In Schlegel v. State Farm Mutual Automobile Insurance Co., the insured made a UIM claim against her carrier, form an accident in which she was seriously injured, and for which she received $100,000 from the tortfeasor. She was required to provide the carrier with all the details about the injury, treatment, and other information that the insurer may need as soon as reasonably possible after the injured insured is first examined or treated for the injury. She was also required to provide written authorization for the carrier to obtain (a) medical bills, (b) medical records, (c) wage, salary, employment, tax, business, and financial information; and (d) any other information it deemed necessary to substantiate the claim.

The carrier requested documentation from plaintiff’s counsel such as medical records and medical bills to evaluate the claim. When plaintiffs failed to answer, the carrier sent at least nine additional inquiries between, but did not receive a response for approximately 11 months after the first inquiry. Two weeks after receiving the responses, it conducted its UIM evaluation and, finding that the value of the claim did not exceed $100,000, denied the claim. Plaintiffs provided additional medical documentation on March 2, 2011, but the carrier again determined that the value did not exceed $100,000 and again denied the claim. The insured brought claims under Pennsylvania’s Bad Faith Statute, Unfair Trade Practices Consumer Protection Law, Motor Vehicle Financial Responsibility Act and Unfair Insurance Practices Act.

The court rejected the bad faith claim, and found that plaintiffs failed to meet their burden of proving that a reasonable juror could find that the carrier lacked a reasonable basis for requesting plaintiff’s medical documentation and that it knew of, or recklessly disregarded, the lack of reasonable basis. The precise legal issue was whether the insurer unreasonable document requests with the intent to improperly delay and ultimately deny the payment of UIM benefits. Plaintiffs took the position that the carrier requested documents it already had, and further argued that it acted in bad faith by requiring documentation to verify the policy coverage when it allegedly already possessed the documents governing the terms of coverage.
The court initially found that the policy clearly states the carrier may request medical documentation when evaluating a claim for UIM benefits, as set forth above; and that it may require the above-described written authorizations to obtain records. The carrier did not deny possessing some of the insured’s medical records from a prior litigation; however, it required an updated report of medical expenses because the insured had been undergoing medical treatment on an ongoing basis throughout the course of this litigation as well as since the prior third-party insurance lawsuit. The court found the request to make the records current reasonable where the UIM claim heavily depended on the total medical expenses. Thus, no bad faith. Assuming arguendo, this request was unreasonable, this amounted to mere negligence, not intentional or reckless conduct. The insureds never complained to the carrier that it already had the records; nor did its employees know of records in the insurer’s file from another case.

Summary judgment was granted on the bad faith claim, and was additionally granted on the Unfair Trade Practices claim, as there was no evidence of misrepresentations, malfeasance or improper conduct.

Date of Decision: August 8, 2013
Schlegel v. State Farm Mutual Automobile Insurance Co., CIVIL ACTION NO.3:11-CV-2190, , 2013 U.S. Dist. LEXIS 111514 (M.D. Pa. August 8, 2013) (Mannion, J.)