Ake v. Central United Life Insurance Company
Filing
78
ORDER granting in part and denying in part 53 Motion for Summary Judgment, as more fully set out. Signed by Honorable David L. Russell on 11/14/18. (jw)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF OKLAHOMA
REBECCA L. AKE,
)
)
)
)
) Case No. CIV-17-937-R
)
)
)
)
)
Plaintiff,
v.
CENTRAL UNITED LIFE
INSURANCE COMPANY
Defendant.
ORDER
Before this Court is Defendant Central United Life Insurance Company’s
(“Defendant” or “Central United”) Motion for Summary Judgment, Doc. 53. Plaintiff has
responded, Doc. 57; Defendant has replied, Doc. 62; and the matter is fully briefed and at
issue. For the reasons stated herein, the Court GRANTS IN PART and DENIES IN PART
Defendant’s Motion.
I. Background
The following facts are undisputed.1 Plaintiff purchased a Cancer Treatment
Benefits Policy (“Policy”) from Defendant with an effective date of July 15, 1997. Doc.
1
“The brief in opposition to a motion for summary judgment . . . shall begin with a section responding, by
correspondingly numbered paragraph, to the facts that the movant contends are not in dispute and shall
state any fact that is disputed.” LCvR56.1(c) (emphasis original). “All material facts set forth in the
statement of material facts of the movant may be deemed admitted for the purpose of summary judgment
unless specifically controverted by the nonmovant using the procedures set forth in this rule.” LCvR56.1(e);
see also Fed. R. Civ. P. 56(e) (“If a party fails to properly support an assertion of fact or fails to properly
address another party’s assertion of fact . . ., the court may: . . . (2) consider the fact undisputed for purposes
of the motion . . . .”). Plaintiff sets out a “Statement of Material Facts in Dispute” at the front of her Response
brief, and she specifically disputes Defendant’s Undisputed Fact Nos. 4–6, 13, 15–16, and 20–21. See Doc.
57, at 1–3. Plaintiff’s briefing, as well, selectively responds to Defendant’s Motion for Summary Judgment,
53, at 3; Doc. 53-1. In addition to covering Plaintiff, the Policy also covered her spouse,
Larry Ake, through its “family coverage” provisions. Doc. 53, at 3. Mr. Ake was diagnosed
with prostate cancer in late 2010. Id. at 4. During Mr. Ake’s treatment for cancer,
Defendant paid over $100,000 in benefits per the Policy’s terms. Id. at 6. Mr. Ake died on
March 5, 2016, and Plaintiff brought suit in November of that year,2 asserting causes of
action for breach of contract and breach of Defendant’s duty of good faith and fair dealing
(otherwise known as the tort of “bad faith”) relating to claims Defendant denied over the
course of Mr. Ake’s treatment. See Am. Compl., Doc. 28; Doc. 53, at 4–5; Doc. 57.
Specifically, Plaintiff made claims for her husband’s treatment with Provenge, an
immunotherapy, and treatment relating to blood platelets. Doc. 53, at 4; Doc. 57; Doc. 62,
at 4 n. 3. Defendant denied both claims as outside the Policy’s coverage. Doc. 53.
Defendant argues that the Policy was “a limited-benefit policy” whose coverage was
restricted to its specific terms. See id. at 3. As related to the denied claims, the Policy
covered “actual charges for cancericidal chemical substances” and “actual charges made
for blood and blood plasma.” Doc. 53, at 3–5 (emphasis omitted). Defendant maintains that
this Policy language does not encompass the immunotherapy and platelet treatments for
which Plaintiff seeks reimbursement. Id. Moreover, Defendant argues that (1) Plaintiff’s
bad faith cause of action relating to Mr. Ake’s Provenge treatment is time-barred; (2) all of
Plaintiff’s bad faith causes of action are unavailing because the parties have a “legitimate
and Plaintiff seemingly concedes several of Defendant’s undisputed facts. Accordingly, pursuant to Federal
and local rules, the Court treats as undisputed those facts to which Plaintiff fails to respond.
2
Defendant timely removed the suit from Oklahoma County district court to this Court on August 31, 2017,
after dismissal of a non-diverse defendant established diversity jurisdiction. See Doc. 1.
2
dispute” over the Policy’s coverage; and (3) Plaintiff’s maximum contract damages for
Provenge treatments in 2013 are $18,986.64, pursuant to an amendment Plaintiff signed
after the Policy issued. Id. at 7–11; Doc. 53-9.
Plaintiff disagrees. According to her Response brief, she “did not know [the Policy]
was a limited benefits policy” and relied on marketing materials and sales agent
representations in concluding that the Policy covered all bills in full. See Doc. 57, at 1–3.
Based on these representations, Plaintiff asserts that the Policy in fact covers the
immunotherapy and platelet treatments at issue, and that Defendant in bad faith denied
these claims. Id. at 8–9. As well, Plaintiff argues that her causes of action are not timebarred because she “discovered” them well after the claims were denied, thereby tolling
the statute of limitations. Id. at 6–7. Finally, Plaintiff challenges Defendant’s maximum
contract damages figure; while she seems to acknowledge that Defendant’s 2013
calculations are correct, she asserts that she is also owed payments for 2016 and the years
prior to 2013, in addition to any remaining benefits for 2013. See id. at 10–11.
II. Motion for Summary Judgment Standard
“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
of law.” Fed. R. Civ. P. 56(a). “An issue is ‘genuine’ if there is sufficient evidence on each
side so that a rational trier of fact could resolve the issue either way. . . . An issue of fact is
‘material’ if under the substantive law it is essential to the proper disposition of the claim.”
Adler v. Wal-Mart Stores, Inc., 144 F.3d 664, 670 (10th Cir. 1998) (quoting Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). “The movant bears the initial burden of
3
making a prima facie demonstration of the absence of a genuine issue of material fact and
entitlement to judgment as a matter of law.” Id. at 670–71 (citing Celotex Corp. v. Catrett,
477 U.S. 317, 323 (1986)). “If the movant carries this initial burden, the nonmovant that
would bear the burden of persuasion at trial may not simply rest upon its pleadings; the
burden shifts to the nonmovant to go beyond the pleadings and ‘set forth specific facts’
that would be admissible in evidence in the event of trial from which a rational trier of fact
could find for the nonmovant.” Id. at 671 (citing Fed. R. Civ. P. 56(e)). In short, the Court
must inquire “whether the evidence presents a sufficient disagreement to require
submission to a jury or whether it is so one-sided that one party must prevail as a matter of
law.” Liberty Lobby, 477 U.S. at 251–52.
While the Court construes all facts and reasonable inferences in the light most
favorable to the non-moving party, Macon v. United Parcel Serv., Inc., 743 F.3d 708, 712–
13 (10th Cir. 2014), “[t]he mere existence of a scintilla of evidence in support of the
plaintiff’s position will be insufficient; there must be evidence on which the [trier of fact]
could reasonably find for the plaintiff.” Liberty Lobby, 477 U.S. at 252. At the summary
judgment stage, the Court’s role is “not . . . to weigh the evidence and determine the truth
of the matter but to determine whether there is a genuine issue for trial.” Id. at 249.
III.
Analysis3
Defendant moves for summary judgment on Plaintiff’s breach of contract and bad
faith theories pertaining to two claims denials: (1) Defendant’s 2013 denial of Plaintiff’s
3
In a diversity suit, such as this one, Oklahoma law applies. See Eden v. Neth. Ins. Co., 834 F.3d 1116,
1120 (10th Cir. 2016).
4
Provenge claim and (2) Defendant’s denial of Plaintiff’s platelet therapy claims. The Court
address each issue in turn.
(A)
Bad Faith: Provenge Claim
Defendant argues that Plaintiff’s bad faith cause of action relating to Mr. Ake’s
Provenge treatment is time-barred under the applicable two-year statute of limitations, 12
O.S. § 95(3).4 Doc. 53, at 7–8. Plaintiff does not seem to contest this statute’s applicability,
Doc. 57, at 6–7, and Oklahoma case law establishes that this statute covers the tort of bad
faith. See Lewis v. Farmers Ins. Co., 1983 OK 100, ¶ 7, 681 P.2d 67, 70; see also Zewdie
v. Safeco Ins. Co. of Am., 304 F. Supp. 3d 1101, 1111 (W.D. Okla. 2018). Therefore, the
operative question is, “when did Plaintiff’s bad faith cause of action accrue?”
Under Oklahoma law, a “statute of limitations ‘begins to run when the cause of
action accrues’ and ‘[a] cause of action accrues when a litigant could first maintain an
action to a successful conclusion.’” Zewdie, 304 F. Supp. 3d at 1112 (alterations original)
(quoting Stephens v. Gen. Motors Corp., 905 P.2d 797, 799 (Okla. 1995)). Mr. Ake’s
Provenge treatment took place in February and March of 2013. See Doc. 53, at 4; Doc. 532, at 9. Plaintiff made a claim for this treatment on March 27, 2013, and Defendant denied
the claim, asserting that it fell outside the Policy’s coverage. See Doc. 53, at 4; Doc. 53-5.
Plaintiff, in her deposition, states that she was aware of Defendant’s denial by May 6, 2013.
Doc. 53-2, at 10. Plaintiff subsequently sent a Request for Assistance to the Oklahoma
Insurance Department on June 14, 2013, but the Department replied on July 19, 2013,
4
For Oklahoma statutes, the Court employs Oklahoma state court, rather than Bluebook, formatting.
5
finding no wrongdoing in Defendant’s denial of the claim. Doc. 53-7–53-8. Based on this
timeline, Plaintiff’s bad faith tort likely accrued on May 6, 2013—the date Defendant
denied the claim—but, regardless, the tort accrued no later than July 19, 2013, when the
Oklahoma Insurance Department made its determination regarding Defendant’s denial.
Plaintiff, however, proposes another accrual period—the months following March
2016, when Plaintiff alleges that a representative of Defendant advised Plaintiff to seek
legal advice. See Doc. 57, at 3, 7; see also Doc. 57-10–57-12. Plaintiff asserts this is a
straightforward application of the “discovery rule,” which “provides that ‘the limitations
period does not begin to run until the date the plaintiff knew or should have known of the
injury.’” Blue v. Universal Underwriters Life Ins. Co., 612 F. Supp. 2d 1201, 1203 (N.D.
Okla. 2009) (quoting Samuel Roberts Noble Found., Inc. v. Vick, 840 P.2d 619, 624 (Okla.
1992)). Because she “did not know her rights until she . . . sought advice of counsel,”
Plaintiff argues that the discovery rule tolled the statute of limitations until this fateful legal
meeting. See Doc. 57, at 7.
Quite simply, this is not how the discovery rule works. Such a rule as imagined by
Plaintiff would vitiate the concept of statutes of limitations altogether. If these statutes did
not run until potential plaintiffs were informed by lawyers that they may have a lawsuit on
their hands, then causes of action would seldom, if ever, be time-barred, rendering
limitations periods virtually superfluous. Ironically, Plaintiff’s primary authority for this
argument, Blue v. Universal Underwriters Life Insurance Co., reveals the argument’s lack
of merit. In Blue, the insured filed a claim for disability coverage with her insurer, on May
7, 2003. 612 F. Supp. 2d at 1202. The insurer denied the claim on December 31, 2003, but
6
the insured did not sue for bad faith and breach of contract until June 26, 2008. Id. The
court found that the insured’s bad faith tort was time-barred under 12 O.S. § 95(3), as she
had failed to sue within two years of the tort’s accrual date: December 31, 2003, the date
the insurer denied the claim. Id. at 1203.
The court also rejected the insured’s discovery rule argument, similar to the one
offered here by Plaintiff. The court recognized that the “statute of limitations is not tolled
simply because a plaintiff ‘negligently refrain[s] from prosecuting inquiries plainly
suggested by the facts.’” Id. (alteration original) (quoting Daugherty v. Farmers Coop.
Ass’n, 689 P.2d 947, 951 (Okla. 1984)). Plaintiffs are “charged with having knowledge of
those facts which ought to have been discoverable in the exercise of reasonable diligence.”
Id. at 1203–04. Thus, it is “irrelevant whether the plaintiff understood that the defendant’s
actions constituted a legal cause of action as long as the plaintiff knew of the facts which
could give rise to such a claim.” Id. at 1204 (internal quotation marks and alterations
omitted) (citing Chasteen v. UNISIA JECS Corp., 216 F.3d 1212, 1217 (10th Cir. 2000));
cf. Erikson v. Farmers Grp., Inc., 151 F. App’x 672, 676–77 (10th Cir. 2005).
Plaintiff had all the facts she needed to pursue her bad faith tort regarding Mr. Ake’s
Provenge treatment by May 6, 2013. At the latest, Plaintiff’s cause of action accrued when
the Oklahoma Insurance Department responded to her Request for Assistance on July 19,
2013. Yet Plaintiff first filed this suit (in state court) on November 2, 2016—over three
years after the latest possible accrual date. Thus, Plaintiff’s bad faith tort regarding
Defendant’s denial of the Provenge claim is time-barred, and this Court GRANTS
summary judgment to Defendant on this issue.
7
(B) Breach of Contract: Provenge Claim
Plaintiff also asserts a breach of contract cause of action regarding Defendant’s
denial of the Provenge claim. Specifically, she claims that her husband’s Provenge
treatment was covered under Part I(F) of the Policy, which provides benefits for “X-ray
Therapy, Radium Therapy, Radiation Therapy and Chemotherapy,” including
“cancericidal chemical substances and the administration thereof for the purpose of
modification or destruction of tissue invaded by cancer.” Doc. 53-1, at 7; see also Doc. 57,
at 8–10. Defendant argues that this Policy language is unambiguous: because this
paragraph does not explicitly list “immunotherapy,” such as Provenge, Plaintiff cannot
allege that she was entitled to benefits for such treatment. See Doc. 53, at 8–10. Moreover,
the Policy “does not provide a benefit for any loss or expense resulting from any other
disease, sickness, side effect or incapacity other than cancer or any treatment thereof as
specifically defined herein.” Doc. 53-1, at 6 (emphasis added). Based on this, Defendant
asserts that Provenge simply falls outside the clear terms of the Policy.
Plaintiff argues that the language sweeps more broadly than Defendant’s reading
because of (1) the language’s ambiguity and (2) Defendant’s marketing materials and
representations made by Defendant’s agent. Doc. 57, at 8–10. That is, Plaintiff seeks to
rely on Oklahoma’s “reasonable expectations” doctrine in construing the Policy. Under
Oklahoma law, the reasonable expectations doctrine “appl[ies] to the construction of
ambiguous insurance contracts or to contracts containing exclusions which are masked by
technical or obscure language . . . .” Max True Plastering Co. v. U.S. Fid. & Guar. Co.,
8
1996 OK 28, ¶ 2, 912 P.2d 861, 863.5 As insurance contracts are contracts of adhesion,
ambiguities in these contracts are “to be construed strictly against the insurer and in favor
of the insured.” Spears v. Shelter Mut. Ins. Co., 2003 OK 66, ¶ 5, 73 P.3d 865, 868. Thus,
under the reasonable expectations doctrine, “if the insurer or its agent creates a reasonable
expectation of coverage in the insured which is not supported by policy language, the
expectation will prevail over the language of the policy.” Max True Plastering Co., 1996
OK 28, ¶ 8, 912 P.2d at 864; see also Spears, 2003 OK 66, ¶ 6, 73 P.3d at 868 (“Under the
reasonable expectations doctrine, when construing an ambiguity or uncertainty in an
insurance policy, the meaning of the language is not what the drafter intended it to mean,
but what a reasonable person in the position of the insured would have understood it to
mean.”).
The Court finds the relevant Policy language ambiguous. Accordingly, it must be
interpreted most favorably to the insured and construed strictly against the insurer. Plaintiff
asserts that she understood the Policy to include immunotherapy treatments such as
Provenge based on the representations of Defendant’s agent. Doc. 57, at 1–2, 8–10.
Plaintiff attaches to her Response brief marketing material used by Defendant’s agent,
which indicates that the series to which the Policy belongs (Cancer Fund Plus Policy Form
Series CP-1004-OK) “PAYS for . . . immunotherapy” and “experimental drug[] treatment.”
5
“A policy term is ambiguous under the reasonable expectations doctrine if it is reasonably susceptible to
more than one meaning.” Max True Plastering Co., 1996 OK 28, ¶ 19, 912 P.2d at 869; see also Lucas v.
Tex. Int’l Life Ins. Co., No. CIV–11–163–FHS, 2012 WL 2327805, at *2 (E.D. Okla. June 19, 2012) (“If
the meaning of the contract terms are uncertain, or the terms can bear more than one reasonable
interpretation, the terms are deemed ambiguous and must be interpreted most favorably to the insured and
against the insurance carrier.” (citing Dodson v. St. Paul Ins. Co., 812 P.2d 372, 376–77 (Okla. 1991)).
9
See Doc. 57, at 1–2; Doc. 57-1–57-2. As to the language, Defendant’s own witness, Sarah
Bottomley, whose deposition excerpts are attached to and cited in Defendant’s Reply brief,
speaks to the Policy’s ambiguity: when asked whether “some immunotherapy drugs can be
cancericidal,” she answers, “Correct but not all of them.” See Doc. 62, at 4; Doc. 62-1, at
2.6 Reading this ambiguous language in conjunction with the representations made to
Plaintiff by Defendant’s agent, a reasonable person in Plaintiff’s position could have
understood that Provenge was covered by the Policy as a cancericidal chemical substance.
“[I]f an insurer desires to limit its liability under a policy, it must employ language that
clearly and distinctively reveals its stated purpose.” Spears, 2003 OK 66, ¶ 7, 73 P.3d at
868. The Policy’s language fails to clearly and distinctively limit coverage as it relates to
Provenge and other immunotherapies. Thus, pursuant to the reasonable expectations
doctrine, the Court DENIES Defendant’s Motion for Summary Judgment as to Plaintiff’s
breach of contract cause of action.7
6
Granted, Ms. Bottomley goes on to testify that, in her reading of relevant FDA releases, Provenge neither
modifies nor destroys tissues. Doc. 62-1, at 3. But the pertinent language itself, particularly “cancericidal
chemical substances,” appears to cover at least some immunotherapies. See id. at 2. Thus, from the
standpoint of a reasonable person in Plaintiff’s position—in light of the representations and materials
offered by Defendant’s agent, which referred to immunotherapy being covered—the Policy could have
created a reasonable expectation that Provenge was covered.
7
An Eastern District of Oklahoma case is instructive here. In Lucas v. Texas International Life Insurance
Co., the district court assessed whether policy language similar to the language at issue covered drugs taken
incident to chemotherapy. 2012 WL 2327805, at *1–2. The policy provision covered “the actual charges
for cancericidal chemical substances and their administration for the purpose of modifications or destruction
of abnormal tissue . . . .”; the insured had submitted claims for drugs administered during chemotherapy,
but the insurer denied them as outside the policy’s coverage. Id. at *2–3 (internal quotation marks omitted).
The court found the phrase “cancericidal chemical substances” ambiguous and, therefore, construed it to
cover the drugs in question, even though they were not explicitly chemotherapy. Id. Likewise, the Court
finds the relevant (and nearly identical) Policy language here ambiguous, such that immunotherapy could
fall within its coverage when read by a reasonable person in Plaintiff’s position.
10
However, the Court GRANTS Defendant’s Motion as to the maximum contract
damages available for 2013 for Provenge-related claims. Defendant notes that Plaintiff
signed an endorsement on May 3, 2002, that amended subsection (F) of Part I of the Policy,
which covers “cancericidal chemical substances,” such that the subsection’s benefits
“would be limited to 50% of the actual charges up to a maximum aggregate benefit of
$50,000 per calendar year.” Doc. 53, at 5; Doc. 53-9 (amendment signed by Plaintiff).
Under this amended Policy, Defendant paid out the $50,000 benefits maximum in 2014
and 2015, and it paid $31,013.36 in benefits in 2013. Doc. 53, at 6. Therefore, “the
maximum contractual damages Plaintiff could recover under her breach of contract theory
. . . is $18,986.64.” Id. at 11. Plaintiff does not seem to dispute this: she does not contest
Defendant’s Undisputed Facts 22–268 and notes that $18,986.64 “may be the amount for
2013.” Doc. 57, at 1–3, 10. Thus, in light of the amendment Plaintiff signed, the Court
GRANTS summary judgment to Defendant on the issue of potential contract damages for
2013.9
8
See supra note 1.
9
The Court notes that the Policy amendment modifies only subsection (F) of Part I of the Policy, covering
(among other things) “cancericidal chemical substances.” See Doc. 53-9. Both parties seem to agree that
claims related to Mr. Ake’s Provenge treatment were the only denied claims from 2013 pertinent to this
litigation—and, at any rate, neither party has submitted evidence to the contrary. Thus, the Court’s grant of
summary judgment as to the maximum contract damages available for 2013 pertains only to the maximum
recoverable for claims falling within subsection (F)’s ambit. If, for instance, Plaintiff also cited to plateletrelated claims denied in 2013 (which she does not), the Court could not grant summary judgment as to the
maximum damages recoverable for these hypothetical claims under a breach of contract theory because the
Policy amendment did not modify the “blood” benefits subsection of Part I. The Court lays out these
observations merely because Defendant’s briefing is sometimes specific and sometimes quite general about
its summary judgment request regarding 2013 contract damages. See generally Docs. 53, 62. Lest there be
confusion, the Court further specifies the scope of its summary judgment grant as to this issue here.
11
(C) Platelets Claims: Bad Faith and Breach of Contract
Defendant also moves for summary judgment on Plaintiff’s causes of action relating
to Mr. Ake’s blood platelet treatment. Under subsection (G) of Part I of the Policy, “the
actual charges made for blood and blood plasma” are covered. Doc. 53-1, at 8. Defendant
argues that this language excludes platelet-related therapies. Doc. 53, at 8. Moreover, as to
Plaintiff’s bad faith tort, Defendant reasserts the Policy’s lack of coverage, but also argues
that, even if the Policy covers these platelet-related therapies, no bad faith tort lies because
Defendant denied benefits based on a “legitimate dispute” over coverage. Id. at 9–10.
The briefing is unclear as to whether there is one denied claim for platelet-related
therapies or multiple denied claims; as well, it is unclear whether there were claims denied
over several years or only for one year.10 Plaintiff submits billing and other documentation,
which seem to indicate denied claims in late 2015 and early 2016. See Doc. 57-14.
Defendant, more generally, moves for summary judgment on any potential platelet-related
claims, arguing that the Policy simply does not cover such treatment. Doc. 3, at 8–10.
The Court finds that Plaintiff may pursue a breach of contract theory regarding Mr.
Ake’s platelet-related treatments under the same “reasonable expectations” doctrine
addressed above. If “cancericidal chemical substances” is ambiguous enough to create a
reasonable expectation of coverage for immunotherapies, then certainly a term as openended as “blood” can encompass platelets, one of blood’s component parts. A reasonable
person situated as Plaintiff was could have expected the Policy’s “blood and blood plasma”
10
Indeed, the briefing is unclear as to what these platelet-related claims are or relate to in the first place.
12
benefits provision to cover treatments relating to Mr. Ake’s blood platelets. See Lucas v.
Tex. Int’l Life Ins. Co., No. CIV–11–163–FHS, 2012 WL 2327805, at *4 (E.D. Okla. June
19, 2012) (finding policy language covering “the actual charges for blood, packed red cells,
whole blood, plasma, platelets and leucocytes” sufficiently ambiguous that “[a] reasonable
person would assume that coverage for blood would include[] full coverage of blood
products [and] fees associated with storage, delivery, processing and . . . the transfusion
itself.”). Thus, Defendant is not entitled to summary judgment on Plaintiff’s breach of
contract cause of action.
However, Defendant is entitled to summary judgment on Plaintiff’s bad faith theory
relating to these platelet claims. To state a prima facie case of bad faith, Plaintiff must
show (1) “coverage under the insurance policy and that the insurer was required to take
reasonable actions”; (2) “the actions of the insurer were unreasonable under the
circumstances”; (3) “the insurer failed to deal fairly and act in good faith toward the insured
in its handling of the claim”; and (4) “breach or violation of the duty of good faith and fair
dealing was the direct cause of any damages that the insured sustained.” Harris v.
Progressive Direct Ins. Co., --- F. App’x ---, 2018 WL 3217191, at *6 (10th Cir. 2018)
(citing Badillo v. Mid Century Ins. Co, 121 P.3d 1080, 1093 (Okla. 2005)). “[T]ort liability
arises only where there is a clear showing that the insurer unreasonably, and in bad faith,
withholds payment of the claim of its insured.” Oldenkamp v. United Am. Ins. Co., 619
F.3d 1243, 1249 (10th Cir. 2010) (internal quotation marks and citations omitted). “An
insurer does not act unreasonably when it withholds payment based on a ‘legitimate
dispute’ regarding coverage.” Id. (citing Skinner v. John Deere Ins. Co., 998 P.2d 1219,
13
1223 (Okla. 2000)); Barre v. State Farm Fire & Cas. Co., 982 F. Supp. 2d 1267, 1274
(N.D. Okla. 2013) (“The Oklahoma Supreme Court and the Tenth Circuit have made clear
that an insurer does not subject itself to a claim of bad faith merely by disputing
coverage.”); see also Harris, 2018 WL 3217191, at *7 (“[A] bad faith ‘cause of action will
not lie where there is a legitimate dispute.’” (quoting Manis v. Hartford Fire Ins. Co., 681
P.2d 760, 762 (Okla. 1984)); Oulds v. Principal Mut. Life Ins. Co., 6 F.3d 1431, 1436 (10th
Cir. 1993) (“The insurer will not be liable for the tort of bad faith if it ‘had a good faith
belief, at the time its performance was requested, that it had a justifiable reason for
withholding payment under the policy.’” (quoting McCoy v. Okla. Farm Bureau Mut. Ins.
Co., 841 P.2d 568, 572 (Okla. 1992)); Thompson v. Shelter Mut. Ins., 875 F.2d 1460, 1462
(10th Cir. 1989) (“The insurer does not breach this duty by refusing to pay a claim or by
litigating a dispute with its insured if there is a ‘legitimate dispute’ as to coverage or amount
of the claim, and the insurer’s position is ‘reasonable and legitimate.’ Rather, to prove a
breach of the duty of good faith and fair dealing the insured must show by a preponderance
of the evidence that the insurer failed to treat the insured fairly or that it tried to make the
insured ‘surrender his policy or disadvantageously settle a nonexistent dispute.’” (citations
omitted)); Caughton v. Liberty Mut. Fire Ins. Co., No. 11-CV-206-GKF-TLW, 2014 WL
11531560, at *11–12 (N.D. Okla. Mar. 6, 2014) (“Where an insurer has demonstrated a
reasonable basis for its actions, bad faith cannot exist as a matter of law, and the insurer is
entitled to summary judgment. . . . A decision to withhold . . . payment, if based on a
14
legitimate dispute or reasonable justification (legal or factual) cannot form the basis of bad
faith tort liability.” (internal quotation marks and citations omitted)).11
Considering the ambiguity of “blood” in the Policy, the Court finds Defendant’s
denials of any platelet-therapy claims to be, at minimum, not unreasonable and based on a
“legitimate dispute” over the scope of the Policy. Cf. Edens v. Neth. Ins. Co., 834 F.3d
1116, 1121 (10th Cir. 2016) (“‘The reasonable expectation doctrine is a double-edged
11
The Plaintiff’s citation to Tomlinson v. Combined Underwriters Life Ins. Co., 708 F. Supp. 2d 1284 (N.D.
Okla. 2010) merits comment. Tomlinson’s facts are similar to those in the instant suit: an insurer denied an
insured’s claims for certain drugs and surgeries related to cancer treatment as outside the scope of the
Policy. 708 F. Supp. 2d at 1286–89. Analyzing the insured’s breach of contract theories, the district court
determined that the relevant policy language, as here, was ambiguous, and it construed the language in the
insured’s favor pursuant to the reasonable expectations doctrine. Id. at 1290–93. As to the insured’s bad
faith tort, the court suggested that Oklahoma law is unsettled on whether the existence of a “legitimate
dispute” over coverage is a full-fledged defense to bad faith or something more akin to a consideration in
assessing the viability of a bad faith theory. See id. at 1294–95 (citing Oklahoma and Tenth Circuit cases
that, on the one hand, treat a legitimate dispute as a defense to bad faith and, on the other hand, view a
legitimate dispute as a factor in a larger assessment). As its cited authority may imply, this Court views the
existence of a legitimate dispute as less legally enigmatic than does the Tomlinson court.
More to the point, Tomlinson’s cited Tenth Circuit case, Haberman v. Hartford Insurance Group,
443 F.3d 1257 (10th Cir. 2006), is distinguishable from the instant suit. Haberman, as cited in Tomlinson,
notes that “a ‘legitimate dispute as to coverage will not act as an impenetrable shield against a valid claim
of bad faith’ . . . .” 443 F.3d at 1270 (quoting Timberlake Constr. Co. v. U.S. Fid. & Guar. Co., 71 F.3d
335, 343 (10th Cir. 1995) (applying Oklahoma law)). Specifically, “‘a plaintiff may bring a bad faith cause
of action even though a legitimate defense to a breach of contract claim exists if the defendant did not
actually rely on that defense to deny payment under the policy.’” Id. (quoting Vining v. Enter. Fin. Grp.,
Inc., 148 F.3d 1206, 1214 (10th Cir. 1998)). Here, Defendant’s rationale for denying Plaintiff’s platelet
therapy claims has not changed: Defendant maintains the claims fall outside the Policy’s coverage. See
Doc. 53, at 5, 8–10; Doc. 62, at 4–6; see also Doc. 57-14 at 1–2 (denying claims listed under “Blood and
Plasma” as “not covered”). More broadly, Plaintiff makes no showing that Defendant’s denials were in bad
faith; neither does Plaintiff offer “conflicting evidence from which different inferences may be drawn
regarding the reasonableness of the insurer’s conduct . . . .” Tomlinson, 708 F. Supp. 2d at 1295 (internal
quotation marks and citation omitted). And to the extent (if any) that the Court considers Plaintiff’s Exhibits
8 and 9—the declarations of Debbie Jones Bush and Karen Littrell, to which Defendant objects, as violative
of Fed. R. Evid. 403—as alleging nefarious behavior by Defendant in the claims consideration process,
these exhibits are irrelevant because they speak only to consideration of Provenge claims, not plateletrelated claims. See Doc. 57-8–57-9; Doc. 62. As stated above, Plaintiff’s bad faith tort relating to Provenge
is time-barred. Thus, while the Court finds the applicable Policy language relating to platelet therapies
ambiguous, the Court sees nothing before it that raises an inference that Defendant acted in bad faith in
reading the Policy narrowly. Or, to paraphrase Tomlinson, “[t]he Court has found that the Defendant[’s]
interpretation of the Policy . . . was too narrow; [but] the trier of fact could [not] find that it was unreasonably
so.” 708 F. Supp. 2d at 1296.
15
sword—both parties to the insurance contract may rely upon their reasonable
expectations.’” (quoting Max True Plastering Co., 912 P.2d at 866)). Plaintiff has failed to
make a prima facie showing of bad faith, and nothing in the evidence offered by Plaintiff
counters Defendant’s legitimate and reasonable explanation for denying coverage.12 See
Yost v. Shelter Mut. Ins. Co., No. CIV-14-725-D, 2015 WL 1843538, at *4 (W.D. Okla.
Apr. 20, 2015) (“Plaintiff also does not point to any fact from which to infer that Defendant
‘did not have a reasonable good faith belief for withholding payment’ under the policy.”
(quoting McCoy, 841 P.2d at 572). And “[t]he mere allegation that an insurer breached the
duty of good faith and fair dealing does not automatically entitle a litigant to submit the
issue to a jury for determination. A jury question arises only where the relevant facts are in
dispute or where the undisputed facts permit differing inferences as to the reasonableness
and good faith of the insurer’s conduct.” Oulds, 6 F.3d at 1436 (citation omitted). The
Court finds that Plaintiff’s bad faith theory does not rise above mere allegations; thus,
Defendant is entitled to summary judgment on this cause of action.
12
In Harris, the Tenth Circuit outlines a burden-shifting framework applied by Oklahoma state courts (most
notably in Manis v. Hartford Fire Insurance Co., 1984 OK 25, 681 P.2d 760) to bad faith tort claims. Once
the plaintiff makes out a prima facie case of bad faith, “the burden shifts to the insurer to show that it had
a ‘reasonable, actually-relied-upon basis for denying [the insured’s claim]’—i.e., that a legitimate dispute
existed.” Harris, 2018 WL 3217191, at *7 (alterations original) (quoting Bannister v. State Farm Mut. Auto.
Ins. Co., 692 F.3d 1117, 1131 (10th Cir. 2012)). If the defendant-insurer can show such a legitimate dispute,
“the burden shifts back to the insured to make an additional showing that the denial of coverage was
undertaken in bad faith.” Id. “[T]he minimum level of culpability necessary for liability against an insurer
to attach is more than simple negligence, but less than the reckless conduct necessary to sanction a punitive
damage award against said insurer.” Badillo v. Mid Century Ins. Co., 2005 OK 48, ¶ 28, 121 P.3d 1080,
1094. Here, even if this Court viewed Plaintiff as establishing a prima facie case of bad faith—which it
does not—it is satisfied that Defendant has sufficiently rebutted such a case by showing a legitimate dispute
over the Policy’s coverage. With the burden shifting back to her, Plaintiff has offered no evidence—made
no additional, clear showing—of bad faith as it relates to Mr. Ake’s platelet therapies. Thus, a bad faith tort
will not lie for these platelet-therapy claims.
16
IV.Conclusion
In sum, the Court
GRANTS summary judgment to Defendant on Plaintiff’s bad faith causes of
action. Plaintiff’s bad faith theory regarding the Provenge claim is time-barred,
and Plaintiff fails to make out a prima facie case of bad faith regarding the
platelet claims.
DENIES summary judgment to Defendant on Plaintiff’s breach of contract
causes of action. Given the Policy’s ambiguity, Plaintiff may pursue breach of
contract theories regarding Defendant’s denial of Provenge and platelet claims.
GRANTS summary judgment to Defendant on the issue of maximum contract
damages available for 2013 (finding the maximum available to be $18,986.64).
IT IS SO ORDERED this 14th day of November 2018.
17
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?