MAY 2011 BAD FAITH CASESSUMMARY JUDGMENT TO INSURER, HOLDING THAT ALL DELAYS IN SETTEMENT OFFERS AND OTHER MATTERS ARE REASONABLE AND IT’S OVERALLHANDLING OF THE CLAIM IS ACCEPTABLE (Philadelphia Federal)

In Thomer v. Allstate Insurance Company, the insured was in a motor vehicle accident in April 2002, and all parties agreed that it was caused by the driver of another vehicle.  She suffered many injuries in the upper half of her body, but the extent and nature of injuries was in dispute.  The insured alleged that her injuries were permanent and that because of them, she was unable to earn an income.

Immediately after the accident, the insured did not receive medical treatment, as she instead waited two days to see a healthcare provider for her injuries.  In the three-and-a-half years after the accident, she visited various medical professionals and underwent numerous hospital visits.  About one year after the accident, the insurer had a Peer Review Organization (“PRO”) evaluate the case, and the PRO determined that maximum medical improvement had been achieved.  The insurer then stopped paying the bills submitted by the insured’s medical providers because it questioned the reasonableness and necessity of her treatments.  The insured filed suit against the insurer in 2004 based on this denial, and the parties eventually settled, with the insurer agreeing to pay the insured until she exhausted the $100,000 medical loss limit under the policy.

In July 2005, the insured submitted a claim for Underinsured Motorist (UIM) benefits, and she demanded the full $100,000 available under this section of the policy.  The insurer made a series of offers, the largest being for $85,000, but the insured refused each offer.  With the imminent threat of litigation, the insurer finally offered and paid the full $100,000 in UIM benefits in December 2008, but the insured filed the instant suit for bad faith in January 2010.

The insured alleged that the insurer acted in bad faith during the overall handling of her UIM claim by unreasonably delaying the resolution of her claim and by its overall handling of the claim.  She claimed that the insurer 1) unreasonably delayed an independent medical exam and statement under oath, 2) failed to include her wage loss and economic damage report, 3) failed to consider her treating physicians’ diagnoses, 4) unreasonably extended low offers for many years, and 5) wrongfully requested that she sign a release relating to her UIM settlement before actually settling for the policy limits.

Concerning the delays, the court determined that the insured and her counsel were responsible for some of the delays, and other delays were caused simply by the need for further investigation, so the insurer did not prove by clear and convincing evidence that there was no reasonable basis for the delay.

The court also found that the insurer had a reasonable basis for not including the wage loss and economic damage report in its evaluation because of conflicting medical records and it had a reasonable basis to question the diagnoses of certain treating physicians.  Additionally, the insurer extending higher offers was reasonable, as it could have done so because of the threat of additional litigation or upon learning of new evidence.  Finally, the insurer had a reasonable basis for requesting the insured to sign a release of the UIM claim before settling for the policy limits.  The court therefore held that the insurer did not demonstrate by clear and convincing evidence that the insurer acted in bad faith, and it therefore granted summary judgment in favor of the insurer.