NOVEMBER 2015 BAD FAITH CASES: COURT DISMISSES INSURED’S BAD FAITH CLAIM AFTER INSURER SHOWS REASONABLE BASIS FOR (1) REQUESTING INDEPENDENT MEDICAL EXAMINATION, (2) REFUSING TO PROCEED TO ARBITRATION WITHOUT AN EXAMINATION, AND (3) DENYING INSURED’S CLAIM (Third Circuit)
In Feingold v. State Farm Mutual Automobile Insurance Company, the insured brought breach of contract and bad faith counts in a suit brought approximately thirteen years after a vehicular accident. In August 1998, the insured was involved in a motor vehicle accident and filed a personal injury protection claim with his insured. Over the next few months, the insurer made multiple attempts to schedule an independent medical examination (“IME”). Despite the fact that the policy required the insured to cooperate with the insurer by submitting to reasonable requests for medical examination, the insured failed to attend multiple scheduled appointments and refused to provide the insurer with other convenient dates.
The insurer eventually obtained peer reviews of the insured’s medical reports, which determined that the insured had reached maximum medical improvement. In contrast, the insured produced a doctor’s report that discussed additional treatment options.
Two years after the insurer’s last request for an IME, the insured filed a petition to appoint arbitrators for uninsured/underinsured motorist claims, which the insurer eventually agreed to. Nevertheless, the insured refused to submit to an IME, and the insurer warned that it would refuse to proceed to arbitration until the examination occurred. The insurer eventually informed the insured that it was closing his file because his failure to submit to an IME indicated that he did not intend to pursue a claim.
In December 2010, twelve years after the accident occurred, the insured’s newly hired counsel requested that the insurer proceed to arbitration, which the insurer refused to do and responded that the file was closed and the claim was time-barred. In October 2011, the insured filed the instant suit for breach of contract and bad faith. The District Court granted summary judgment in favor of the insurer after finding that the insured’s failure to submit to an IME constituted a material breach of the agreement that had prejudiced the insurer, and the insured appealed.
In affirming summary judgment on the insured’s bad faith claim, the Court found that the insurer had a reasonable basis for requesting an IME, refusing to proceed to arbitration without an examination, and denying the insured’s claim. Specifically, the Court reasoned that an IME was needed to determine the cause of the insured’s injuries and to clarify inconsistencies in the prognosis.
