff basically asserted that the insurance company had allegedly fraudulently induced her to purchase medical expense benefits coverage that it allegedly never truly intended to provide. 

The Plaintiff also asserted that the carrier unjustifiably initiated numerous peer reviews by allegedly biased medical professionals in order to allegedly manufacturer a sham basis upon which to deny coverage for allegedly reasonable and necessary treatment.

In additional to suing the carrier for breach of contract and bad faith, the Plaintiff also sued the individual claims representative as well.

The carrier filed Preliminary Objections relative to the Plaintiff’s demand for counsel fees under §1716 and §1798 of the Motor Vehicle Financial Responsibility Law. 

The carrier also filed Preliminary Objections against the bad faith claim.

The claims representative also filed a demurrer on the claims against that party.

Challenges were also made against the claims under the UTPCPL.

The court granted the demurrer asserted by the claims adjuster after finding that the Plaintiff was not able to demonstrate a duty of care owed to the claims adjuster to the insured so as to expose the adjuster to individual tort liability.

The court otherwise found that the Plaintiff had stated a valid cause of action against the carrier for bad faith. The court also found that the claims were not barred by the gist of the action doctrine. The court additionally found that the economic loss doctrine did not preclude the tort claims asserted by the Plaintiff.

Anyone wishing to review a copy of this decision may click this LINK.

Source of image:  Photo by Marek Studzinski on www.unsplash.com.

Summary Judgment Granted in Favor of Carrier in Auto Accident First Party Benefits Case Regarding Issues With an IME

In the case of Loughery v. Mid-Century Ins. Co., No. 2:-19-CV-00383-WSH (W.D. Pa. Dec. 20, 2022 Hardy J.), the court addressed cross Motion for Summary Judgment on a Plaintiff’s claim for statutory bad faith alleging that a Defendant carrier requested an independent medical examination in an auto accident first party benefits case without first obtaining a court order and without good cause.

In denying the Plaintiff’s Motion for Summary Judgment, the court found that the Plaintiff did not show that the Defendant carrier acted unreasonably and in bad faith in failing to pay on the claims presented as there was a split of opinion in the courts as to the validity of the IME clause at issue.

The court also noted that the Defendant carrier’s interpretation of the provision was in accordance with the interpretation of the law as expressed by some of those courts.

As such, the court granted the Defendant carrier’s Motion for Summary Judgment.

Anyone wishing to review a copy of this decision may click this LINK.

Bad Faith Claim Based Upon Delay in Full Payment Dismissed; Right to File Amended Complaint Allowed

In the case of Elansari v. The First Liberty Ins. Corp., No. 2:20-CV-5901-JDW (E.D. Pa. May 6, 2021 Wolson, J.), the court granted a Defendant’s Motion to Dismiss a Plaintiff’s Amended Complaint for bad faith but allowed the Plaintiff to file yet another Amended Complaint.

According to the Opinion, the Plaintiff alleged a breach of contract where the carrier subsequently paid a disputed amount of total liability and lost income coverage. The Plaintiff complained that the carrier failed to make full payment within a certain timeframe and asserted that he suffered damages due to that delay.

The Opinion indicated that the carrier first issued a check to the Plaintiff for approximately $3,700.00 and advised him that it would not pay additional compensation. However, after the Plaintiff filed suit, the carrier then issued an additional payment for another $1,089.00.

The court granted the carrier’s Motion to Dismiss after finding that the Plaintiff’s claim that the carrier had breached the insurance contract by not paying the additional amount failed because the carrier had since sent the Plaintiff a check for that amount in dispute.

The court also found that the Plaintiff failed to establish that the carrier had any contractual or legal duty to process his claims within a certain timeframe or that the Plaintiff had suffered any compensable damages as a result of any purported delay.

The court additionally noted, in this bad faith case, the Plaintiff's claims that the carrier’s purported delay in processing the additional payment failed in that that alleged delay appeared from the record before the court to be the result of negligence rather than any recklessness or bad faith.

Neverthless, the Plaintiff was still granted the right to file an Amended Complaint.

Anyone wishing to review a copy of this decision may click this LINK.


Source: “Digest of Recent Opinions.” Pennsylvania Law Weekly (May 27, 2021).

"Threadbare" Facts Found Not To Support Insurance Bad Faith Claim

In the case of Diaz v. Progressive Advanced Ins. Co., No. 5:19-CV-06052-JDW (E.D. Pa. Feb. 21, 2020 Wolson, J.), the Eastern District Federal Court dismissed a first party property damage bad faith case under a finding that the Plaintiff did not state a valid cause of action based upon a pleading of  “threadbare” facts.

The court noted that the Plaintiff basically asserted in the Complaint that he had a policy with the carrier, that his car was damaged in a vandalism event, that he had submitted a proof of loss, that he had been truthful throughout the investigation, and that the carrier denied the claim. The court noted that these allegations did not establish any plausible claim of bad faith.

The court also confirmed that there is no common law bad faith cause of action in Pennsylvania for refusing to pay benefits or as to claims handling. It is noted that the Plaintiff did not oppose this part of the Motion to Dismiss. 

Anyone wishing to review a copy of this decision may click this LINK.  The Court's companion Order can be viewed HERE.

I send thanks to fellow blogger, Attorney Lee Applebaum of the Philadelphia law offices of Fineman Krekstein & Harris, for bringing this case to my attention. Attorney Applebaum is also the creator and writer of the excellent Pennsylvania and New Jersey Insurance Bad Faith Case Law Blog which can be viewed HERE.

Interesting Defense Strategy Results in Striking of Certain Portions of Federal Court UIM Bad Faith Claim as Immaterial or Impertinent

In the case of Bacon v. USAA Cas. Ins. Co., No. 1:18-CV-01686 (M.D. Pa. May 6, 2019 Kane, J.), the court addressed a motion by a UIM carrier to dismiss certain portions of a bad faith Complaint as immaterial and impertinent.  

The wrinkle in this case is that the carrier was making a more specific motion to only strike portions of the UIM bad faith Complaint as being immaterial and impertinent, as opposed to attempting to dismiss the entire Complaint.  

In this matter, the Plaintiff asserted that the carrier’s alleged refusal to pay full medical benefits and asserted that this refusal lead to certain consequences between the insured and third parties.  

The carrier focused its Motion to Dismiss on attempting to strike four (4) specific paragraphs of the Complaint.   The first two (2) paragraphs at issue raised the carrier’s advertisement directed to members of the military.  The Plaintiff alleged that, as a long-serving Army veteran, he relied upon these representations and warranties in the ad.  The Plaintiff alleged that carrier breached these representations and warranties.  

The court agreed to strike these two (2) paragraphs as being irrelevant on the issue of whether the carrier breached its duties under the policy itself and/or whether the carrier violated the bad faith statute.  

The court additionally found that the allegations pertaining to alleged warranties were prejudicial in that such allegations could lead the jury to believe that the carrier owed responsibilities to the Plaintiff outside of the scope of the insurance policy at issue.  

The court refused to strike two (2) other paragraphs raised in the defense motion.   In one of these paragraphs, the Plaintiff asserted allegations that the carrier had refused to pay a benefit due. In that paragraph, there are also grievances that were directed by the Plaintiff at third parties. The court found that the alleged refusal to pay the Plaintiff benefits due was enough to preserve this paragraph even though the other allegations pertaining the third parties may not have been actionable in this particular matter. 

With regards to the final paragraph at issue, the Plaintiff had asserted that the position taken by the carrier with respect to the payment of medical benefits resulted in certain ramifications to the Plaintiff.  The court noted that, while the paragraph had some language that focused on possible future conduct, the allegations within the paragraph alleged that the carrier had refused, in the past, to pay for certain medical treatment.   The court felt that these allegations could bear some  relationship to whether the Defendant breached a duty under the policy or imposed by the bad faith statute.  

Anyone wishing to review a copy of this decision, may click this LINK

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

Low Ball Offer Not Necessarily Bad Faith

In the case of Rosenthal v. Am. States Ins. Co., No. 1:18-cv-01755 2019 (WL 1354141 M.D. Pa. March 26, 2019 Kane, J.), the court dismissed a bad faith count in a UIM case but allowed the Plaintiff the right to file an Amended Complaint.  

Generally speaking, after reviewing general bad faith law, the court noted that failing to plead descriptions of what a carrier actually did, or why they did it, can be fatal to a bad faith claim under the Federal Rules of Civil Procedure.  

Of note, the court confirmed that an allegation that the carrier paid first party medical benefits while not paying UIM claims is not in and of itself bad faith.   The court noted that allegations of bad faith in this regard must go beyond “a mere inconsistency” in the handling of these two (2) types of claims under the policy.  

Moreover, the court also noted that an allegation of a bad faith failure to communicate requires the Plaintiff to plead actual efforts to communicate with the carrier to which the carrier failed to respond in good faith.  

Judge Kane additionally held that identifying the difference between a demand and an offer alone cannot serve as the basis for claim for bad faith, absent allegations that the carrier acted unreasonably and in bad faith by making the lower offer.   In this case, the Plaintiff was demanding $1 million dollars in settlement, which she alleged was lower than her actual damages, and asserted that the carrier only offered $107,012.00.  The court found that these allegations, in and of themselves, were insufficient to support a claim for bad faith.  

The court noted that a low but reasonable estimate would be not treated as bad faith.  Here, the insured also did not allege any facts from which a jury could plausibly conclude that the Defendant’s offer was unreasonable and not made in good faith as opposed to an offer being made as part of the ordinary course of negotiations between carriers and Plaintiffs. 
 
Anyone wishing to review a copy of 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 for bringing this case to my attention. 

Eastern Federal District Court Takes a Closer Look at Interplay Between First Party Claims and Bad Faith Claims

The issue of bad faith claims in the first party benefits lawsuits was reviewed by the Eastern Federal District Court in the case of Shea v. USAA, No. 17-4455 (E.D. Pa. July 25, 2018 Surrick, J.).  The issues came before the court on the carrier's motion to dismiss.

Following the insured's involvement in a motor vehicle accident, the insured began to receive the benefit of her $100,000 in first party medical coverage under her own policy.  At some point after a peer review, the carrier stopped the payment of the benefits.  The Plaintiff filed a breach of contract claim, alleging violations of 75 Pa.C.S.A. Section 1797, and asserted bad faith conduct on the part of the carrier.

The court noted that there are conflicting Pennsylvania state and federal court decisions on the crucial issue of whether the MVFRL's provisions pertaining to peer reviews of first party medical benefits supplants claims for breach of contract, bad faith, and consumer protection law violations.  It was noted that, to date, the Pennsylvania Supreme Court has not addressed the proper interaction of these causes of action in the first party context.

In his decision in this Shea case, Judge R. Barclay Surrick of the Eastern District Federal Court lays out the issues and the law in great detail and in an easy-to-follow fashion.

The court rejected the defense contention that the MVFRL's peer review process preempts the existing common law remedy for breach of an insurance contract's implied covenant of good faith and fair dealing.  The Court ruled that 75 Pa.C.S.A. Section 1797, which lays out the framework for first party benefits, does not prohibit an action for damages arising from an alleged breach of the insurance contract's implied covenant of good faith and fair dealing where those damages are otherwise available under the facts alleged.

In reviewing the conflicting line of cases on the issue of whether a Section 1797 peer review claim can be asserted in the same case as a Section 8371 bad faith claim, the Shea court elected to side with what it termed as a growing number of cases that have fallen on the side of allowing both claims to be pled in a single action.  In the end, the court in Shea held that, where it is alleged that a carrier failed to follow the mandates of Section 1797, a plaintiff's remedies are not limited to those stated under Section 1797, but could also include the remedies allowed under the bad faith statute found at 42 Pa.C.S.A. Section 8371.

In the end, the court denied the carrier's motion to dismiss.

Anyone wishing to review this decision may click this Memorandum Opinion may click this LINK.

I send thanks to Lee Appelbaum, writer of the excellent Pennsylvania and New Jersey Insurance Bad Faith Case Law Blog, and from the Philadelphia law firm of Fineman, Krekstein & Harris for bringing this case to my attention.