Goshorn v. Westfield Insurance Company

Filing 8

MEMORANDUM AND ORDER denying dft's Motion to Dismiss count II 2 Signed by Honorable Sylvia H. Rambo on 05/04/12 (ma, )

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
TAMMY L. GOSHORN,
Plaintiff
v.
WESTFIELD INSURANCE CO.,
Defendant

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Civil Action No. 1:12-cv-0517

The Honorable Sylvia H. Rambo

MEMORANDUM
Before the court is Defendant Westfield Insurance Company’s
(“Westfield”) Motion to Dismiss Count II (Doc. 2) of the complaint. For the reasons
that follow, the motion will be denied.
I.

Background
A.

Facts

This case arises out of a car accident that occurred on October 1, 2009,
in York County, Pennsylvania, between Plaintiff Tammy Goshorn and an individual
named Eric Meisenhelder. (Compl. ¶¶ 5, 6.) Meisenhelder was insured by a policy
with liability limits of $100,000. Plaintiff’s case against Meisenhelder settled for
$97,000 — an amount sufficiently covered by the policy limits, but insufficient to
wholly cover Plaintiff’s alleged injuries making her claim one against an
underinsured motorist. (Id. ¶ 6.)
Plaintiff claims that as a result of this accident she sustained the
following injuries: “Aggravation to Plaintiff’s lumbar spine requiring surgical

intervention in the form of a lumbar fusion at L5-S1 with instrumentation and bone
grafting with laminectomy at L5 and partial laminectomy at S1.”1 (Id. ¶ 8.) As a
result of the accident and subsequent injuries, Plaintiff claims she now suffers from
the following: “[] extreme pain, inconvenience, and mental anguish”; “permanent
scarring”; “[] general health, strength, and vitality [impairment]”; “future medical
treatment”; and other general losses. (Id. ¶ 9.)
At the time of the accident, Plaintiff was insured by Westfield under
policy number WNP4466460, which provided underinsured motorist benefits up to
$300,000. (Id. ¶ 11.) This policy was stacked on three motor vehicles, for a total
policy payout maximum of $900,000. (Id.)
On March 25, 2011, Plaintiff sent to Westfield the police report from
the accident as well as all relevant medical documents. (Id. ¶ 15.) On April 21,
2011, Plaintiff’s counsel contacted James Erickson, the assigned claims adjuster
from Westfield, and inquired about the status of Plaintiff’s underinsured motorist
(“UIM”) claim. (Id. ¶ 16.) The complaint alleges that Erickson replied that
Plaintiff’s claim was “on the pile” but had not yet been evaluated. (Id.)
On June 1, 2011, Westfield granted consent to Plaintiff to settle the
third-party claim with Meisenhelder as it appeared Meisenhelder had no attachable
assets. (Id. ¶ 17 & Ex. B.) Having heard nothing about her own claim with
Westfield, Plaintiff’s counsel called Erickson on June 17, 2011, and July 7, 2011.
(Id. ¶ 18.) Plaintiff’s counsel left telephone messages but received no response. (Id.)

A laminectomy is a surgery involving removal of the back part of the vertebrae,
known as the “lamina.” This surgery is performed to remove pressure on the spine which can be caused
by, inter alia, bony growths in the spinal canal or a herniated disk. See Mayo Clinic, Laminectomy,
http://www.mayoclinic.com/health/laminectomy/MY00674 (last visited May 4, 2012).
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On August 5, 2011, and September 6, 2011, Plaintiff’s counsel wrote letters to
Westfield, but again, received no response. (Id. ¶ 18.) Plaintiff’s counsel once again
tried calling Erickson on September 16, 2011, and twice on September 23, 2011. (Id.
¶ 19.) During the second call, Plaintiff’s counsel left a message asking Erickson to
return the calls so that Erickson’s supervisor would not have to be contacted. (Id.)
Later on September 23, 2011, Erickson left a message with Plaintiff’s counsel
explaining that he would be sending Plaintiff’s MRI films to a medical expert for
review. (Id. ¶ 20.) Subsequently, on October 20, 2011, Plaintiff’s counsel wrote to
Erickson asking for an update on the status of Plaintiff’s claim. (Id. ¶ 21.) On
October 25, 2011, Westfield, through Erickson, sent a letter to Plaintiff’s counsel
indicating they were effectively denying the claim. (Id. ¶ 22.) Westfield based its
decision on a report from Michael L. Brooks, who holds both a medical and a law
degree, who had examined Plaintiff’s MRI films and determined that Plaintiff had
not suffered any injury related to the October 1, 2009 automobile accident. (Id.) On
November 9, 2011, Plaintiff’s counsel wrote to Westfield expressing surprise and
dismay that the claim had been denied; Westfield never responded to this letter. (Id.
¶ 23.) Therefore, Plaintiff alleges Westfield has breached its contractual obligations
to Plaintiff and has acted in bad faith pursuant to 42 Pa. Cons. Stat. § 8371.
B.

Procedural History

This case was originally filed in the York County Court of Common
Pleas, but was removed to this court by Defendant on March 21, 2012. (Doc. 1.) On
March 28, 2012, Defendant filed the instant motion to dismiss count two of the
complaint, and brief in support. (Docs. 2, 3.) Plaintiff filed a brief in opposition on

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April 11, 2012, (Doc. 5), to which Defendant responded on April 25, 2012, (Doc. 7).
Therefore, the motion is now ripe for disposition.
II.

Discussion
Based on the facts alleged above, Plaintiff bring claims for breach of

contract and bad faith under 42 Pa. Cons. Stat. § 8371. Defendant at this stage has
only moved to dismiss the claim for bad faith. For the reasons that follow, the
motion will be denied.
In Pennsylvania, bad faith claims against insurance companies are
governed by Pennsylvania’s Bad Faith Statute, 42 Pa. Cons. Stat. § 8371, which
reads,
In an action arising under an insurance policy, if the court
finds that the insurer has acted in bad faith toward the
insured, the court may take all of the following actions:
(1) Award interest on the amount of the claim
from the date the claim was made by the
insured in an amount equal to the prime rate of
interest plus 3%.
(2) Award punitive damages against the
insurer.
(3) Assess court costs and attorney fees against the
insurer.
42 Pa. Cons. Stat. § 8371. To establish a bad faith claim, a plaintiff must show: “(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 reasonable basis in
denying the claim.” Lockhart v. State Farm Mut. Auto. Ins. Co., 2010 WL 597476,
at *6 (W.D. Pa. Feb. 16, 2010). While the cases usually speak in terms of the denial
of benefits, “[f]ailure to conduct a reasonable investigation based on available
information may” also support a claim of bad faith on the part of an insurance
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company. Giangreco v. U.S. Life Ins. Co., 168 F. Supp. 2d 417, 423 (E.D. Pa. 2001).
Although not explicitly defined in Pennsylvania, “bad faith” has been
interpreted to mean “frivolous or unfounded refusal to pay proceeds of a policy
which imports a dishonest purpose and means a breach of a known duty (i.e. good
faith and fair dealing), through some motive of self-interest or ill will; mere
negligence or bad judgment is not bad faith.” Lockhart, 2010 WL 597476, at *6
(citing Terletsky v. Prudential Prop. & Cas. Ins. Co., 649 A.2d 680 (Pa. Super. 1994)
(internal quotations omitted)). Intuitively, insurance companies must investigate
claims in a reasonable manner. Id. Furthermore,
[t]o defeat a bad faith claim, the insurance company need
not show that the process used to reach its conclusion was
flawless or that its investigatory methods eliminated
possibilities at odds with its conclusions. Rather, an
insurance company simply must show that it conducted a
review or investigation sufficiently thorough to yield a
reasonable foundation for its action.
Id. (quoting Mann v. UNUM Life Ins. Co. of Am., 2003 WL 22917545, at *6 (E.D.
Pa. Nov, 23, 2003).
In addition, there is a heightened burden of proof in bad faith claims,
and a plaintiff must demonstrate by clear and convincing evidence that an insurer
acted in bad fath. “The clear and convincing standard requires evidence of bad faith
so clear, direct, weighty and convincing so as to enable the factfinder to make its
decision with clear conviction.” Lockhart, 2010 WL 597476, at *6 (quoting Polselli
v. Nationwide Mut. Fire Ins. Co., 23 F.3d 747, 752 (3d Cir. 1994) (internal citations
omitted). Thus, a plaintiff’s burden is quite high. Id.

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At this early stage in the litigation, the court finds that Plaintiff has
properly pled a claim for bad faith. Plaintiff claims that Westfield has frivolously
and unfoundedly failed to pay proceeds rightfully owed to Plaintiff under policy
number WNP4466460. Furthermore, Plaintiff claims that this was done because
Westfield has not conducted a proper investigation into Plaintiff’s medical claims
and instead relied solely on the opinion of one medical/legal expert who only
reviewed Plaintiff’s MRI films and did not review any other relevant medical
documentation. Although the court makes no determination as to the ultimate
viability of Plaintiff’s bad faith claim, the court does note that Plaintiff’s burden
moving forward is quite high and a claim for bad faith cannot be based on
“negligence or bad judgment” on the part of Westfield’s agents. However, in light of
the standard applicable to motions to dismiss, the court will allow this claim to
proceed.
III.

Conclusion
For the reasons set forth above, Defendant’s motion to dismiss count

two of the complaint will be denied. An appropriate or will issue.

s/Sylvia H. Rambo
United States District Judge
Dated: May 4, 2012.

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IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
TAMMY L. GOSHORN,
Plaintiff
v.
WESTFIELD INSURANCE CO.,
Defendant

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Civil Action No. 1:12-cv-0517

The Honorable Sylvia H. Rambo

ORDER
For the reasons set forth in the accompanying memorandum of law, IT
IS HEREBY ORDERED that Defendant’s motion to dismiss count II (Doc. 2) is
DENIED.
s/Sylvia H. Rambo
United States District Judge
Dated: May 4, 2012.