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Eastern District Court Grants Summary Judgment On Bad Faith Claim After Finding An Alleged Fifteen-Month Delay Is Not Bad Faith

A court in the Eastern District of Pennsylvania recently granted an insurer’s Motion for Partial Summary Judgment after finding that the insurer did not act in bad faith by taking fifteen months to make a settlement offer to resolve an insured’s underinsured motorist (“UIM”) claim because, during the investigation, the insurer repeatedly asked for medical documentation, communicated with the insured’s counsel, and provided updates on the progress of the investigation.  See Bernstein, et al., v. Geico Casualty Co., 2020 WL 1308226, (E.D. Pa., March 19, 2020).

The insured was injured in December 2015 when his automobile was rear-ended by a drunk driver.  The insured had been injured in an unrelated automobile accident in November 2014, and he was still treating for these injures at the time of the December 2015 accident.  With respect to the December 2015 accident, the insured collected the full limits of the tortfeasor’s bodily injury policy, and then in October 2017 requested that his own insurer open a UIM claim and sent the insurer a demand letter.  The insurer acknowledged the insured’s UIM claim and began an investigation.  A detailed review of the investigation timeline showed that the insurer made multiple efforts via phone and letter to reach the insured’s counsel to discuss the claim and/or request additional medical records related to the November 2014 accident.  The insurer made a settlement offer to Plaintiff in January 2019.

The insured and his wife filed suit against the insurer alleging breach of contract, statutory bad faith, and loss of consortium.  The insured argued that the insurer acted in bad faith by taking fifteen months (from October 2017 to January 2019) to make an offer of settlement.  The insurer filed a motion for summary judgment to dismiss the bad faith claim, arguing that any delay in its settlement offer was attributable to the insured’s delay in producing documentation relating to the November 2014 accident.

The court granted the insurer’s motion for summary judgment on the bad faith claim after finding that no reasonable jury could find by clear and convincing evidence that the insurer lacked any reasonable basis for its investigation.  The court determined that the alleged delay was reasonable because the insurer was attempting to evaluate the extent to which the injuries alleged for the December 2015 accident were attributable to the earlier November 2014 accident.  This finding was supported by the fact that the insurer repeatedly asked the insured for additional medical documentation, repeatedly communicated with the insureds’ counsel, and provided updates on the progress of the investigation.  Even if the insurer had delayed for fifteen months, as alleged, the court recognized that a period of fifteen months before making a settlement offer is not a per se violation of § 8371.