OCTOBER 2013 BAD FAITH CASES: COURT REFUSES TO DISMISS BAD FAITH CLAIM WHERE PLAINTIFF ALLEGES THAT CARRIER FAILED TO INVESTIGATE AND ATTEMPTED TO HAVE EXCULPATORY WITNESS CHANGE HIS STORY (Middle District)

In Pauling v. State Farm Mutual Automobile Insurance Co., the insured alleged that he was the victim of a hit and run accident, leaving him seriously injured, and was covered under his parents’ automobile policy, which included UM coverage. The father contacted a witness in the police report who said that the hit-and-run driver, and not the son, had been responsible for the accident. However, after making a claim for UM benefits, the plaintiff alleged that the carrier pressured and intimidated that witness into providing a description of events which placed blame for the accident on the son and, in the insurer’s view, supported a denial of coverage. Plaintiff alleged that the carrier made no attempt to locate and interview that witness’s girlfriend, a known eyewitness to the accident, and did not have an agent visit or inspect the scene of the accident. Plaintiff alleged that because the witness, allegedly at the carrier’s “substantial urging,” reported that the son was at fault, the carrier denied his claim for UM benefits.

The court denied the carrier’s motion to dismiss the son’s statutory bad faith claim.  The court found that the alleged facts do not set out merely potential negligence in claims handling or a difference over legal analysis as to whether the policy provides coverage; rather, the allegations, which the court was required to assume as true for a motion to dismiss, set out not only a failure to investigate but an active effort to affect a witness’s reporting of the incident, which, if true, would reflect the kind of self-interest and dishonest purposes the statute is aimed at.

Date of Decision: September 26, 2013

Pauling v. State Farm Mutual Automobile Insurance Co., CIVIL ACTION NO. 1:13-CV-01348, 2013 U.S. Dist. LEXIS 137950 (M.D. Pa. September 26, 2013) (Conner, J.)