JUNE 2016 BAD FAITH CASES: FAILURE TO ACCEDE TO SETTLEMENT DEMAND ALONE NOT BAD FAITH; ALLEGATION OF FAILURE TO REVIEW MEDICAL RECORDS DISMISSED AS CONCLUSORY (Philadelphia Federal)

In Camp v. New Jersey Manufacturers Insurance Company, the insurer refused to pay anything beyond the tortfeasor’s settlement of this UIM claim. The court dismissed the original bad faith claim for pleading only conclusory allegations, with leave to amend. The amended complaint added some detail, as set forth below, but the court still found it insufficient. The thrust of the complaint was that the insurer did not make an offer beyond the approximately $80,000 settlement, and her medical records showed a lifetime of medical costs at approximately $221,000.

The court found plaintiff’s allegations of failing to evaluate medical records in a demand package conclusory. The court further found the allegations plainly contradicted by the facts in the same pleading. The amended complaint alleged that the insurer’s representative stated that she had reviewed all relevant records in determining that it would not be approving the UIM claim, and the insured did not plead any contrary facts. Rather the insured only alleged legal conclusions that the claims handler did not do so. Contradicting a factual claim by the insurer with a legal conclusion was not to be afforded any weight.

The insured also alleged a failure to make a settlement offer in response to the insured’s claim. “However, failure of an insurer to ‘immediately accede to a demand for the policy limit cannot, without more, amount to bad faith.’” The insured offered no facts as to why the failure to make a settlement offer was in bad faith. The court cited the proposition that making allegations that the insurer failed to make an offer, “without additional elements of “self-interest” or “ill will” do not amount to a claim for bad faith under 42 Pa. Cons. Stat. § 8371.”

While there is case law that self-interest or ill will are not elements of section 8371 bad faith, the court cited case law where bad faith was inadequately pleaded because: (1) “[n]othing in the complaint sets forth any facts regarding [d]efendant’s actions . . . from which the Court can infer a bad faith claim”; (2) plaintiff “failed to allege facts that reasonably suggest a ‘frivolous or unfounded refusal to pay proceeds of a policy’”; (3) and failing to “provide sufficient facts . . . to suggest that [d]efendant lacked a reasonable basis for the denial of [] benefits” fatal to bad faith claim at pleading stage.

The allegations found inadequate by the court were:

Failing to evaluate the medical records and reports included in plaintiff’s demand package clearly establishing that plaintiff will incur a total lifetime cost of $221, 412.00 for medical treatment and medications related to injuries sustained in the subject motor vehicle accident. See Exhibit B.

Failing to make a settlement offer despite clear and uncontradicted medical records and reports establishing that plaintiff will incur a total lifetime cost of $221,412.00 for medical treatment and medications related to injuries sustained in the subject motor vehicle accident. See Exhibit B.

Failing to evaluate the medical records and reports included in plaintiff’s demand package clearly establishing that plaintiff suffered serious and permanent injuries to her neck, right shoulder and right wrist including significant aggravations to pre existing cervical spondylosis with broad based disc protrusion at C5-6, cervical radiculopathy at C6, right shoulder sprain and strain, and carpal tunnel syndrome requiring surgical intervention. See Exhibit B.

Failing to make a settlement offer despite clear and uncontradicted medical records and reports establishing that plaintiff suffered serious and permanent injuries to her neck, right shoulder and right wrist including significant aggravations to pre-existing cervical spondylosis with broad based disc protrusion at C5-6, cervical radiculopathy at C6, right shoulder sprain and strain, and carpal tunnel syndrome requiring surgical intervention. See Exhibit B.

Failing to evaluate the medical records and reports included in plaintiff’s demand package clearly establishing that plaintiff suffered and continues to suffer from severe pain and discomfort in her neck, right shoulder and right wrist, and will require Nucynta ER, and extended release opiate analgesic, to manage her chronic pain for the foreseeable future. See Exhibit B.

Failing to make a settlement offer despite clear and uncontradicted medical records and reports establishing that plaintiff suffered and continues to suffer from severe pain and discomfort in her neck, right shoulder and right wrist, and will require Nucynta ER, and extended release opiate analgesic, to manage her chronic pain for the foreseeable future. See Exhibit B.

It must be noted that this opinion cites a considerable body of case law, and is a useful research tool and resource.

Date of Decision: June 8, 2016

Camp v. N.J. Mfrs. Ins. Co., 2016 U.S. Dist. LEXIS 74496, *6-7 (E.D. Pa. June 8, 2016) (Heffley, U.S.M.J.)

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