2015 Bad Faith Cases: Insured Adequately Pleaded Bad Faith Claim Based On Delays In The Claims Handling Process (Middle District)

In Baker v. State Farm Mutual Automobile Insurance Company, the Court denied the insurer’s motion to dismiss an insured’s bad faith claim based on the delay in handling an underinsured motorist claim. The insured was involved in a motor vehicle accident caused by the other driver, and allegedly suffered serious injuries. The insured’s husband was covered under an auto insurance policy with liability limits of $50,000. The insured was covered for three automobiles under a separate insurance policy issued by the defendant insurer, which had underinsured motorist coverage limits of $300,000.

The insured retained counsel, who informed the defendant insurer that the husband’s policy limits were only $50,000. The insured sent her insurer various medical records and provided information about her treatment, which detailed “the failure of a pain control device implemented in [the insured] and upcoming surgeries to correct that problem.” As funds were running low for the insured and her husband, she requested a “without prejudice advance” of $10,000 for treatment. The insurer responded that it would not issue any payment until it had completed its claims evaluation, and further requested an independent medical evaluation (“IME”) from the insured.

The insurer originally scheduled the IME at an office over 100 miles from the insured’s home. The insured asked for the IME to be rescheduled, and the insurer scheduled it at a physician’s office over 200 miles from the insured’s home.

The insured filed suit, asserting a claim for UIM benefits in the full amount of $300,000, and a statutory bad faith claim.

The insurer sought to dismiss the bad faith claim, arguing that “there are no facts in the amended complaint to suggest that it acted without a reasonable basis, or with the knowledge that it lacked a reasonable basis in handling Plaintiffs’ UIM claim.” The insurer further claimed that it used “ordinary, reasonable, good-faith” claims-handling, and the complaint showed nothing more. The insured responded that the bad faith claim focused on the delays in the claims handling process.

The Court found the facts were sufficiently pleaded to state a claim for bad faith. Specifically, the insureds alleged “that they notified Defendant on November 1, 2012, that [the husband’s carrier] had tendered its [$50,000] policy limits,” and forwarded all medical records to the insurer’s claims adjuster in August 2013. The insurer allegedly failed to inform the insured of the status of her claim, and waited approximately 15 months after receiving the insured’s medical records to schedule an IME. The Court found this delay, if proven, could be so unreasonable as to amount to bad faith, and refused to dismiss the bad faith claim at this stage of the litigation.

Date of Decision: June 11, 2015

Baker v. State Farm Mut. Auto. Ins. Co., No. 4:14-CV-2295, 2015 U.S. Dist. LEXIS 75529 (M.D. Pa. June 11, 2015) (Brann, J.)