Judge Conti granted in part and denied the insurer’s summary judgment motion on the insured’s bad faith allegations. The insured’s claims rested on two arguments: (1) the insurer failed to provide a written explanation of its coverage decision relative to a machine used to generate radiation to treat patients with cancer; and (2) the insurer lacked a reasonable basis for treating the machine as business personal property subject to lower coverage limits.
The machine at issue was a linear accelerator designed to generate radiation used to treat cancer patients. Installation took approximately two months and required a team of specialized workers. The insured argued that the machine was permanently attached to the building, and should be covered under “building” coverage. The insurer argued that the machine was a “fixture” or “machinery and equipment” that is “business personal property.”
The court found the Policy’s language ambiguous, but that the insurer’s interpretation of the phrase “permanently attached” was reasonable. Given these facts, the court found that the insured could not show that the insurer acted in bad faith when it decided to cover the radiation machine as personal property of the insured.
However, the court denied the insurer’s motion for summary judgment as it related to the insurer’s failure to respond to the insured. Specifically, the insured’s expert noted that the insurer failed to respond to seven written requests from the insured for the carrier’s coverage position, which constituted a breach of industry standards. In response, the insurer alleged that the resolution of the claim was delayed due to the insured’s refusal to assist in the investigation of the claim and fulfill certain obligations under the policy.
Thus, the court concluded that the insurer’s arguments did not support a grant of summary judgment with regard to the insurer’s failure to provide a written explanation of a coverage decision, but did support a grant of summary judgment as it related to any other bad faith allegations.
Date of Decision: September 28, 2016
Rosewood Cancer Care, Inc. v. Travelers Indem. Co., No. 14-434, 2016 U.S. Dist. LEXIS 133075 (W.D. Pa. Sept. 28, 2016) (Conti, J.)