Johnson et al v. GEICO Casualty Company et al
MEMORANDUM OPINION re 579 MOTION for Summary Judgment. Signed by Judge Richard G. Andrews on 3/26/2014. (nms)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
KERRY JOHNSON, and SHARON
ANDERSON, on behalf of themselves and
all others similarly situated
Civil Action No. 06-408-RGA
INSURANCE COMPANY, et al,
Richard H. Cross, Jr., Esq., Christopher P. Simon, Esq., and Kevin S. Mann, Esq., Cross and
Simon LLC, Wilmington, DE; Ingrid Moll, Esq., Motley Rice, LLC, Hartford, CT, attorneys for
Paul A. Bradley, Esq., Maron Marvel Bradley & Anderson, LLC, Wilmington, DE; George M.
Church, Esq. and Laura A. Cellucci, Esq., Miles & Stockbridge P.C., Baltimore, MD; Meloney
Perry, Esq., Perry Law P.C., Dallas, TX, attorneys for the Defendants.
Presently before the Court for disposition is Defendants' Motion for Summary Judgment
Regarding the Claims of Sharon Anderson. (D.I. 579). This matter has been fully briefed.
(D.I. 585, 599, 6II). For the reasons set forth herein, the Defendants' Motion for Summary
Judgment is GRANTED IN PART and DEFERRED IN PART.
The Plaintiffs filed this case on April I9, 2006 in the Superior Court of Delaware. The
case was removed to this Court on June 27, 2006. (D.I. I). The Plaintiffs assert that the
Defendants' automated claims processing system violates the Delaware personal injury
protection law ("PIP") as it "imposes undisclosed and unjustified policy exclusions in violation
of Defendants' contractual, extra-contractual, statutory, and regulatory obligations to their
insureds .... " (D.I. 599 at 8). This case has seven Counts.
Breach of Contract
Bad Faith Breach of Contract
Breach ofthe Duty of Fair Dealing
Common Law Fraud
Tortious Interference with Contract
On December 30, 2009 the Court certified this case as a class action for Counts III, IV,
and VI. (D.I. 32I at I). The Defendants now move the Court to grant their Motion for
Summary Judgment on all seven Counts.
"The court shall grant summary judgment if the movant shows that there is no genuine
dispute as to any material fact and the movant is entitled to judgment as a matter oflaw."
FED.R.Crv.P. 56(a). The moving party has the initial burden of proving the absence of a
genuinely disputed material fact relative to the claims in question. Celotex Corp. v. Catrett, 477
U.S. 317,330 (1986). Material facts are those "that could affect the outcome" ofthe
proceeding, and "a dispute about a material fact is 'genuine' if the evidence is sufficient to
permit a reasonable jury to return a verdict for the nonmoving party." Lamont v. New Jersey,
637 F.3d 177, 181 (3d Cir. 2011) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242,248
(1986)). The burden on the moving party may be discharged by demonstrating that there is an
absence of evidence supporting the non-moving party's case. Celotex, 477 U.S. at 325.
The burden then shifts to the non-movant to demonstrate the existence of a genuine issue
for trial. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986);
Williams v. Borough ofWest Chester, Pa., 891 F.2d 458,460-61 (3d Cir. 1989). A non-moving
party asserting that a fact is genuinely disputed must support such an assertion by: "(A) citing to
particular parts of materials in the record, including depositions, documents, electronically stored
information, affidavits or declarations, stipulations ... , admissions, interrogatory answers, or
other materials; or (B) showing that the materials cited [by the opposing party] do not establish
the absence ... of a genuine dispute .... " FED.R.Crv.P. 56(c)(1).
When determining whether a genuine issue of material fact exists, the court must view
the evidence in the light most favorable to the non-moving party and draw all reasonable
inferences in that party's favor. Scott v. Harris, 550 U.S. 372, 380 (2007); Wishkin v. Potter,
4 76 F .3d 180, 184 (3d Cir. 2007). A dispute is "genuine" only if the evidence is such that a
reasonable jury could return a verdict for the non-moving party. Anderson, 477 U.S. at 247--49.
If the non-moving party fails to make a sufficient showing on an essential element of its case
with respect to which it has the burden of proof, the moving party is entitled to judgment as a
matter oflaw. See Celotex Corp., 477 U.S. at 322.
The Defendants put forth four main arguments: (1) that the Plaintiff Sharon Anderson
("Plaintiff') lacks standing under 21 Del. C.§§ 2118 and 2118B(c), (2) that the Plaintiff is not
entitled to the statutory penalty under 21 Del. C. § 2118B( c) because she was provided a written
explanation for any denial of payment, (3) that GEICO is entitled to summary judgment on
Counts III, IV, and VI because they are premised on a violation of 18 Del. C.§ 2304(16), and (4)
that GEICO is entitled to summary judgment on all seven Counts because the Plaintiff cannot
satisfy the required elements of each Count. The Court will address each of these arguments in
21 Del. C.§§ 2118 and 2118B(c)
The Defendants contend that the Plaintiff lacks standing to seek additional benefits or
statutory interest under 21 Del. C.§ 2118B(c).
The purpose of 21 Del. C. § 2118B "is to ensure reasonably prompt processing and
payment of sums owed by insurers ... , and to prevent the financial hardship and damage to
personal credit ratings that can result from the unjustifiable delays of such payments." 21 Del.
C. § 2118B(a). In order to accomplish this, the law requires:
When an insurer receives a written request for payment of a claim for benefits
pursuant to§ 2118(a)(2) of this title, the insurer shall promptly process the claim
and shall, no later than 30 days following the insurer's receipt of said written
request for first-party insurance benefits and documentation that the treatment or
expense is compensable pursuant to § 2118( a) of this title, make payment of the
amount of claimed benefits that are due to the claimant or, if said claim is wholly
or partly denied, provide the claimant with a written explanation of the reasons for
such denial. If an insurer fails to comply with the provisions of this subsection, then
the amount of unpaid benefits due from the insurer to the claimant shall be
increased at the monthly rate of:
(1) One and one-half percent from the thirty-first day through the sixtieth
(2) Two percent from the sixty-first day through the one hundred and
twentieth day; and
(3) Two and one-half percent after the one hundred and twenty-first day.
!d. at (c).
The statute allows only for a "claimant" to bring suit. !d. The term "claimant" is
defined as the person, or organization, that submits the claim to the insurer. Sammons v.
Hartford Underwriters Ins. Co., 2011 WL 6402189, *2 (Del. Super. Dec. 15, 2011) (defining the
term claimant as a matter of statutory construction and finding that "[c ]ommon sense dictates
that the 'claimant' who submitted the claim receives any statutory damages."), ajj'd, 49 A.3d
1194 (Del. 2012). This means that a claimant can be, but is not limited to, an insured or a
medical provider. !d. In Sammons, the Superior Court of Delaware determined that because
the medical bill was submitted to the insurer by the medical practice, the medical provider and
not the insured was the claimant. !d. at *3. The Superior Court further held that even if the
payment was not timely, the insured would not have been "entitled to any statutory interest." !d.
The Plaintiff argues that she is the claimant and thus has standing under 21 Del. C. §
2118B. The Defendants disagree. (D.I. 585 at 15). The Defendants argue that "there are no
material factual differences between the Sammons case and this case that would require a result
different than that reached in Sammons." ld. The Plaintiff contends that this case is different
from Sammons because, unlike in Sammons, here (1) the Plaintiffwould be subject to late fees if
GEICO did not pay the claimed amounts on time, (2) "GEICO's insurance policies and operating
procedures dictate that the insureds, not medical providers, are the 'claimants' of benefits under
their policies," (3) GEICO sends insureds applications for claim benefits, and (4) GEICO only
negotiates the amount of a claim with an insured. (D.I. 599 at 21-25). The Defendants argue
that the charges that the Plaintiff bases her claim on were submitted by the Plaintiffs providers
to GEICO and that GEICO paid the claims directly to the providers. (D.I. 585 at 19, 20). The
Defendants provide the Court with ample documentation both that the claims were made by the
providers. (D.I. 582-3, 582-4, 582-5, 582-6, 582-7). The Plaintiff does not dispute this.
Instead, the Plaintiff argues that this case is different from Sammons because, despite the bills
various medical providers and that the claims were paid directly to the various medical
originating from the medical providers, the Plaintiff remained ultimately liable for any unpaid
bills, which is dissimilar from the facts in Sammons, where the insurance company was only
alleged to have paid the bills late. (D.I. 599 at 27, 28). The Court disagrees with the Plaintiff.
The Superior Court of Delaware found as a matter of statutory construction that the
claimant was the person or entity that submitted the bill to the insurer. Sammons, 2011 WL
6402189 at *2. The Supreme Court ofDelaware then affirmed the decision, albeit without an
opinion. Sammons v. Hartford Underwriters Ins. Co., 49 A.3d 1194 (Del. 2012). Despite the
Plaintiff's invitation, this Court will not construe this statute differently than the state courts of
Delaware have done. 1 Thus, as the Plaintiff has not provided any evidence that she submitted a
It may be that the Supreme Court's affirmance is not binding on this court. Nevertheless, even assuming that, this
Court must still give deference to the Superior Court's interpretation, both because it is a state court interpretation of
a state statute, and also because its logic is compelling.
bill directly to GEICO, she does not have standing under 21 Del. C. § 2118B. The Defendants'
Motion for Summary Judgment regarding additional benefits and statutory benefits under 21 Del.
C.§ 2118B(c) is granted. 2
Counts III, IV, and VI's Connection 18 Del. C.§ 2304(16)
The Defendants argue that because "Counts III, IV[,] and VI are premised entirely upon
[an] alleged violation of 18 Del. C. §2304(16)," and the Court has previously found that there is
no private right of action afforded under 18 Del. C. §2304(16), the Defendants' motion for
Summary Judgment as to these claims should be granted. (D.I. 585 at 27). The Court will hold
oral argument on this issue and will therefore reserve judgment on it.
Counts I, II, III, IV, and V
The Defendants argue that Counts I, II, III, IV, and V should be dismissed as the Plaintiff
is unable to satisfy her burden of proof regarding each of these claims. !d. at 36-45. The Court
will hold oral argument on these issues and will therefore reserve judgment on each of them.
The Defendants argue that Count VI fails as the Plaintiff has put forth no evidence of any
misrepresentations relating to the sale or advertisement of her auto insurance policy. (D.I. 585
at 45, 46).
Count VI is a claim under Delaware Consumer Fraud Act, 6 Del. C. § 2513. (D.I. 316 at
32, 33). The statute reads:
The act, use or employment by any person of any deception, fraud, false pretense,
false promise, misrepresentation, or the concealment, suppression, or omission of
As the Court is granting Defendants' motion for Summary Judgment as to 21 Del. C. § 2118B(c) for lack of
standing, the Court need not, and elects not to, address the Defendants' argument that 21 Del. C. § 2118B(c) was not
violated because GEICO provided written explanations for any claim denials.
any material fact with intent that others rely upon such concealment, suppression
or omission, in connection with the sale, lease or advertisement of any merchandise,
whether or not any person has in fact been misled, deceived or damaged thereby, is
an unlawful practice.
6 Del. C.§ 2513. As per the statute, misrepresentations are only actionable as related to the
sale, lease, or advertisement of merchandise. 3
The Defendants argue that, "The undisputed evidence shows there are no
misrepresentations, misstatements, or promises by GEICO, whether intentional or negligent, in
connection with GEICO's merchandising practices." (D.I. 585 at 46). Furthermore, GEICO
directs the Court's attention to numerous locations in Plaintiffs deposition that confirm this
proposition. !d.; See, e.g., (D.I. 654-2 at 3-20). The Plaintiff responds that the Defendants'
form insurance contract "promises insureds that ' [a]ny term of this policy in conflict with the
statutes ofDelaware are [sic] amended to conform to those statutes."' (D.I. 599 at 45). The
Court is not persuaded by the Plaintiffs argument. The Plaintiff fails to point to any evidence
that this sentence was ever relied on by anyone, including the Plaintiff, during the purchase of
any policy. Furthermore, the only possible interpretation of the cited language is that the
contract is to be interpreted consistent with Delaware law. The clause is meant to avoid
conflicts between the contract and Delaware law. It cannot serve as a mode of advertisement
under 6 Del. C.§ 2513. The Plaintiff has not cited any case that so holds, nor has the Plaintiff
cited to any cases in support of its arguments as related to Count VI. (D.I. 599 at 45). Here,
the Defendants have pointed the court to an absence of material facts, as required by Celotex
GEICO acknowledges that, for the purpose of this statute, an auto insurance plan is considered merchandise. The
Court agrees. (D.I. 585 at 46); see also 6 Del. C. § 2511 ( 6).
Corp., and the Plaintiff fails to point the Court to any genuine material issue of disputed fact.
Therefore, the Defendants' Motion for Summary Judgment is granted as to Count VI.
The Defendants argue that the Plaintiff fails to satisfy the elements for a claim of tortious
interference with contractual relations.
Tortious interference requires "(1) a contract, (2) about which defendant knew and (3) an
intentional act that is a significant factor in causing the breach of such contract (4) without
justification (5) which causes injury." Aspen Advisors LLC v. United Artists Theatre Co., 861
A.2d 1251, 1266 (Del. 2004).
The Defendants argue that the Plaintiff "has failed to state a viable claim that GEICO
interfered with her contracts with her providers" because "under [the Plaintiffs] allegations, it
could only be her healthcare providers, not [the Plaintiff] to whom GEICO may be subject to
liability." (D.I. 585 at 48 (internal quotation marks omitted)). The Plaintiff argues that because
"[the Plaintiff] had a contractual relationship with a medical provider, which was known to
GEICO," there can be tortious interference. (D.I. 599 at 46). The Court disagrees with the
One relevant portion of the Restatement (Second) of Torts, on which Delaware law is
based, see Irwin & Leighton, Inc. v. WM Anderson Co., 532 A.2d 983,992 (Del. Ch. 1987),
One who intentionally and improperly interferes with the performance of a contract
(except a contract to marry) between another and a third person by inducing or
otherwise causing the third person not to perform the contract, is subject to liability
to the other for the pecuniary loss resulting to the other from the failure of the third
person to perform the contract.
Restatement (Second) of Torts§ 766 (1979). It is clear, after substituting in the relevant party
names, that the Plaintiff has no cause of action. The restatement would either read:
[GEICO] intentionally and improperly interfere[ d] with the performance of a
contract (except a contract to marry) between [the Plaintiff] and a [medical practice]
by inducing or otherwise causing [the medical practice] not to perform the contract,
is subject to liability to [the Plaintiff] for the pecuniary loss resulting to the
[Plaintiff] from the failure of the [medical practice] to perform the contract.
[GEICO] intentionally and improperly interfere[ d] with the performance of a
contract (except a contract to marry) between [the medical practice] and [the
Plaintiff] by inducing or otherwise causing [the Plaintiff] not to perform the
contract, is subject to liability to [the medical practice] for the pecuniary loss
resulting to the [medical practice] from the failure of the [Plaintiff] to perform the
In the first instance, there has been no evidence that the medical practice failed to perform any
promise owed to the Plaintiff, and in the second instance, it would be the medical practice, and
not the Plaintiff, that could recover.
The Plaintiff argues that section 766A ofthe Restatement (Second) ofTorts permits the
Plaintiff's claim. Section 766A reads:
One who intentionally and improperly interferes with the performance of a contract
(except a contract to marry) between another and a third person, by preventing the
other from performing the contract or causing his performance to be more
expensive or burdensome, is subject to liability to the other for the pecuniary loss
resulting to him.
Restatement (Second) ofTorts § 766A (1979). Comment (e) to this section states:
Intent and purpose. The intent required for this Section is that defined in § 8A.
The interference with the other's performance of his contract is intentional if the
actor desires to bring it about or if he knows that the interference is certain or
substantially certain to occur as a result of his action.
!d. The Plaintiff is correct that this Court should also consider § 766A of the Restatement
(Second). See Allen Family Foods, Inc. v. Capitol Carbonic Corp., 2011 WL 1205138 (Del.
Super. Mar. 31, 2011 ). However, the Plaintiff has made no showing that any harm alleged from
the breach of contract (i.e., the Plaintiffs failure to pay her medical bills) impacted the
performance owed to the Plaintiff. (D.I. 316 at 33); see Allen, 2011 WL 1205138 at *6
("Section 766A is intended to address situations where 'the Plaintiff is unable to obtain
performance of the contract by the third person because he has been prevented from performing
his part ofthe contract."') The Plaintiffmakes no allegation, and has no evidence, that she did
not get all the medical services she wanted. Therefore, the Defendants' Motion for Summary
Judgment as to Count VII is granted.
For the reasons above, the Court will GRANT IN PART and DEFER IN PART the
Defendants' Motion for Summary Judgment (D.I. 579). The Court will hear oral argument
regarding the 18 Del. C.§ 2304(16) issue, as it relates to Count III, IV, and VI, and whether the
Defendants have met their burden to show an absence of disputed material fact on each of the
elements of Claims I, II, III, IV, and V. An appropriate order will be entered.
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