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Rawle & Henderson Secures Summary Judgment for Client
05/04/09
Contact
Thomas A. Kuzmick
(215) 575-4262
In the case of James L. Brown and Sandra Brown v. Great Northern Insurance Co., No. 3:07-cv-0322, M.D. Pa., Rawle & Henderson partners, Tom Kuzmick, Cathy Walto and Fred Buck, were successful in securing summary judgment in favor of Great Northern Insurance Company (GNIC). The case involved allegations of bad faith against GNIC in its handling of the claims made in the underlying underinsured claim (“UIM”) and arbitration brought by GNIC's insureds. Judge A. Richard Caputo of the United States District Court for the Middle District of Pennsylvania found that there was no clear and convincing evidence by which a reasonable jury could find that GNIC acted in bad faith in its handling of its insureds’ UIM benefits claim and, as a result, granted GNIC's motion for summary judgment.
FACTS
In February 2001, James L. Brown was injured in an automobile accident. Brown notified Great Northern of his intention to bring a UIM claim in March 2003 for the injuries he alleged he sustained in the accident. GNIC made multiple requests of Brown to provide GNIC with information regarding his physical condition and treatment. For over 22 months, Brown failed to respond to these requests.
Brown ultimately retained counsel and demanded arbitration. When GNIC asked for information regarding Brown’s treatment and claim for lost wages, Brown either refused or was slow to provide the information.
Plaintiffs provided the report of their economist in support of Mr. Brown’s wage loss claim shortly before the UIM arbitration was scheduled to take place. One day before the arbitration, Great Northern offered to settle the UIM claim, together with Brown's related first-party benefits claim for $775,000, $650,000 of which was for the UIM claim. Brown rejected this offer, continued to demand the policy limits of $1.6 million and proceeded to arbitration. On Nov. 22, 2006, an arbitration panel awarded $960,000 to Brown and his wife, Sandra.
The Browns sued Great Northern in the Court of Common Pleas for Luzerne County, alleging bad faith pursuant to 42 Pa. C.S.A. § 8371. Great Northern removed the case to the U.S. District Court for the Middle District of Pennsylvania and, after discovery was completed, moved for summary judgment.
PENNSYLVANIA LAW
In Pennsylvania, it is well settled that to recover on a claim for bad faith, the insured must show by clear and convincing evidence that the insurer “did not have a reasonable basis for denying benefits under the policy and that the defendants knew or recklessly disregarded its lack of reasonable basis in denying the claim.” Blaylock v. Allstate Insurance Co. , 2008 WL 80056 at * 7 (Jan 7, 2008 M.D. Pa. Jan. 7, 2008). To prevail, the insurance company need only show that it had a “reasonable basis” for denying a claim. Id. (citing J.C. Penney Life Ins. Co. v. Pilosi, 393 F.3d 356, 357 (3d Cir. 2004)). Mere negligence or bad judgment is not sufficient to support a claim for bad faith, rather the insurer’s conduct must “import a dishonest purpose.” Condio v. Erie Insurance Exchange, 899 A.2d 1136, 1143 (Pa. Super.),appeal denied, 590 Pa. 668, 912 A.2d 838 (2006).
In the context of a UIM claim, plaintiff must prove that he is legally entitled to coverage. Condio, 899 A.2d at 1145. While an insurer must act in good faith, it does not need to “sacrifice its own interests by blindly paying every claim submitted by an insured in order to avoid a bad faith law suit.” Id. Indeed, a UIM claim is not strictly a first party claim, it is “inherently and unavoidably adversarial” by its nature. Allstate Property & Casualty Insurance Co. v. Vargas, 2008 WL 4104542 at *8 (E.D.Pa., Aug. 29, 2008). Thus, it is expected that an insurance carrier will investigate and evaluate a UIM claim. See Zappile v. Amex Assurance Co. , 928 A.2d 251, 260 (Pa.Super.), appeal denied, 596 Pa. 708, 940 A.2d 366 (2007) (stating that “although [plaintiff] believed the second accident had no effect on the prior injuries, Amex was within its rights to investigate. This is not evidence of bad faith.”).
COURT REASONING
Judge A. Richard Caputo found that a reasonable jury could not find clear and convincing evidence of bad faith from the undisputed facts of the case. The undisputed facts of the case were developed through the examination of plaintiff, Mr. Brown, at his deposition. The deposition testimony was used extensively in support of the summary judgment motion and, more so, extensively cited to by Judge Caputo in his opinion granting the motion.
"Taking first, Plaintiff's argument that Defendant acted in bad faith by failing to evaluate his claim and engage in negotiations after Plaintiff provided it with medical records, the evidence shows that Plaintiff himself delayed Defendant's investigation of his claim. While Plaintiff provided records, bills, and authorizations regarding his injuries and treatment after his 2001 car accident, he ignored repeated requests for records on treatment of a pre-existing injury to the same body area allegedly injured in the accident and ultimately refused to provide such information," the judge said.
Judge Caputo further noted that Brown ignored repeated requests for permission to view his first-party benefits claim file relating to the same accident. "Though Plaintiff acknowledges Defendant's requests were reasonable or at least ordinary in the course of an insurer's claim investigation, he argues that Defendant should have evaluated his claim on the information he provided. On the contrary, Defendant was not obligated to accept without question Plaintiff's determination of what information was relevant to the valuation of his claim," the Judge said.
Judge Caputo added that Great Northern's failure to evaluate and offer settlement between the date that Brown provided authorization to view his first-party benefits file on April 11, 2006, and the Nov. 22, 2006, arbitration was not sufficient to establish bad faith. "In light of Quaciari, a delay of just over seven months without other evidence of bad faith, is insufficient to establish bad faith even if attributable to the insurer's inaction. As Plaintiff raises no evidence of bad faith other than Defendant's failure to resolve the claim prior to arbitration, Defendant is entitled to summary judgment," the judge said, citing Quaciari v. Allstate Ins. Co. , 998 F. Supp. 578, 582-83 (E.D. Pa.), aff’d without opinion, 172 F.3d 860 (3d Cir. 1998).
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