January 2017 Bad Faith Cases: A “Low-Ball” Offer to Settle, Without More, is Insufficient to Show Bad Faith (Philadelphia Federal)

This first-party Uninsured/Underinsured Motorist Coverage claim involved allegations that the insurer acted in bad faith by making a “low-ball” offer to settle the insured’s personal injury claims. The case arose out of a car accident where the insured was rear ended in a hit and run and incurred medical bills totaling $8,232.00. The Insurer made an initial offer of $1,000 to settle the Insured’s UIM claim. This offer was rejected, and the Insurer refused to pay the full value of the Insured’s medical bills.

The Insured’s bad faith claim was based solely on the premise that the $1,000 offer, acting alone, was facially unreasonable in light of the $8,000 in medical bills and $25,000 policy limits. The Insured argued that a facially unreasonable offer is itself bad faith. The Court disagreed. According to the Court, a “low-ball” offer, without any other allegations of wrongful conduct, is insufficient to maintain a claim of bad faith. To prove bad faith, an insured must point to some action or inaction taken by the insurer which shows that the offer was not made negligently or as a negotiation strategy, but made as a result of bad faith conduct on the part of the insurer. Entirely missing from the Insured’s Complaint were any allegations that the Insurer failed to conduct a reasonable investigation or failed to have the medical records reviewed by an in-house doctor or nurse.

Date of Decision: August 11, 2016

West v. State Farm Ins. Co., No. 16-3815, 2016 U.S. Dist. LEXIS 106783 (E.D. Pa. Aug. 11, 2016) (Jones, II, J.)