Court of Appeals of Ohio holds a bad faith claim may proceed even if no basis for coverage exists.

After being injured in a car accident, the plaintiffs sought coverage under the driver’s insurance policy for medical benefits. The defendant first issued a check to the driver, but after the check was returned by the driver’s attorney asking the check be made out to the driver’s medical provider, the defendant denied both the driver’s and the passenger’s claims. Both then sued the defendant for breach of contract and bad faith denial of coverage. The trial court granted the defendant’s motion for summary judgment on breach of contract, finding that the denial of benefits was appropriate. The trial court also granted the defendant’s motion for summary judgment as to the bad faith claims upon the basis that coverage was debatable and that the bad faith claims were dependent on the contract claims. The Court of Appeals reversed and remanded the trial court’s decision. In Ohio, there are two types of bad faith claims. The first category of bad faith claim is when the insurer denies a claim and knows there is no lawful basis for that denial. Such a bad faith claim is dependent on the outcome of a breach of contract claim. The second category is when the insurer denies a claim without a reasonably justifiable and lawful basis to support that denial. The court noted this second type of bad faith claim is not dependent on a breach of contract claim because the plaintiff must only prove that the insurer failed to determine whether its denial of coverage was reasonable. The court determined that the plaintiffs’ bad faith claims were the second type and, thus, the trial court’s granting of summary judgment in favor of the defendant was premature because a jury could decide that the defendant’s investigation was inadequate. This decision is an important as it highlights that a diligent investigation into all claims, including those that are clearly not covered, is required because an inadequate investigation, even if no coverage is extended, can lead to a possible bad faith claim in Ohio.

_{Case Law Alerts, 4^th Quarter, October 2016. Case Law Alerts is prepared by Marshall Dennehey Warner Coleman & Goggin to provide information on recent developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. Copyright © 2016 Marshall Dennehey Warner Coleman & Goggin, all rights reserved. This article may not be reprinted without the express written permission of our firm.}