The Case of the Missing Email

In the case of Live Face On Web, LLC v. Merchants Insurance Group, No. 2:19-CV-00528-JDW (E.D. Pa. April 1, 2020 Wolfson, J.), the court addressed cross motions for summary judgment on claims involving request for declaratory judgment, breach of contract, statutory bad faith, negligence, and vicarious liability law.

This case was filed under allegations that an insured requested that a vehicle be added to an insurance policy and that the insurance agent failed to notify the carrier of the same. According to the Opinion, the insurance agent denied ever receiving the emailed request from the insured to add the vehicle.  The Court opened the Opinion by call this "the case of the missing email."

The claims against the carrier in this matter included claims of bad faith violations of the Unfair Insurance Practices Act and vicarious liability with regards to the insurance agent’s alleged negligence.

The court granted summary judgment on all claims except for the negligence claim. Notably, Judge Wolfson reaffirmed the rule of law that there is no private right of action against the carrier under the Unfair Insurance Practices Act.

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

I send thanks to Attorney Brigid Q. Alford of the Camp Hill, PA office of Marshall Dennehey for bringing this case to my attention.

No Bad Faith Found Where UIM Carrier Demanded Statement Under Oath Even Though Deposition Previously Completed

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.   

 

 

Centre County Court Confirms That Bad Faith Statute Does Not Apply to Carrier's Conduct in Litigation Process As a Legal Adversary

In the recent decision in the case of Hardy v. Erie Insurance Exchange, No. 2012-CV-2059 (C.P. Centre Co. March 7, 2017, Ruest, J.), the court addressed cross-motions for summary judgment in an automobile accident matter.   The case more specifically centered around property damage claims, medical expenses claims along with related bad faith claims.   The Plaintiff filed an action alleging breach of contract and bad faith.  

Of note, the court allowed the breach of contract action to go forward as genuine issues of material fact remained on that count.   However, the court granted summary judgment to the carrier on the Plaintiff’s claims for bad faith.  

In so ruling, the court noted that, an insurance company is not required to blindly pay each claim without investigation in order to avoid a bad faith lawsuit.  

While the Plaintiffs argued in this matter that the Defendant carrier acted in bad faith by failing to promptly and accurately investigate and handle the claim, the court found that the facts of record indicated that the carrier responded to the claim within a reasonable amount of time.   The court also found that the Defendant carrier was not liable for bad faith under the allegations of violations of the Unfair Insurance Practices Act.  

The court also rejected the Plaintiff’s claims for bad faith under 42 Pa. C.S.A. §8371 on the basis of the Defendant’s allegations during litigation.   The court noted that the appellate courts of Pennsylvania have declined to find that the broad language of §8371 covers a party’s action during discovery as a basis for a bad faith allegation.  

Rather, §8371 has been read by the Pennsylvania appellate courts to only allow for a remedy for bad faith conduct that alleged arises when a carrier is acting as an insurer, not actions by the carrier when acting as a legal adversary in the litigation process.  

Overall, the court granted summary judgment to the carrier on the bad faith claim.  

Anyone wishing to review this decision may click this LINK.