March 2014 Bad Faith Cases: Court Grants Motion For Summary Judgement Where Plaintiff Failed To Submit Independent Medical Examination Based On Violation Of Cooperation Clause In Insurance Policy (Philadelphia Federal)

In Goddard v. State Farm, plaintiff brought suit against his insurer alleging breach of contract and bad faith arising from the insurer’s refusal to pay UM/UIM benefits to plaintiff for an accident which took place on August 6, 1998.  Although the claim was timely submitted to the insurer, plaintiff refused or failed to submit to an independent medical examination following his submission of the claim.  In 2001, plaintiff filed a motion to compel arbitration.  An arbitrator was selected for the case in June of 2005.  At the time the arbitrator was selected, the insurer conditioned the arbitration on plaintiff’s completion of a medical examination.  Between September 2005 and February 2007, the insurer continued its attempts to acquire a medical examination of plaintiff to no avail. Plaintiff obtained a new attorney in February 2007, who requested to proceed to arbitration, but the insurer instead denied the claim and closed the file, citing plaintiff’s failure to submit to a medical exam, and the insurer’s belief the statute of limitations on plaintiff’s claim had expired.  Plaintiff did not file suit until October of 2011.

The insurer filed a motion for summary judgment, asserting plaintiff violated the cooperation clause in his policy by refusing to submit to a medical examination after the accident.  The insurer further asserted it had been deprived of its opportunity to assess plaintiff’s condition following the accident, determine the legitimacy of his injuries, and in the interim between the accident and closing of the file, had lost the ability to determine whether any separate injuries might have occurred.  The insurer also asserted plaintiff’s bad faith claim was time barred by the two-year statute of limitations on such claims, because the alleged bad faith action took place in 2007, and plaintiff did not file his cause until October 7, 2011.  Plaintiff argued his motion to compel arbitration tolled the statute of limitations on the claim.

While the parties argued about which action triggered the statue of limitations, the judge considered such a determination irrelevant, as plaintiff’s motion to compel arbitration in 2001 effectively tolled the statute of limitations, regardless of when it was triggered.  Therefore, the statute of limitations had not run, and there were no grounds to grant summary judgment on that issue.  The court did, however, grant summary judgment on the issue of plaintiff’s breach of the cooperation clause in his insurance policy.  The court found prejudice as a matter of law because the insurer was irrevocably denied the opportunity to evaluate the state of plaintiff’s health at the time of his claim, as well as the opportunity to determine whether all of the conditions for which he sought treatment were from the accident.  Furthermore, plaintiff’s refusal to participate in the examination prevented the insurer from determining whether it could seek contribution under the policy, and resulted in prejudice to the insurer.  Therefore, the court granted defendant’s motion for summary judgment.

Date of Decision: January 16, 2014

Goddard v. State Farm Mut. Auto. Ins. Co., Civil Action No. 11-6309, 2014 U.S. Dist. LEXIS 5974 (E.D. Pa. Jan. 16, 2014) (O’Neill, Jr., J.).