May 2010 BAD FAITH CASES BAD FAITH SUBSUMED BY BREACH OF CONTRACT CLAIM (Philadelphia Federal)

In Fingles v. Continental Casualty Company, the insured had signed a long-term care insurance policy with the insurer in 1996.  On September 10, 2003, the insured suffered brain damage while undergoing triple bypass surgery.  After receiving treatment at a rehabilitation facility, the insured required in-home care.  Once the insurer denied the insured’s request for payment for a nursing assistant because the assistant was not affiliated with a licensed home care agency, the insured moved to an assisted living facility on July 15, 2004.

The insured unsuccessfully submitted two more claims to the insurer.  He was first denied in late 2004 because some necessary forms were missing.  His next application, sent in May 2005, was denied in December 2005 because the insurer claimed that the insured’s coverage had been terminated almost two years earlier due to a missed premium payment.  The insurer had given no notice of the termination of coverage to that point, but it said that the insured could reinstate the policy if he paid the past-due amount.

The insured passed away on January 7, 2006, and the plaintiff submitted the past-due amount ten days later.  The insurer only issued a partial payment on the claim, and plaintiff sued to recover the remaining amount.

One of the counts of the lawsuit alleged a common law insurance bad faith infraction separate from the breach of contract count.  The court dismissed this count, ruling that the count alleging a breach of contract includes any bad faith insurance claim.  The judge did not rule at this time whether there was in fact bad faith on the part of the insurer; he simply merged the two claims into one breach of contract claim that includes a bad faith allegation within it.

Date of Decision: April 28, 2010

Fingles v. Cont’l Cas. Co., Civil Action No. 08-05943, United States District Court for the Eastern District of Pennsylvania, 2010 U.S. Dist. LEXIS 41643 (E.D. Pa Apr. 28, 2010) (O’Neill, Jr., J.).