PHILADELPHIA – A federal judge has dismissed a bad faith claim alleged against GEICO Insurance Company, in the wake of a passenger injured in an accident who was denied payment of underinsured motorist benefits.
A Dec. 8 ruling from U.S. District Court for the Eastern District of Pennsylvania Judge Gene E.K. Pratter explained the Court’s rationale in this matter.
“Alexis Satterfield sustained injuries from a head-on motor vehicle accident. Satterfield was a passenger in a car insured by GEICO Secure Insurance Company when another vehicle veered into oncoming traffic, lost control and struck the car,” Pratter stated.
“Following the collision, Satterfield demanded payment of underinsured motorist benefits from GEICO. When GEICO failed to pay those benefits, Satterfield sued GEICO for breach of contract and statutory bad faith. GEICO moves to dismiss only the bad faith claim.”
As a result of the accident, Satterfield said she suffered “significant physical injuries” including a rib fracture, sternal fracture and pulmonary embolism (a blood clot in the lungs).
After Satterfield was denied third-party payment of underinsured motorist benefits by GEICO (which were said to have been covered in the policy) and subsequently sued them, the company moved to dismiss the bad faith allegation for failure to state a claim and for only including conclusory allegations of bad faith.
Pratter agreed.
“Under Pennsylvania law, to recover on a bad faith action against an insurer, a plaintiff must establish by clear and convincing evidence both ‘(1) That the insurer did not have a reasonable basis for denying benefits under the policy and (2) That the insurer knew or recklessly disregarded its lack of a reasonable basis,” Pratter stated.
Pratter said that in its present iteration, Satterfield’s complaint “fails to include specific facts regarding GEICO’s actions, including those which would support a bad faith claim.”
“Satterfield needs to plead the ‘Five W’s’ – the who, what, where, when, why – and how GEICO’s conduct plausibly constitutes bad faith. In a recent case with analogous claims, the court found that the allegations – albeit cursory – were enough to show that the insurer lacked a reasonable basis to deny benefits. However, the court could not plausibly infer that the insurer knew or recklessly disregarded a lack of a reasonable basis to deny benefits,” Pratter said.
“So too here. The Third Circuit Court of Appeals has reminded plaintiffs that the mere ‘failure to immediately accede to a demand for the policy limit cannot, without more, amount to bad faith.”
The Court then dismissed the bad faith claim, but permitted the breach of contract claim to remain and for Satterfield to file an amended complaint which identifies GEICO’s allegedly unreasonable conduct.
U.S. District Court for the Eastern District of Pennsylvania case 2:20-cv-01400
From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nick.malfitano@therecordinc.com