Insurance Coverage/Bad Faith

by Allison Krupp, Esq. (717.651.3510 or alkrupp@mdwcg.com)

Delaware

Insurer complied with 21 Del. C. § 2118b by giving the plaintiff 30 days' notice that it was denying her medical claims related to the accident.
Bracken-Bova v. Liberty Mut. Fire Ins. Co., No. K10C-11-034 WLW, 2011 Del. Super. LEXIS 471 (Del. Super. Ct., Oct. 7, 2011) ***This opinion has not been released for publication. Until released, it is subject to revision or withdrawal

After the plaintiff was injured in a motor vehicle accident, she made an uninsured/underinsured personal injury claim under her automobile insurance policy. A doctor hired by the insurer conducted an independent medical evaluation and determined that the injuries were due to a pre-existing degenerative disease, which was temporarily aggravated by the accident. Therefore, the insurer sent the plaintiff a letter explaining that the medical claims would not be honored after a certain date due to the medical evaluation. The Superior Court of Delaware, Kent granted the insurer's motion for partial summary judgment as to Plaintiff's claims for statutory damages under 21 Del. C. § 2118B and attorney's fees, because it provided Plaintiff 30 days' notice that it was denying her claim, and provided the reason for its decision.

Florida

Insurer had reasonable grounds to deny coverage where the plaintiff's property was not covered under the insurance policy because he did not reside there.
Mahens v. Allstate Ins. Co., No. 11-12027, 2011 U.S. App. LEXIS 22478 (11th Cir., Nov. 4, 2011). ***This opinion appears to be unpublished

The plaintiff appealed the trial court's grant of summary judgment in favor of the insurer in this breach of contract case. The plaintiff never resided in the subject property but had a third party manage the property for him. After a water leak caused substantial damage, the insurer initially indicated it would pay the claim, but later determined it was not covered since the policy required that it be used as a residence. The plaintiff sued alleging the insurer acted in bad faith in denying the claim. The United States Court of Appeals for the Eleventh Circuit determined that the plaintiff failed to satisfy the residency requirement and that the insurer was not estopped from denying coverage just because it had initially indicated it would cover the claim.

New Jersey

Plaintiff's claims for common law fraud, bad faith, the New Jersey Consumer Fraud Act and punitive damages were all dismissed.
Fuscellaro v. Combined Ins. Group, Ltd., No. 11-723, 2011 U.S. Dist. LEXIS 111470 (D.N.J., Sept. 29, 2011)

The plaintiff's insurance claim was denied because she had failed to take her vehicle in for a required photo inspection and her collision and comprehensive coverage was cancelled. Her subsequent claim for common law fraud was dismissed because her amended complaint failed to put the defendant on notice of the precise misconduct being charged. The plaintiff's bad faith claim was dismissed for failing to show that the defendant either lacked a fairly debatable reason for denying coverage or that the defendant knowingly or recklessly disregarded the lack of a reasonable basis for denial. The court also dismissed the plaintiff's claim under New Jersey's Consumer Fraud Act because the payment of insurance benefits is not subject to the CFA. Finally, the court dismissed the request for punitive damages in light of its dismissal of the plaintiff's other claims.

New York

Plaintiff's various claims, including breach of the covenant of good faith and fair dealing, corporate malfeasance-tortious interference, fraud, bad faith and unjust enrichment, were all dismissed.
Cross v. State Farm Ins. Co., No. 3:10-CV-1179, 2011 U.S. Dist. LEXIS 119546 (N.D.N.Y., Oct. 17, 2011)

The United States District Court for the Northern District of New York dismissed the plaintiff's claim for breach of the covenant of good faith and fair dealing because the plaintiff failed to assert specific conduct separate and apart from the handling of the insurance policy. The court also dismissed the claim for corporate malfeasance-tortious interference because the plaintiff failed to allege the existence of any agreement between him and a third party. The plaintiff's claim under New York Insurance Law § 2601 was denied because there is not a private cause of action under the statute, as was his claim under New York's General Business Law § 349, because he failed to demonstrate that the harm was directed at consumers as a whole. Finally, the court dismissed the plaintiff's claims for fraud, bad faith and unjust enrichment and denied the plaintiff's application to file a Third amended complaint.

Ohio

Plaintiff's declaratory judgment action did present an actual case or controversy by pleading actual harm and the significant possibility of future harm.
Keybank National Assoc. v. First American Title Ins. Co., No. 1:10CV02143, 2011 U.S. Dist. LEXIS 113701 (N.D. OH, Sept. 30, 2011)

The plaintiff filed an action for declaratory judgment, breach of contract and bad faith with the United States District Court for the Northern District of Ohio, Eastern Division. The defendant insurer filed a motion to dismiss all three counts. The court held it was premature to dismiss the plaintiff's claims for breach of contract and bad faith since the complaint contained "enough" to give the defendant fair notice of both claims and the grounds for those claims. The court also denied the defendant's claim that there was no actual case or controversy to support the declaratory judgment action since the plaintiff had pleaded actual harm (refusal of claims), as well as the significant possibility of future harm (potential denial of future claims).

Pennsylvania

Insurer did not act in bad faith by making offer below policy limits where there were legitimate issues regarding insured's entitlement.
Carcarey v. Geico Gen. Ins. Co., No. 10-3155, 2011 U.S. Dist. LEXIS 123679 (E.D. Pa., Oct. 26, 2011)

This case arose from a vehicle accident in which the deceased was killed while walking along the side of the road. The subject policy included uninsured motorist coverage for family members residing with the plaintiff (the deceased's mother and Administratrix of his estate). The United States District Court for the Eastern District of Pennsylvania granted summary judgment in favor of the insurance company and found the insurer did not act in bad faith by offering less than 25% of the plaintiff's claim. There was evidence that the deceased did not reside with the plaintiff at the time of the accident and, therefore, no reasonable jury could conclude the insurer acted in bad faith.

The gist of the action doctrine barred the plaintiff's tort claim against the insurer.
Yakubov v. Geico Gen. Ins. Co., No. 11-3082, 2011 U.S. Dist. LEXIS 122968 (E.D. Pa., Oct. 24, 2011)

The plaintiff submitted a claim for uninsured motorist benefits and income loss benefits under the Personal Injury Protection coverage of the policy. When the insurer ceased paying the $2,500 per month benefit, the plaintiff sued and alleged, among other claims, intentional misrepresentation. The insurer argued that the intentional misrepresentation claim was barred by the gist of the action doctrine. The doctrine bars a plaintiff from recasting his breach of contract claim as a tort claim. The United States District Court for the Eastern District of Pennsylvania agreed and dismissed the count relating to intentional misrepresentation.