Court Dismisses Bad Faith Claim and Rejects Insured’s Argument that Insurer Made a ‘Low-Ball’ Offer to Settle

Rau v. Allstate Fire and Casualty Ins. Co., 3:16-cv-0359 (M.D. Pa. 2018) 

This bad faith case arises from the insurer’s handling of the plaintiff’s underinsured motorist (UIM) claim following a 2011 motor vehicle accident. The parties had previously agreed to submit the UIM claim to high/low binding arbitration, with $200,000 as the high and $10,000 as the low. The arbitrator awarded $306,345, which was molded consistent with the high/low terms and with credit for the tortfeasor’s liability limits. Following that arbitration, the plaintiff pursued a bad faith claim against her insurer. Her primary argument was that the insurer had acted in bad faith by failing to offer her the full policy limits prior to the arbitration. After discovery was closed, the insurer filed a motion for summary judgment, which the Middle District Court granted. The court considered that, prior to the arbitration, the plaintiff had demanded the full $200,000 UIM policy limits to settle her UIM claim. The insurer counter-offered $10,000, which the plaintiff rejected and reiterated her policy limits demand. The court found that the plaintiff had failed to offer any evidence demonstrating a genuine factual dispute that the insurer did not have a reasonable basis for its valuation. The medical reports from the plaintiff’s doctors and the insurer’s medical experts indicated that further medical treatment was unnecessary because most of the plaintiff’s injuries had resolved. The insurer’s pre-suit offer was, at least in part, reflective of the lack of surgical records or records indicating that the plaintiff immediately intended to undergo spinal fusion surgery. The court also reasoned that the insurer was not required to tender the full policy limits merely because the plaintiff had demanded them. Thus, the insurer’s motion for summary judgment was granted. 

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