California Court Reverses Judgment in Favor of Insurer Following Car Accident: Reasonable Jury Could Find Insurer Acted Unreasonably in Denying Plaintiff’s Demand for Damages

After suffering injuries in a car accident, the plaintiff in a recent case before the Superior Court of Orange County argued that her insurance company breached their implied covenant of good faith and fair dealing.  While the court had found that the insurance company was entitled to summary judgment, based on the legal doctrine of “genuine dispute,” the plaintiff appealed. The California Court of Appeal for the Fourth District held that there were triable issues regarding whether the insurance company’s decision that the plaintiff did not need steroid injections was made without conducting a good faith investigation and without a reasonabstethoscopele basis for a genuine dispute.

The case followed a vehicle collision in which another driver ran a red light and struck the plaintiff’s car. The other driver had caused the accident, and the plaintiff reported the accident to her insurance company the next day.  She also immediately reported chest pain in a police report at the scene of the accident. She was transported by ambulance to the hospital, where she complained of pain in her face and arm.

The plaintiff then sought medical treatment from a chiropractor, first stating she had back pain. Later, she saw an osteopath, who recommended she receive a magnetic resonance imaging (MRI) test for her spine.  The MRI was noted to indicate significant disc protrusion, requiring more therapy, medications, and injections.

After settling a separate claim with the driver who caused the collision, the plaintiff demanded the full amount on her remaining underinsured motorist policy coverage.  She requested $35,000, for medical bills that totaled $17,654.44 and the expected ongoing pain and treatment for the remaining years of her life expectancy.

Eventually, the plaintiff rejected the offer to settle provided by the insurance company, for $9,367, and again demanded the full $35,000.  The figure set forth by the insurer reflected the reasonable and customary amount of the plaintiff’s bills ($14,367) and $10,000 for general damages. They then subtracted the $15,000 that the plaintiff had received from the driver at fault. After more medical evaluations were presented to the insurer, they increased their evaluation of the plaintiff’s pain, raising their evaluation of her claim to $25,000.  The plaintiff again rejected this offer, demanded the $35,000, and moved forward with her legal claim.

The court stated that when an insurance company receives a claim and determines it will be denied, the implied covenant of good faith mandates that they investigate the grounds for the denial.  An action may give rise to tort damages when an insured shows that the denial or delay of their claim was unreasonable.  However, if there is a genuine dispute with an insured regarding coverage liability or the amount of the insured’s coverage claim, it will not be in bad faith, although the insurer may be liable for breach of contract.  This rule, known as the “genuine dispute” rule, has been applied to factual disputes as well as policy interpretations.

To be entitled to summary judgment, the court stated that there must be no triable issues concerning a genuine dispute over coverage or the value of the insured’s claim.  A dispute is deemed “genuine” when there is a reasonable, legitimate dispute, based on an objective standard.

Here, the court stated that the plaintiff showed triable issues of material fact remained, concerning whether the insurer’s repeated denials of the plaintiff’s claim had been unreasonable and in bad faith. The court made clear that a jury could find that the insurer’s repeated denials of the plaintiff’s claim had been unreasonable and in bad faith. The court stated that the insurer insisted that the plaintiff had not needed steroid injections, but they had not conducted a good faith investigation.  There was no reasonable basis for a genuine dispute, according to the court.

Specifically, while the insurer had relied on evidence set forth by their expert, the dates of those medical opinions were years earlier, and the medical expert had not been consulted again.  During the period of time that passed, the plaintiff had received steroid injections, and more had been recommended.  The insurer simply relied upon their expert’s earlier opinions to dispute the medical necessity of those treatments.

The court noted that the insurer went against the implied covenant of good faith and fair dealing to ignore the treatment and recommendations of the plaintiff’s treating physicians, rather than adequately investigate.  In fact, the court noted that they were not holding the insurer had breached their implied covenant but that a reasonable jury could conclude they had.

Turning to the genuine dispute doctrine, the court stated that it had been an error for the lower court to grant summary judgment based on this doctrine.  When there is a genuine dispute, the insurance company must still fairly investigate a claim.  Additionally, insurers are not entitled to judgment as a matter of law when a jury could find the insurer acted unreasonably.

In short, the court reversed the judgment, finding that a reasonable jury could find the insurer acted unreasonably.

At Sharifi Firm, our Southern California car accident attorneys guide injured individuals and their families through the process of seeking compensation for harm caused by the fault of another party. To schedule a free consultation, call our office at 866-422-7222 or complete our online form.

More Blog Posts:

California Appellate Court Affirms Finding Car Insurer Breached Duty of Good Faith and Fair Dealing and was Liable for Judgment Against Insured, Southern California Injury Lawyer Blog, August 1, 2016

California Appellate Court Upholds Jury Verdict that Dangerous Condition Had Not Caused Plaintiff’s Single-Vehicle Accident, Southern California Injury Lawyer Blog, June 8, 2017

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