SEPTEMBER 2010 BAD FAITH CASES BAD FAITH ALLEGATION SURVIVES MOTION TO DISMISS WHEN INSURED ALLEGES A VIOLATION OF THE INDEPENDENT MEDICAL EXAMINATION PROCESS (Middle District)

In Hickey v. Allstate Property and Casualty Company, the insured owned an automobile insurance policy with the insurer for $100,000.  He was in a motor vehicle accident, and he suffered injuries to his neck and back.  The insured underwent physical therapy as a result of the injuries.  Almost two years after commencing the therapy, the insurer notified the insured that it would require an Independent Medical Examination before processing any further medical bills.  After the examination, the insurer notified the insured that it would no longer pay the bills.

The insured filed a Complaint in state court containing counts for breach of contract and bad faith.  After the case was removed to federal court on diversity, the insurer filed a motion to dismiss the Complaint’s bad faith count.  The motion was granted with respect to the allegations preempted by section 1797 of the Pennsylvania Motor Vehicle Financial Responsibility Law, but it was denied with respect to the allegation of the insurer’s abuse of the Peer Review Organization process.  The insurer then moved for reconsideration of the decision.

The insurer argued that the insured never alleged that it even used a peer review organization.  However, the court determined that the independent medical examination functioned as a peer review organization.  It also asserted that the insured’s claims did not allege an abuse of the independent medical examination process, but the court ruled that the allegations did sufficiently state a claim that the insurer violated the process.  Finally, the court disagreed with the insurer’s assertion that the remedies provided section 1797 of the Pennsylvania Motor Vehicle Financial Responsibility Law precluded any remedies under the Pennsylvania Bad Faith Statute.  Therefore, the court denied the insurer’s motion for reconsideration.

Date of Decision:  August 20, 2010

Hickey v. Allstate Prop. & Cas. Ins. Co., No. 3:10cv907, United States District Court for the Middle District of Pennsylvania, 2010 U.S. Dist. LEXIS 86086 (Aug. 20, 2010) (Munley, J.)