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No Bad Faith For “Proper” Investigation & Plaintiff’s Own Delay

Article by Daniel Inadomi, Esq.

The Eastern District of Pennsylvania granted an insurer’s motion for partial summary judgment and dismissed a bad faith claim after finding that the insurer “had a reasonable basis for conducting the investigation, acted reasonably throughout the investigation, and it had a reasonable basis for denying full benefits under the policy due to the findings of the investigation.”  See Solano-Sanchez v. State Farm Mut. Auto Ins. Co., 2022 WL 17741996 (E.D. Pa. Dec. 16, 2022).

In Solano-Sanchez, the insured was rear-ended in a three-vehicle chain-reaction accident on October 12, 2016.  After impact, the insured was transported to the emergency room where she complained of left-side neck pain and pain in her left shoulder.  Low back pain was not reported at this time.  A PIP claim was opened on March 6, 2017 upon request by the insured’s counsel, and on January 12, 2018, counsel sent a “demand package” to the insurer, which detailed the insured’s ongoing medical issues, requested the insurer’s consent to settle with the tortfeasor for the $15,000 liability policy limit, and presented a UIM claim to the insurer.  The insured alleged that she sustained significant injuries to her cervical and lumbar spine, which were getting worse.

The claim specialist assigned to the UIM claim granted consent to settle with the tortfeasor and began to evaluate the UIM claim.  The claim specialist noted that there was a question of causation with respect to the insured’s low back injury due to discrepancies between the insured’s initial description of her pain following the accident, and the description of pain shared with her chiropractor three months later.  The insurer requested that the insured sit for a statement under oath and also requested the execution of several medical authorizations.  The statement under oath took place on July 9, 2018.  Nearly a year later, on June 10, 2019 the insurer had received all the requested medical records and sought to schedule an IME.  The IME took place on August 26, 2019, and the insured filed her lawsuit on September 3, 2019.  On October 24, 2019, based on the results of its investigation, the insurer offered $6,000 to resolve the insured’s UIM claim. The insured rejected this offer.

The insured alleged that the insurer acted in bad faith by 1) taking too long to initiate and conduct the investigation, 2) making an unreasonably low settlement offer, and 3) failing to meet industry standards throughout the investigation.

The Court granted the insurer’s motion for partial summary judgment and dismissed the bad faith claim.  With respect to alleged delay, the Court found that the delay in investigation was largely caused by the insured’s failure to sign releases for records as well as the insured’s failure to attempt to obtain her own records.  The Court further found that the insurer did not act in bad faith because it monitored the claim regularly and attempted to keep the matter moving along, particularly with respect to securing medical records.

With respect to the settlement offer, the Court found that the insurer’s $6,000 offer was not unreasonably low.  The Court found that the insurer’s investigation, which consisted of a statement under oath, collection and review of medical records, and an IME, was “proper” and provided the insurer with a reasonable basis to find that the insured’s back injury was not caused by the accident.  The lack of causation led to the value of the claim upon which the offer was based.

With respect to the insurer’s alleged failure to meet industry standards throughout its investigation, the Court rejected the insured’s expert’s conclusions on the question of bad faith.  The Court found that the expert “interprets the same facts before us and uses those facts to come to a legal conclusion about [the insurer’s] adherence to the industry standard.”  Accordingly, the Court declined to consider the expert’s opinion because they do not help the Court “determine a fact in issue.”