Plucker v. United Fire & Casualty Company
ORDER denying 133 Plaintiff's Motion for Attorney's Fees. Signed by U.S. District Judge Karen E. Schreier on 9/28/16. (SLW)
UNITED STATES DISTRICT COURT
DISTRICT OF SOUTH DAKOTA
ORDER DENYING PLAINTIFF'S
MOTION FOR ATTORNEY'S FEES
UNITED FIRE & CASUALTY COMPANY,
Plaintiff, Debbie Plucker, brought suit against defendant, United Fire &
Casualty Company, for breach of contract and bad faith. A jury trial was held,
and the jury found in favor of Plucker on the breach of contract claim and
United Fire on the bad faith claim. Plucker now moves for attorney fees under
SDCL 58-12-3. The court denies the motion.
Plucker purchased a car insurance policy from United Fire & Casualty
Company. Trial Exhibit 1. The policy included $5000 in medical payments
coverage for Plucker if she was injured in an accident. Id. at UF004921. While
Plucker was driving on Interstate 90, a semi-truck trailer on the other side of
the median and traveling in the opposite direction lost a tire. The tire and its
rim crossed the median, bounced off of another tractor trailer, and hit the front
of Plucker’s car. As a result of the accident, Plucker started treating with
Dr. Lanpher, her chiropractor.
Under the terms of the insurance contract, Plucker needed to grant
United Fire access to her medical records before she could receive payment for
her medical bills. Typically, United Fire got an insured’s medical records by
having the insured sign a medical release authorizing United Fire to have
access to the records. After the accident, United Fire sent Plucker a copy of its
standard medical release, but Plucker felt uncomfortable signing the form as
written. To alleviate her concerns, Plucker redacted the parts of the medical
release that authorized the release of medical records related to prior alcohol
use, drug abuse, and psychiatric treatment. Plucker also added language
limiting the validity of the release. United Fire did not accept the altered release
and told Plucker no medical provider would accept the changes she made to
As an alternative to signing an unaltered medical release, United Fire
told Plucker she could submit her own medical records. Plucker attempted to
retrieve her records from Dr. Lanpher, but she was unable to get them. Plucker
discussed with her insurance agent the problems she was having with United
Fire. The insurance agent wrote to United Fire asking, “Why are we treating our
own insured like the enemy?” Trial Exhibit 9.
After Plucker hired a lawyer, her lawyer wrote to United Fire three times
and asked it to reconsider its decision to not pay Dr. Lanpher’s bills. United
Fire still did not pay the claim. After Plucker filed her lawsuit, she signed a
medical authorization in essentially the same form as that provided by United
Fire and authorized the release of her medical records to her attorneys. After
her attorneys received and disclosed the medical records to United Fire, United
Fire paid the claim in full. When the case went to trial, the jury awarded
Plucker $100 in damages on her breach of contract claim. It found in favor of
United Fire on the bad faith claim.
Plucker now seeks $143,660.48 as reasonable attorney fees and sales tax
under SDCL 58-12-3. Plucker argues United Fire acted unreasonably by (1) not
accepting Plucker’s altered medical release, (2) not sending Dr. Lanpher the
altered medical release, (3) telling Plucker she could submit her own medical
records, and (4) not otherwise helping Plucker obtain the medical records.
Docket 134 at 1-3.
The court may award Plucker attorney fees if United Fire “refused to pay
the full amount of [Plucker’s] loss, and that such refusal [was] vexatious or
without reasonable cause . . . .” SDCL 58-12-3. The statute allows for the
collection of “reasonable attorney’s fees necessarily incurred in defending or
enforcing a valid insurance contract right.” All Nation Ins. Co. v. Brown, 344
N.W.2d 493, 494 (S.D. 1984) (citing Fla. Rock, Etc. v. Cont’l Ins. Co., 399 So. 2d
122 (Fla. 1981)). The purpose of the statute is to discourage insurance
companies from contesting valid claims. Id.
To prevail on her motion for attorney’s fees, Plucker must prove three
elements: (1) United Fire refused to pay the full amount of Plucker’s loss; (2)
United Fire’s refusal to pay Plucker’s claims was vexatious or without
reasonable cause; and (3) Plucker’s legal fees are a reasonable charge for the
“work performed to enforce the insurance contract claim.” Biegler v. Am. Family
Mut. Ins. Co., 621 N.W.2d 592, 606 (S.D. 2001) (citing Isaac v. State Farm Mut.
Auto. Ins. Co., 522 N.W.2d 752 (S.D. 1994); Brooks v. Milbank Ins. Co., 605
N.W.2d 173 (S.D. 2000)). Here, Plucker has failed to prove the second
element—that United Fire’s refusal to pay Plucker’s claims was vexatious or
without reasonable cause.
During trial, both parties agreed that United Fire had a right to obtain
Plucker’s medical records before paying her medical bills. This is a standard
practice in the insurance industry. The South Dakota Supreme Court has
explained that if there is a reasonable basis for not paying an insured’s claim,
the insurance company is not in violation of SDCL 58-12-3. See Howie v.
Pennington Cty, 563 N.W.2d 116, 118-19 (S.D. 1997). Here, United Fire
attempted to process Plucker’s claim by having her sign a medical
authorization that would give United Fire access to her medical records. As an
alternative to signing the medical authorization, United Fire told Plucker she
could submit her medical records directly to United Fire. Plucker took neither
course of action until she brought suit. Because United Fire had a right to
review Plucker’s medical records, United Fire did not act in violation of SDCL
58-12-3 by refusing to pay Plucker’s claim until it had copies of Plucker’s
Plucker primarily relies on five South Dakota Supreme Court cases1 to
support her motion for attorney’s fees; however, each case is distinguishable
because United Fire’s conduct did not rise to the same level of culpability as
the defendants in the other cases. The first case Plucker cites is Lewis v. State
Department of Transportation, 667 N.W.2d 283 (S.D. 2003). In Lewis, the South
Dakota Department of Transportation denied plaintiff’s medical claim for the
replacement of his veneers after a metal box struck him in the face. Id. at 285,
291. The South Dakota Supreme Court reasoned that the denial was without
reasonable cause because the claim administrator gave “inconsistent
justifications” for denying the plaintiff’s claim and because the administrator
did not provide a medical opinion to contradict the plaintiff’s doctor. Id. at 291292. Here, United Fire’s response and actions remained consistent throughout
the handling of Plucker’s claim. United Fire repeatedly explained that it needed
to receive Plucker’s medical records before it could pay her claim. United Fire
also did not dispute that Plucker was injured. Rather, United Fire did not pay
Plucker’s medical bills because it did not have copies of Plucker’s medical
records. Thus, Plucker’s claim is distinguishable from Lewis.
Lewis v. State Dep’t of Transp., 667 N.W.2d 283 (S.D. 2003); Biegler v. Am.
Family Mut. Ins. Co., 621 N.W.2d 592 (S.D. 2001); Sawyer v. Farm Bureau Mut.
Ins. Co., 619 N.W.2d 644 (S.D. 2000); Isaac v. State Farm Mut. Auto. Ins. Co.,
522 N.W.2d 752 (S.D. 1994); Eldridge v. Nw. G. F. Mut. Ins. Co., 221 N.W.2d 16
Plucker also argues that her claim is similar to the plaintiff’s claim in
Biegler v. American Family Mutual Insurance Co., 621 N.W.2d 592 (S.D. 2001),
where the defendant insurance company “did everything it could to put off, and
thereby deceive, [the insured] even though it knew that it had an obligation to
defend [the insured].” Id. at 607. In Biegler, the insurance company denied it
had a duty to provide a defense for its insured even though the insurance
company knew the policy stated otherwise. Id. Here, United Fire did not make a
similar denial. United Fire did not tell Plucker her treatments with Dr. Lanpher
would not be covered under her policy. Instead, United Fire requested Plucker’s
medical records to process her claim. United Fire’s conduct is not equivalent to
that of the defendant in Biegler.
Plucker also cites Sawyer v. Farm Bureau Mutual Insurance Co., 619
N.W.2d 644 (S.D. 2000). In Sawyer, agents of the defendant insurance
company discussed how to undervalue plaintiff’s losses, how to make plaintiff
appear fraudulent, whether they could use an allegation that plaintiff’s wife
was committing adultery, and their need to minimize a paper trail. Id. at 652.
Plucker produced no evidence at trial that United Fire engaged in similar
Next, Plucker argues Isaac v. State Farm Mutual Automobile Insurance
Co., 522 N.W.2d 752 (S.D. 1994), is a sufficient basis for awarding her attorney
fees. In Isaac, the plaintiff was involved in a car accident with another driver.
Id. at 754. Defendant insurance company denied plaintiff’s claim for benefits
and insisted that the other driver was responsible for plaintiff’s injuries, even
though plaintiff had uninsured motorist coverage. Id. The South Dakota
Supreme Court summarized the case by saying that “State Farm delayed in
investigation, settlement and evaluation for years.” Id. at 763. State Farm also
refused to pay amounts clearly owed under the policy unless the plaintiff
dismissed her bad faith claim against the defendant. Id. Here, none of United
Fire’s actions reach the same level of seriousness as the actions taken by State
Farm. Once United Fire received Plucker’s medical bills, United Fire started
processing Plucker’s claim. Although Plucker argued at trial that United Fire
told her the claim could not be subrogated to collect from the semi-truck
driver, United Fire did not attempt to deny coverage for this reason. United
Fire’s actions are not similar to State Farm’s.
Finally, Plucker relies on Eldridge v. Northwest G. F. Mutual Insurance
Co., 221 N.W.2d 16 (S.D. 1974). In Eldridge, plaintiff reported damage to his
home. Id. at 17-20. Defendant insurance company had someone assess the
damage to the home, but before repairs were completed, the home sustained
further damage. Id. Defendant refused to conduct a second assessment. Id. The
South Dakota Supreme Court upheld an award of attorney’s fees because
“there was no adequate, good faith investigation of plaintiff’s claim of additional
storm damage to his home.” Id. at 22. Here, again, United Fire did not dispute
that Plucker sought treatment for her injuries stemming from the accident.
United Fire did not attempt to reduce or limit the medical bills Plucker
submitted. Rather, United Fire simply tried to gain access to Plucker’s medical
records so it could process her claim.
Plucker fails to show that United Fire acted vexatiously or without
reasonable cause. United Fire attempted to process Plucker’s claim by
obtaining Plucker’s medical records, but this process became more difficult
when Plucker refused to sign an unaltered medical release. Although United
Fire might have been able to handle the situation differently, its refusal to pay
Plucker’s medical bills was based on its need to access Plucker’s medical
records, not a desire to delay, limit, or ultimately deny Plucker’s claim. Because
United Fire did not refuse to pay Plucker’s claim vexatiously or without
reasonable cause, it is
ORDERED that plaintiff’s motion for attorney’s fees and costs (Docket
133) is denied.
DATED this 28th day of September, 2016.
BY THE COURT:
/s/ Karen E. Schreier
KAREN E. SCHREIER
UNITED STATES DISTRICT JUDGE
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