MAY 2009 BAD FAITH CASES
WHEN BASED ON ABUSE OF THE PRO PROCESS, PAIN & SUFFERING CLAIMS SURVIVE A MOTION TO STRIKE & BAD FAITH STATUTE IS NOT PRE-EMPTED BY THE MVFRL (Western District)
In Miller v. Allstate Fire & Casualty Insurance Company, the court denied the insurer’s motions to strike and to dismiss, primarily because the claims related to abuse of the peer review organization (“PRO”) process.
The insured was injured in a motor vehicle accident but the insurer stopped paying his chiropractic bills after a peer review organization (“PRO”) examined the file. The insured filed for wrongful denial of first-party medical benefits under the PA Motor Vehicle Financial Responsibility Law (“MVFRL”) and for abuse of the PRO process, alleging intent to avoid paying the claim, under the bad faith statute.
The insurer moved to strike the following sections of the complaint under Fed. R. Civ. P. 12(f) as being immaterial, impertinent, or scandalous (wholly unrelated or the moving party would be prejudiced by their inclusion):
- Reference to pain and suffering (arguing these are not recoverable under either the MVFRL or the bad faith statute)
- References to underinsured motorist coverage and full tort option in the policy on the truck
- Allegation of unreasonable and wanton behavior by using a PRO to limit exposure to a possible underinsured motorist claim
- Reference to the insurer’s advertising slogan (being “in good hands”) as engendering a false sense of trust
The first was denied because the pain and suffering were not presented as damages; they were related to abuse of, not use of, the PRO process and refusal to pay medical claims. The next two were denied because they are based on the insurance policy and the court held that other policy provisions may be related to the claim for benefits or may be needed to properly address the allegation of handling that claim in bad faith to avoid potential payment under the underinsured motorist coverage. The insurer also failed to show how it would be prejudiced by any of them remaining in the complaint. The last was denied because it was alleged under the bad faith claim and, under the liberal standard of review applied, the insurer did not prove it was wholly unrelated or that prejudice would ensue.
The insurer also moved to dismiss the bad faith claim under Rule 12(b)(6), arguing that there could be no bad faith claim because the MVFRL is the sole remedy for denial of first-party medical benefits. The court, however, noted that the PA Supreme Court has not ruled on whether the MVFRL pre-empts the bad faith statute. It found persuasive other court decisions in which there is no pre-emption when the case involves the combination of an unreasonable denial of benefits based on a PRO review and abuse of the PRO process, as this case does. It also found the insured’s allegations of PRO process abuse and mishandling of claims to be separate from the first-party medical benefits claim under the MVFRL so it denied the motion to dismiss the bad faith claim.
Date of Decision: March 5, 2009
Miller v. Allstate Fire & Cas. Ins. Co., CIVIL ACTION No. 07-260, 2009 U.S. Dist. LEXIS 18702 (W.D. Pa. Mar. 5, 2009)(Gibson, J.)