Gade v. State Farm Mutual Automobile Insurance Company
Filing
111
OPINION AND ORDER Granting 19 Defendant's Motion for Partial Summary Judgment and Granting Defendant's 98 Motion in Limine re: Plaintiff's Proffered Bad Faith Expert Witness. Signed by Chief Judge Christina Reiss on 11/19/2015. (pac)
UNITED STATES DISTRICT COURT
FOR THE
DISTRICT OF VERMONT
TERESA GADE,
Plaintiff,
v.
STATE FARM MUTUAL AUTOMOBILE
INSURANCE COMPANY,
Defendant.
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2015 NOV 19 PH 3: 49
Case No. 5:14-cv-00048
OPINION AND ORDER GRANTING DEFENDANT'S MOTION FOR PARTIAL
SUMMARY JUDGMENT AND GRANTING DEFENDANT'S MOTION IN
LIMINE RE: PLAINTIFF'S PROFFERED BAD FAITH EXPERT WITNESS
(Docs. 19, 98)
Plaintiff Teresa Gade brings this action against Defendant State Farm Mutual
Automobile Insurance Company ("State Farm"), her automobile insurance carrier, for
breach of contract and bad faith denial of insurance benefits arising out of motor vehicle
collisions Plaintiff was involved in on January 3, 2008 and May 21, 2009. Plaintiff's bad
faith claim arises out of State Farm's refusal to settle her uninsured motorist ("UM")
claim arising out of the 2008 collision.
Pending before the court is State Farm's motion for partial summary judgment,
wherein State Farm argues that Plaintiff cannot prevail on her bad faith claim because
State Farm had a reasonable basis to deny her 2008 UM claim. Plaintiff opposes the
motion. Also pending before the court is State Farm's Motion In Limine Re: Plaintiff's
Proffered Bad Faith Expert Witness. (Doc. 98.) State Farm asks the court to find that its
Motion for Partial Summary Judgment presents a question of law to be decided by the
court and to further find that an expert witness opinion on the issue of whether an insurer
has a reasonable basis to deny a claim is inadmissible. Plaintiff counters that the issue is
one of fact and contends that her expert witness offers admissible evidence that must be
considered in deciding whether partial summary judgment is appropriate.
Plaintiff is represented by Todd D. Schlossberg, Esq. State Farm is represented by
Richard H. Wadhams, Jr., Esq. and Robin 0. Cooley, Esq. The court held oral argument
on this motion on September 26, 2014 and allowed additional discovery and briefing
before ruling on the motion. 1 The court took the motion under advisement on September
14, 2015.
I.
The Undisputed Facts.
A.
The 2008 Collision.
On January 3, 2008, Plaintiff, who was then forty years old, was involved in a
motor vehicle collision in Winooski, Vermont, in which she was rear-ended by another
driver who left the scene without providing his identification. A State of Vermont
Uniform Crash Report (the "2008 Crash Report") describes the circumstances of the 2008
collision as follows:
On January 3, 2008, at approximately 1515 hours, I responded to the
intersection of East Spring Street and Russell Street for a report of a motor
vehicle crash. Dispatch advised that one of the vehicles had fled the scene.
Upon arrival I met with the operator of Vehicle #2, Gade. She advised that
she had stopped at the stop sign for Westbound traffic when she was hit
from behind. She went on to state that she got out of her vehicle and
approached the vehicle that hit her. She stated that the Unknown male
asked her to move out of traffic and when she moved he fled the scene.
Gade's only description of the operator and vehicle #2 is that it was a male
operator and the vehicle was a dark colored van or truck. Gade did not see
the license plate and could provide no further information.
Gade advised that she had a sore neck as a result of the crash.
Gade was provided a State of Vermont Uniform Crash Report and was
advised to complete a Vermont Accident Report.
There are no suspects at this time for Operator #1. No further action taken
at this time.
1
State Farm's motion was filed on June 18, 2014. Plaintiff initially opposed the motion on the
grounds that she needed to conduct certain discovery before she could properly oppose it.
Pursuant to Fed. R. Civ. P. 56(d), the court agreed to allow Plaintiff to conduct discovery before
filing her opposition to State Farm's motion. Plaintiffs opposition was filed on August 31,
2015.
2
(Doc. 22-4 at 2.)
The 2008 Crash Report contains no information regarding the other vehicle. It
indicates that Plaintiff suffered a non-incapacitating injury, the airbag in her vehicle did
not deploy, and she did not need to be extracted from her vehicle. It further states that
Plaintiff was wearing a shoulder and lap belt and that her estimated speed at the time of
the collision was zero miles per hour. The 2008 Crash Report does not indicate whether
Plaintiffs vehicle required towing.
The following day, on January 4, 2008, Plaintiff reported the 2008 collision to
State Farm, who advised Plaintiff there was no deductible for her property damage. The
estimate to repair Plaintiffs vehicle totaled $333.40 and indicated a repair of the
vehicle's rear bumper and paint and finish to the affected area. 2 Plaintiff apparently
chose not to have the vehicle repaired and subsequently sold it on September 14, 2009.
Plaintiff did not advise State Farm of her personal injury claim resulting from the 2008
collision until after she consulted with legal counsel following the May 21, 2009
collision. She submits an affidavit in which she avers that, after the 2008 collision, State
Farm did not inform her that she could bring a claim forUM benefits under her own
policies for any physical injury she suffered.
B.
Plaintiff's Medical History Before and After the 2008 Collision.
Prior to the 2008 collision, Plaintiff had a history of receiving treatment for neck
and back pain and related symptoms. 3 On August 22, 2002, Plaintiff visited Fletcher
2
Plaintiff disputes whether $333.40 represents the full amount of the property damage sustained
by her vehicle as a result of the 2008 collision but proffers no evidence to the contrary. See Fed.
R. Civ. P. 56(c) (requiring party opposing summary judgment to proffer admissible evidence to
dispute fact characterized by moving party as undisputed); Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 248 (1986) ("[A] party opposing a properly supported motion for summary judgment
'may not rest upon the mere allegations or denials of his pleading, but ... must set forth specific
facts showing that there is a genuine issue for trial."').
3
Plaintiff filed a separate Statement of Additional Undisputed Facts primarily directed to her
competing characterizations of her medical records. State Farm argues that the court should not
consider this statement because it merely attempts to recharacterize the evidence and because a
separate statement of undisputed facts is not authorized by the applicable rules. Pursuant to
Vermont Local Rule 56(b), "[a] party opposing summary judgment ... must provide a separate,
3
Allen Health Care for '"chronic neck problems'" and pain. (Doc. 19-8 at 1.) At the time,
Plaintiffs treatment provider noted that Plaintiff had been experiencing increasing neck
pain over the past six weeks and that Plaintiff rated her pain as a seven, presumably on a
scale of one to ten.
On May 29, 2007, a MRI examination revealed Plaintiff had "[d]egenerative disc
disease including an area of osteophytic ridging and diffusely bulging disc at C6-7 level,
which creates right-sided more than left-sided foramina! narrowing and lateral recess
stenosis and mild disc bulge C5-C6 level." (Doc. 19-9 at 1.) On May 31, 2007, Plaintiff
reported that "she has ... neck pain that is fairly constant." (Doc. 19-10 at 1.)
On July 10, 2007, Plaintiff met with Stanley E. Grzyb, M.D. for a spinal
consultation. Dr. Grzyb recorded the presenting "[p]roblem" as "[n ]eck pain" and noted
Plaintiff "has had very extensive past medical history regarding her lumbar spine" and
that "Dr. Monsey had to perform a series of procedures for her." (Doc. 97-3 at 1.)
Plaintiff reported to Dr. Grzyb that she "has experienced cervical spine discomfort for at
least the last twelve months[,]" "[s]he has a combination of both muscular discomfort and
a deeper achy discomfort[,]" and that "she has had very occasional numbness of the little
and ring fingers of each hand." !d. Plaintiff reported "no upper extremity pain." !d.
Plaintiff advised that when she tried to do activities that she enjoyed "including sky
diving and running, she will have increased discomfort. Likewise, during normal every
day activities she will experience the achy discomfort in the neck." !d. Plaintiff noted
that she "has occasionally used Advil or Aleve" and that "[w ]hen the discomfort is more
intense, she will use Ultram." !d.
concise statement of disputed material facts." "The rule thus does not authorize the filing of a
statement of additional undisputed facts by the non-moving party." Rotman v. Progressive Ins.
Co., 955 F. Supp. 2d 272,276 (D. Vt. 2013); see also Post v. Killington, Ltd., 2010 WL
3323659, at *1 n.l (D. Vt. May 17, 2010), aff'd, 424 F. App'x 27 (2d Cir. 2011) (striking a
"statement of additional facts as unauthorized by the applicable rules"). However, the court may
consider "additional facts [where] it is clear from the parties' briefing that those facts are both
material and undisputed." Rotman, 955 F. Supp. 2d at 276. Here, the court will rely on the
medical records themselves, rather than the parties' characterization of them. Accordingly, any
disputed facts are not material. See Liberty Lobby, Inc., 477 U.S. at 248 ("Factual disputes that
are irrelevant or unnecessary will not be counted.").
4
Dr. Grzyb recorded that Plaintiff "has noted a crackling, crunching sensation in the
neck with motion" and that she "has had chiropractic care which did not lead to
resolution of her discomfort" although when her chiropractor applied manual traction, it
was beneficial. !d. Dr. Grzyb reviewed Plaintiffs cervical spine MRI and noted that
"[t]he most significant change is at the C6-7 level where she has modest degenerative
change with a bulging disc and associated osteophyte formation which creates bilateral
foramina! lateral recess narrowing, more on the right than on the left" although she was
"not experiencing any C7 radicular symptoms at the present time." !d. Dr. Grzyb
diagnosed Plaintiff as having "[ c]ervical spondylosis 4 with primarily axial neck pain[,]"
id. at 2, and agreed with Plaintiffs decision to pursue conservative treatment consisting
of physical therapy and traction.
From October 27, 2004 until the 2008 collision, Plaintiff saw Sean Mahoney, D.C.
for chiropractic care on eleven occasions. Dr. Mahoney's initial "analysis reveal[ ed]
areas [of] cervical, thoracic and lumbar fixation and subluxations[.]" (Doc. 97-5 at 1.)
Plaintiff experienced significant back pain during the period in question and reported
injuries sustained on two separate occasions when she was lifting her child, groceries,
and ice and on a separate occasion when she passed out and fell in the bathroom. During
this time frame, she reported neck pain as follows: on January 12, 2005, Plaintiff
complained of "neck and upper back pain[;]" on May 20, 2005, she noted she suffered
from "frequent neck pain and stiffness[;]" on October 25, 2005, she again reported
"frequent neck pain[;]" on September 7, 2007, she reported "continued neck and dorsal
pain which is frequent and ranging from 4-6 on 10 scale[;]" and on December 18, 2007,
she sought treatment for "neck and upper back pain and stiffness and extreme limitation
of cervical motion[.]" !d. at 1-3. Dr. Mahoney noted "bilateral lateral bending, bilateral
rotation, extension and flexion[] ... [are] reported to be quite painful and palpating
4
"Cervical spondylosis, commonly called arthritis of the neck, is the medical term for ... agerelated, wear-and-tear changes that occur over time." See Doc. 97 at 2 (citing Ortholnfo,
http://orthoinfo.aaos.org/topic.cfm?topic=A00369 (last visited Nov. 16, 2015)).
5
evokes a response of pain throughout the entire cervical spine and the dorsal spine to the
thoracic four level." !d. at 3.
After the January 3, 2008 collision, Plaintiff saw Dr. Mahoney on January 15,
2008. She reported that she experienced "fairly severe-8 on 10 scale neck and upper back
pain and spasm" and Dr. Mahoney observed that Plaintiff's "range of motion is very
limited on lateral bending and rotation, extension and this is all reportedly quite painful."
!d. Dr. Mahoney noted that Plaintiff responded well to the treatment he administered.
His records do not indicate that Plaintiff reported that she had been involved in a motor
vehicle collision. On January 18, 2008, Plaintiff saw Dr. Mahoney again and reported
"continued severe neck pain averaging 8 on 10 scale with episodes of painful muscle
spasm and very limited cervical range of motion." !d. at 3. Dr. Mahoney recorded that
Plaintiff "did get a little bit of relief and is moving better than her last visit on the 15th."
!d. His records do not mention the 2008 collision.
On January 22,2008, Plaintiff saw Dr. Mahoney and "relat[ed] that her neck and
upper back pain is doing very poorly and she rates this at a pretty strong eight on 10 scale
today with a severe restricted cervical motion, muscle splinting and tenderness and also
indicates pain radiating down into the left lower lumbar." (Doc. 97-5 at 5.) Dr.
Mahoney's notes record that Plaintiff"does have a pre-existing disc bulge-herniation in
the cervical spine and I indicated to her that this accident could well have aggravated that
level of disc herniation and in fact caused a secondary area to be involved." !d. This is
the first mention of the 2008 collision in Plaintiff's medical records. 5
On February 13, 2008, Plaintiff visited Dr. Grzyb for a follow-up visit for "[a]xial
neck pain and right upper extremity paresthesias." (Doc. 97-6 at 1.) He noted that since
he last saw Plaintiff, she had "followed a conservative treatment program with physical
therapy, traction and was doing much better." !d. Dr. Grzyb recorded Plaintiff's
description of the 2008 collision and the symptoms she suffered thereafter as follows:
5
As State Farm observes, Plaintiff has produced three different versions of Dr. Mahoney's notes
for the January 22, 2008 visit. (Doc. 100-1 at 20-21, ~ 30, Exhibit HH thereto.)
6
She indicates that she was involved in an automobile accident on January
[3], 2008. She was the driver of her vehicle and she indicates that she was
struck from behind. She pulled over at the request of the driver who struck
her and the driver continued on so she has no idea who caused the accident.
She indicates that thereafter she experienced increasing neck pain as well as
paresthesias in the right upper extremity. The paresthesias have involved
the middle, ring and long fingers and also have involved the thumb and
index fingers. She indicates that the paresthesias involving the little and
ring fingers increase with flexion and extension activities of the cervical
spine. She has worked with a chiropractic physician, Dr. Sean Mahoney,
but this has not led to resolution of her discomfort. She has also tried
traction, but the traction definitely increased her symptoms, specifically
leaning to increase a sense of paresthesia in the right thumb and index
finger.
!d. Dr. Grzyb,reviewed lateral x-rays of Plaintiffs cervical spine taken within the
previous two weeks and noted that "the degenerative change at C6-7 with disk space
narrowing at that level" was "similar to the MRI that was done last year." !d. Dr.
Grzyb's assessment was "[a]xial neck pain, cervical spondylosis, right upper extremity
symptoms that may be related to cervical radicular symptoms/thoracic outlet
syndrome/cubital tunnel syndrome/ambiguous carpal tunnel syndrome." !d. He advised
Plaintiff that she could pursue further evaluation through a repeat MRI.
On February 29, 2008, Plaintiff reported to Dr. Mahoney that her pain level was
"just a little bit lower" and that she had been to a neurologist for testing who had
diagnosed thoracic outlet syndrome. (Doc. 97-5 at 7.) Plaintiff advised that she thought
she was suffering from a "cervical disc related issue" and Dr. Mahoney noted that he was
"completely in accord with her evaluation of this situation based on her objective testing
results, her past history and the mechanism of injury with the recent motor vehicle
accident." !d. Plaintiff visited Dr. Mahoney fourteen times after the 2008 collision and
prior to the 2009 collision without reporting significant or sustained improvement in her
neck and back symptoms.
On February 28, 2008, Plaintiff visited Thomas J. Zweber, M.D. for an
electrodiagnostic medicine consultation. Dr. Zweber described Plaintiffs "somewhat
complicated history relating to her spine" as including a "fracture of her lumber spine
7
approximately 10 years ago" and "[i]n the summer 2007, she began to have significant
neck pain [and] had an evaluation showing some spinalDJD and disk disease." (Doc. 977 at 1.) He noted that Plaintiff advised that she was "doing quite well" until the 2008
collision, which she described as follows:
In January 2008, she was rear ended by another car going perhaps 10
mile[s] per hour. She felt sudden immediate increased pain in her neck
down into her right and left arms. Since then she has been having frequent
numbness into her fourth and fifth fingers on her right greater than left
hand. Ongoing neck pain and she states that she is quite bothered by this.
It is affecting any of her physical activities where previously she was quite
active athletically and at home.
!d. Dr. Zweber performed a nerve conduction study and an MRI and recorded the
following impressions based on "an abnormal EMG/Nerve Conduction Study[:]"
1.
2.
3.
4.
Patient has mild to moderate right cubital tunnel syndrome.
She has mild to moderate left cubital tunnel syndrome.
She also appears to have bilateral mild thoracic outlet syndrome.
Despite some clinical suspicion for cervical radiculopathy, I was
unable to document cervical radiculopathy, although with peripheral
nerve irritability and entrapment it makes the diagnosis more
difficult.
!d. at 3.
On March 5, 2008, Plaintiff received a second MRI evaluation, which revealed
"bilateral neural foramina} stenosis right greater than left" on the C6-C7 level. (Doc. 1914 at 1.) Heather Burbank reviewed the MRis and opined that Plaintiffs condition was
"unchanged from prior study" [Plaintiffs May 29, 2007 MRI] and her C6-C7 level
"[ d]oes not appear significantly changed from the prior study." !d.
On April24, 2008, Plaintiff received treatment from Jerry Tarver, M.D. of the
Vermont Interventional Spine Center. Dr. Tarver noted that Plaintiff presented "with a 4month history of increased right neck pain with radiation of pain and numbness down her
right arm into her second through fifth fingers" and reported that her symptoms began
after a low-speed motor vehicle accident in which she was rear ended and that she had "a
long history of chronic neck pain and generally very manageable." (Doc. 97-8 at 1.) He
further noted that Plaintiff had a history of lumbar spine problems which included
8
"persistent chronic low back pain" and surgery in 1995, 2000, and 2001. !d. Dr. Tarver
recorded that a cervical MRI revealed "changes [that] are reportedly no different from a
previous cervical MRI from the year before." !d. Dr. Tarver assessed cervical
spondylosis and gave Plaintiff an injection of Isovue-200, Lidocaine, and
Dexamethasone. On May 15, 2008, Plaintiff saw Dr. Tarver again and reported "very
minimal relief' from the steroid injections and no significant cessation of the symptoms
she was experiencing in her fingers. (Doc. 97-9 at 1.) Dr. Tarver administered another
steroid injection which also failed to provide any significant relief.
On July 29, 2008, Plaintiff was evaluated by Robert D. Monsey, M.D. of the Spine
Institute of New England. Dr. Monsey recorded the following in the "[s]ubjective"
portion of his evaluation:
The patient is a 41-year-old woman who began experiencing neck
discomfort with no specific traumatic event in 2007 with some neck pain
with occasional numbness in her small and ring finger of each hand. She
had chiropractic care which did not lead to resolution of her discomfort.
She used anti-inflammatories. She saw Dr. Grzyb and was started on a
course of physical therapy and traction and had complete relief of her
symptoms until a motor vehicle accident in January when she was struck
from behind. Following that she has had increased neck pain and arm
symptoms, which have gotten progressively worse. She describes the pain
in the neck center and on the right paraspinal region with discomfort along
the shoulder with a numbness and tingling that extends along the lateral
brachium, dorsoradial forearm[] and into the ulnar border as well as the
radial border of the hand with tingling in either the ulnar two digits or radial
three digits depending on how she moves her neck. She notes the neck pain
tends to be constant, worsened with activity. The arm symptoms tend to be
there to some degree, but are worsened particularly by motion of her neck
and any particular motion in the way she moves her neck will predict where
the pain into the arm will go. She was treated with traction and physical
therapy, again both of which made her more sore and treated with antiinflammatories without significant relief. She underwent epidural
injections with no change in her symptoms. She has had acupuncture with
no relief. She feels that these current symptoms significantly impair her
quality of life and comes in today to discuss potential options for treatment
of that.
In addition, she describes several months of left-sided lumbosacral flank
numbness that occurs if she sits or is in one position for too long a period of
9
time, occasional "insect bite" feelings involving her leg in different
distributions with no specific motion or action that precipitates those. She
notes those are quite transient and intermittent.
(Doc. 97-11 at 1.) Dr. Monsey opined that Plaintiffs symptoms were "consistent with a
radiculopathy in the setting of electrophysiologic evidence of peripheral compressive
neuropathies and concordant radiographs" and that "the natural history which is one of a
waxing and waning course, but progressive improvement over an unpredictable time
period." !d. at 2. He discussed treatment options, including additional medication and
surgery and opined that surgery offered "a 90% chance of good relief of symptoms." !d.
On September 29, 2008, Plaintiff underwent a C6-7 anterior cervical disketomy
and fusion, anterior structural allograft, and anterior Synthes plate. On November 4,
2008, at a follow up visit, Dr. Monsey described Plaintiff as "doing well" with "complete
relief of her preoperative neck and arm pain" and noted that she was "making excellent
symptomatic and functional gains." (Doc. 19-16 at 1.)
Plaintiff asserts that her medical bills related to the January 2008 collision total
$51,249.48 and that she lost income in the amount of$51,249.48 following her
September 29, 2008 surgery.
C.
The 2009 Collision.
On May 21, 2009, Plaintiff was involved in a second motor vehicle collision. She
alleges that George Snide pulled out of his driveway and struck her vehicle, causing her
to suffer a spinal injury. With State Farm's permission, Mr. Snide's insurer settled with
Plaintiff for $100,000, the limits of his policy. Plaintiff submitted a claim for
underinsured motorist benefits, which State Farm denied. In this lawsuit, Plaintiff asserts
a breach of contract claim against State Farm arising from its denial ofunderinsured
motorist coverage for the 2009 collision.
D.
State Farm's Denial of Plaintiff's 2008 UM Claim.
On October 5, 2010, Plaintiffs counsel requested copies of the declaration pages
for all State Farm policies that were in effect at the time of Plaintiffs 2008 collision and
asked State Farm to confirm the total combined available UM coverage. Each of State
10
Farm's policies at issue provides: "We will pay damages for bodily injury or property
damage an insured is legally entitled to collect from the owner or driver of an uninsured
motor vehicle." (Doc. 19-1 at 3, ~ 8.) State Farm responded by letter dated October 19,
2010 and advised that it was reviewing the potential coverage. On October 28, 2010,
State Farm advised that there were two policies in effect at the time of the 2008 collision
and that certified copies of the Declarations Pages had been requested. On November 9,
2010, State Farm sent Plaintiff's counsel the requested Declarations Pages for two
policies. State Farm subsequently sent Plaintiff's counsel certified copies of three auto
policies.
At the request of State Farm, on June 10, 2011, Plaintiff submitted to an
Examination Under Oath wherein she averred that prior to the 2008 collision, she had "a
sore neck" that she went to the doctor for in 2007 that was "low grade" and which was
"resolved" through physical therapy and a home traction device. (Doc. 97-1 at 18-19.)
She declared that although she "may have had a flair-up or two" her neck pain was
otherwise "forgettable in between" by which Plaintiff meant that she had some symptoms
but they "weren't so bad" and she "wouldn't necessarily think about them." !d. at 19-20.
She further stated under oath that she "had neck pain right after the accident" and that the
pain "going down [her] arm right after the accident" occurred "[w]ithin a few weeks" and
continued to worsen thereafter until she had surgery. !d. at 21-22. Although she was
able to work during this time period, she ceased doing "extra-curricular exercise, fun and
family activities" and was not able to do "a lot of the normal routines around the house:
Laundry, housework, things like that." !d. at 22.
State Farm acknowledges that a claimant's credibility is taken into consideration
in determining whether to pay a claim. On July 18, 2011, it advised Plaintiff's counsel
that it had reviewed the records and Examination Under Oath summary provided by the
defense and stated that it would be best to obtain films from Plaintiff's MRis performed
on May 29, 2007 and in March 2008.
On August 4, 2011, after discussions with Plaintiff's counsel, State Farm's claims
representative, Armando Bermudez, wrote Plaintiff's counsel, advising that State Farm
11
was "currently having this claim reviewed by an Independent Physician and a
Biomechanical Expert[,]" (Doc. 97-27 at 1), and by a separate letter on the same date
advised:
We have reviewed the Examination Under Oath and the medical records
provided. Based on what we have, we feel that we have causation issues
regarding the injuries alleged in this matter. Your client was treating for
cervical issues almost up to the date of loss. She saw the chiropractor three
weeks before the accident.
Because this impact was so minor, we feel that this accident did not
aggravate your client's condition, so we will not be making any voluntary
payments for your client's [2008 UM] claim.
(Doc. 19-24 at 1.)
On October 19, 2011, Plaintiff's counsel asked State Farm to confirm in writing
the total available UM coverage. On November 16, 2011, State Farm advised that it was
treating Plaintiff's claim as a UM claim under two applicable policies, both with
"100,000.00 per person/300,000.00 per accident" limits. (Doc. 19-26 at 1.) By letters
dated November 17 and November 21, 2011, Plaintiff's counsel again asked State Farm
to confirm the total UM coverage.
Plaintiff subsequently requested that State Farm pay UM benefits for her personal
injuries sustained as result of the 2008 collision. By letter dated October 19, 2011, she
confirmed that she was asking State Farm to pay the "available UM coverage limits."
(Doc. 19-25 at 1.) State Farm responded by letter dated November 16,2011, advising
that:
The damages presented are unclear as being related to this loss. This was a
minor accident, the damage to your client's vehicle was $333.40. The
question is-was there enough force to cause an injury? Was there a need
for surgery because of the accident? Your office did not provide any
records in regards to the MRis done prior to this accident due to similar
complaints she had.
MRis were done in the late spring and summer of 2007, due to bilateral
hand parasthesias. Your office did not provide us any records from the
doctors that ordered the MRis, or any follow up to discuss the results. Can
your office provide us with those records?
12
(Doc. 19-26 at 1.) By letter dated November 17, 2011, Plaintiffs counsel again
requested payment ofUM benefits and asserted that State Farm had not "articulated any
basis for denying payment of benefits, or provided any grounds for disputing the medical
evidence[.]" (Doc. 19-27 at 1.) Plaintiffs counsel further asserted that "Ms. Gade has
provided you with her pre-collision and post-collision medical records." !d.
On November 18, 2011, State Farm wrote Plaintiffs counsel and stated:
We have reviewed the medical records again. We have some serious
causation concerns with this claim. We cannot at this time make any offers
of settlement. If you have anything else for us to consider, please provide.
(Doc. 19-28 at 1.)
On November 21, 2011, Plaintiffs counsel wrote Mr. Bermudez and provided a
2007 cervical MRI record which Plaintiffs counsel asserted he had previously provided,
but which Mr. Bermudez reported was missing. Plaintiffs counsel also provided a CD
with the May 2007 and March 2008 cervical spine MRis, together with an assertion that a
"careful comparison of these two studies shows significant neuro-foramina! compromise
at C6/C7 on the 2008 study, while such a finding was not present on the May 2007 study"
and an assertion that orthopaedic surgeons Grzyb and Monsey had both concluded that
"Ms. Gade did in fact suffer significant worsening in her symptoms as a result of the
[2008] collision, requiring her to undergo cervical fusion surgery." (Doc. 97-21 at 1.)
Plaintiffs counsel stated that he believed that Plaintiff had four State Farm policies in
effect as of January 3, 2008.
Thereafter, on April 18, 2012, Plaintiffs counsel submitted an addendum written
by Dr. Mahoney and a March 9, 2012 report letter from Dr. Monsey. Based on these
submissions, Plaintiffs counsel asked State Farm to reconsider its refusal to make a
settlement offer on Plaintiffs first-party UM claim.
Dr. Mahoney's April12, 2012 addendum states:
Teresa had been treated by me several times in August and September 2007
for an acute, non-traumatic episode of lower back pain. She had also
experienced episodes of neck pain in the past with no report of upper
extremity, radiating pain.
13
This woman would present for treatment at my office occasionally and
primarily for flare-ups of chronic lower back pain and muscle spasms. Just
before her 113/08 motor vehicle accident, I had treated her on 12/18/07.
She presented with neck and upper back pain and mild lumbar pain. These
symptoms resolved with one visit.
Mrs. Gade returned to my office on 1115/08 after the January 3, 2008
accident. Her condition at that time included severe neck and upper back
pain. By January 28, she started to report right arm and hand pain and
paresthesias. On 2/6/08 she was noting pain and parasthesias into both
arms and hands. This was clearly a change in any of her previous clinical
presentations. Teresa continued to treat with me occasionally until her
cervical spine surgery on 9/29/08[.] Her last visit at my office was on
August 4, 2008.
It is my opinion that Mrs. Gade's condition and the need for her 9/29/08
spine surgery, more likely than not, was caused by the motor vehicle
accident that occurred on 113/08.
(Doc. 97-20 at 1.)
Dr. Monsey's March 9, 2012 report letter stated:
Ms[.] Gade initially had atraumatic neck pain in 2007, which resolved with
minimal care and had been asymptomatic until 112008 when she was in a
motor vehicle accident. At that point in time, she began developing neck
and arm symptoms again. The motor vehicle accident directly resulted in
precipitation of the onset of symptoms related to degenerative changes at
C6-7. She underwent a C6-7 anterior diskectomy and fusion with complete
relief of her symptoms until 5/2009 when she was struck in a motor vehicle
accident again precipitating neck and arm pain secondary to degenerative
changes at C5-C6. Because of the ongoing symptoms, she underwent a C56 anterior cervical disketomy and fusion with very good relief of her arm
symptoms with continued intermittent neck pain at the time I had last seen
her in January of 20 11.
(Doc. 97-19 at 1.)
On April27, 2012, Mr. Bermudez wrote Plaintiffs counsel and provided a March
16, 2012 report letter that states as follows:
Thank you for your letter dated April 18th. Enclosed is a report for you to
review. I have some concerns on Dr. Mahoney's report stating that
[Plaintiffs] issues resolved after the December 18th, 2007 visit[.]
Your client waited 12 days to seek treatment after the accident. There is
nothing in the records that support[ s] that she was fine after the December
14
18, 2007 treatment. There were no significant changes in the diagnostics
done before and after the accident.
Please review the report [a copy of the March 16, 20 12 report by Michael
T. Prange, Ph.D., P.E. who opines that the 2008 collision "provided no
mechanism to create any cervical spinal disc injuries to [Plaintiff] and
provided no more potential for exacerbation of any pre-existing disc
pathologies than routine activities.]"
(Doc. 19-31 at 1, 8.) State Farm concedes it did not rely on the Prange report in its initial
denial of Plaintiff's UM claim on August 4, 2011.
E.
Plaintifrs Bad Faith Claim Against State Farm.
On or about December 31, 20 13, Plaintiff filed this lawsuit alleging, among other
things, that State Farm acted in bad faith with regard to her 2008 UM claim by: (I)
"fail[ing] to respond to Plaintiff's November 21, 2011 request that [State Farm] identify
and confirm the auto insurance policies in effect as of January 3, 2008 that afforded [UM]
coverage to Plaintiff[;]" and (2) "Defendant's March 18 6 refusal to pay or offer to pay
any [UM] benefits to Plaintiff in connection with the January 3, 2008 collision, despite its
having neither sought nor obtained any medical opinion or medical report from a licensed
medical or health care provider stating that Plaintiff sustained no injury to her cervical
spine as a result of that collision[.]" (Doc. 5 at 5, ,-r,-r 41-42.)
In deposition, Mr. Bermudez testified that State Farm concluded that Plaintiff had
sustained no injury as a result of the 2008 collision. He further testified that if State Farm
had determined that Plaintiff sustained an injury as a result of the 2008 collision,
including an aggravation of a preexisting injury or condition or a short-term or transient
injury, State Farm would not have denied Plaintiff's claim. In discovery, State Farm
acknowledged that it "does not have a medical opinion from a medical doctor specifically
stating that 'Plaintiff sustained no injury to her cervical spine as a result of that [January
3, 2008] collision."' (Doc. 97-1 at 39, ,-r 90.) 7
6
Plaintiff characterizes this as a typographical error in her Complaint and contends that she
meant to indicate August 4, 2011.
7
Plaintiff proffers evidence which she claims reveals that State Farm's activity log for her 2008
collision claim is either inadequate or inaccurate and asks the court to accept as an undisputed
15
F.
Plaintifrs Proffered Expert Witness's Opinion.
In support of her opposition to State Farm's motion for partial summary judgment,
Plaintiff submits the twenty-six page report (the "Fey Expert Report") of Louis G. Fey,
Jr. dated August 11, 2015. 8 (Doc. 97-30.) In his Expert Report, Mr. Fey stated that he
provided his opinions "with a reasonable degree of probability based upon the standards
that apply to the property casualty insurance industry." !d. at 2. Based upon his review
of Plaintiffs insurance policies and medical records, State Farm's claim file, related
correspondence, and the legal documents filed in this case, Mr. Fey asserts that State
Farm "failed to conduct a prompt and thorough investigation in violation of industry
standards before denying the claim[,]" and "handled the claim with a preconceived bias
against its insured in violation of industry standards[.]" !d. at 24. Mr. Fey notes that
State Farm recognized that Plaintiff was likely an "eggshell plaintiff' and contends that
"[t]he industry acknowledges that pre-existing conditions actually increase a claim[']s
value rather than lowering it." !d. at 20. He thus concludes that "from an objective
claims perspective, there was no reasonable basis upon which [State Farm] could
conclude that [Plaintiff] did not suffer[] some injury or ex[ac]erbation of her pre-existing
condition as a result of the January 3, 2008 hit-and-run collision." !d. at 11.
fact that "State Farm has a well-recognized history of a widespread pattern of bad-faith insurance
practices in denying and refusing to pay any benefits on automobile claims" and "a history of
concealing and destroying relevant claims file records and claims handling manuals and policies"
citing one case and an article. (Doc. 97-1 at 42-43.) Because the alleged facts are not relevant in
determining the pending motions, the court disregards them.
8
Mr. Fey has "been engaged to serve as an expert witness with regard to the industry standards,
customs, and practice involved in handling uninsured motorist ("UM") insurance claims." (Doc.
97-30 at 2.) He has over thirty-three years of experience handling insurance claims, including
auto claims and related litigation. In his role at Fey Consulting LLC, he "provide[s] litigation
support and or expert testimony with regard to claim handling, allegations of agency errors and
omissions, underwriting disputes, and a variety of other insurance[-]related issues." !d.
Previously, Mr. Fey has been qualified as an expert on insurance matters by courts in Georgia,
Mississippi, and Louisiana.
16
II.
Conclusions of Law and Analysis.
A.
Standard of Review.
"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). "When viewing the evidence, the court must 'assess the
record in the light most favorable to the non-movant and ... draw all reasonable
inferences in [the non-movant's] favor."' Weinstock v. Columbia Univ., 224 F.3d 33, 41
(2d Cir. 2000) (quoting Del. & Hudson Ry. Co. v. Canso/. Rail Corp., 902 F.2d 174, 177
(2d Cir. 1990)). Summary judgment is warranted if the non-moving party fails to proffer
admissible evidence in support of each essential element of her claim. See Celotex Corp.
v. Catrett, 477 U.S. 317, 323 (1986) ("The moving party is 'entitled to a judgment as a
matter of law' because the nonmoving party has failed to make a sufficient showing on
an essential element of her case with respect to which she has the burden of proof.").
"The trial court's function in deciding such a motion is not to weigh the evidence
or resolve issues of fact, but to decide instead whether, after resolving all ambiguities and
drawing all inferences in favor of the non-moving party, a rational juror could find in
favor of that party." Pinto v. Allstate Ins. Co., 221 F.3d 394, 398 (2d Cir. 2000).
However, "mere speculation and conjecture is insufficient to preclude the granting of the
motion." Harlen Assocs. v. Inc. Viii. of Mineola, 273 F.3d 494,499 (2d Cir. 2001).
Although Plaintiff contends that she was not "afforded adequate discovery even on
the limited issue of the 'first prong' of Vermont's bad faith law," (Doc. 97 at 8 n.8),
pursuant to Fed. R. Civ. P. 56(d), the court granted her an extension of thirteen months to
file her opposition to State Farm's motion for partial summary judgment. During this
time, Plaintiff propounded interrogatories and document requests, deposed State Farm's
claim representative with regard to her 2008 UM claim, underwent an independent
medical examination ("IME"), and retained an expert witness who produced an expert
17
report. The court thus concludes that Plaintiff had adequate time for discovery prior to
filing her opposition. 9
Because the court's jurisdiction over this case is based upon diversity of
citizenship, it analyzes Plaintiffs bad faith claim in accordance with Vermont law. See
Erie R.R. Co. v. Tompkins, 304 U.S. 64,78-79 (1938); Omega Eng'g, Inc. v. Omega,
S.A., 432 F.3d 437, 443 (2d Cir. 2005). The court applies the Federal Rules of Evidence,
in conjunction with Vermont's substantive law, in order to determine the admissibility of
any contested evidence. See Sims v. Great Am. Life Ins. Co., 469 F.3d 870, 876-83 (lOth
Cir. 2006) Uoining other Circuits that have held that Federal Rules of Evidence are not
governed by Erie doctrine in a diversity case, but noting that courts must still consider
that "state substantive policy directs the admissibility of evidence under the relevancy
considerations of Rule 401 ").
B.
Vermont Law Governing First-Party Bad Faith.
Under Vermont law, "[t]o establish bad faith, the plaintiff must show that: '(I) the
insurance company had no reasonable basis to deny benefits of the policy, and (2) the
company knew or recklessly disregarded the fact that no reasonable basis existed for
denying the claim."' Murphy v. Patriot Ins. Co., 2014 VT 96,
~
17, 106 A.3d 911, 917
(quoting Bushey v. Allstate Ins. Co., 670 A.2d 807, 809 (Vt. 1995)). "An insurance
company may challenge claims that are fairly debatable and will be found liable only
where it has intentionally denied (or failed to process or pay) a claim without a
reasonable basis." Bushey, 670 A.2d at 809 (internal quotation marks omitted). "Thus,
See Serecky v. Nat 'l Grange Mut. Ins., 2004 VT 63, ~ 28, 857 A.2d 775, 785, 177 Vt. 58, 69-70
("[W]e also reject plaintiffs' assertion that the court erred in granting summary judgment before
discovery was complete" and noting that, despite plaintiffs' claim that with additional discovery
"they might have been able to show that defendants acted in bad faith by denying coverage
without conducting a proper investigation[,] ... we find no error in the timing of the court's
summary judgment decision."); Bushey v. Allstate Ins. Co., 670 A.2d 807, 811 (Vt. 1995)
(rejecting plaintiffs argument "that the court should not have granted defendant's summary
judgment motion when the parties had not completed discovery [because] further discovery
might have provided relevant information, including in-house memoranda that defendant had
been ordered to produce" and observing that "Rule 56 does not require that summary judgment
motion decisions await completion of discovery, and to so require would defeat the purpose of
the rule.").
9
18
the rule limits recovery to instances in which an insurer not only errs in denying coverage
but does so unreasonably." !d. As a result, under Vermont law, "no insurer will be liable
for a good-faith error in denying or delaying a claim," id., and "[w]here a claim is 'fairly
debatable,' the insurer is not guilty of bad faith even if it is ultimately determined to have
been mistaken." Murphy, 2014 VT 96, ~ 17 (quoting Bushey, 670 A.2d at 809).
As a threshold issue, the parties dispute whether the first prong of the bad faith test
presents a question of law or a question of fact. 10 The Vermont Supreme Court arguably
has not squarely addressed this issue. In such circumstances, this court must predict how
that court would rule. As the Second Circuit has explained:
'our role as a federal court sitting in diversity is not to adopt innovative
theories that may distort established state law. Instead we must carefully
predict how the state's highest court would resolve the uncertainties that we
have identified. In making this prediction, we give the fullest weight to
pronouncements of the state's highest court ... while giving proper regard
to relevant rulings of the state's lower co_urts.
Runner v. NY. Stock Exch., Inc., 568 F.3d 383, 386 (2d Cir. 2009).
10
Plaintiff contends that whether State Farm had a reasonable basis to deny her claim is a
question of fact under Vermont law. The cases she cites for this contention are either
distinguishable or stand for a contrary proposition. In Century Partners, LP v. Lesser Goldsmith
Enterprises, Limited, 2008 VT 40, 184 Vt. 215, 958 A.2d 627, the court considered good faith in
the context of a landlord-tenant contract, pursuant to a different standard than a first-party bad
faith insurance claim. Id. at~ 21. Buote v. Verizon New Eng., 249 F. Supp. 2d 422, 432 (D. Vt.
2003), involved a worker's compensation case which posed the question of whether an injury
was work-related and included "strong evidence that the claims adjuster's stated basis for
denying benefits was a misrepresentation[.]" This court concluded that those factual issues must
be resolved by the jury. Id. In Village of Morrisville Water Light Department v. United States
Fidelity & Guaranty Co., 775 F. Supp. 718, 735 (D. Vt. 1991), this court considered whether an
insurer "acts in bad faith in refusing to defend its insured" and concluded that the issue was
"generally one for the trier of fact" but noted that the issue "becomes a question of law ... from
the uncontroverted evidence in the record. Such is not the case here." (internal citation omitted).
In Myers v. Ambassador Insurance Co., 508 A.2d 689, 690 (Vt. 1986), which predates Bushey,
the Vermont Supreme Court addressed whether an "insurer acted in bad faith as a matter of law
by refusing to settle [an] underlying lawsuit within the limit of [the insured's] policy and by not
advising him of matters critical to his exposure, thereby depriving him of the opportunity to
protect his uninsured interests." ld. The Myers court concluded that "it is clear that the insurer
acted in bad faith as a matter of law." I d. at 692.
19
Here, the court predicts that the Vermont Supreme Court would rule that where the
facts are undisputed, the court may rule on the first prong of the bad faith test as a
question of law. Indeed, Bushey makes this point clear:
[a] motion for summary judgment by an insurer compels a court to consider
both elements of the bad-faith tort. If the insurer prevails on either prong,
the court must grant the insurer's motion .... When a court decides that an
insurer's actions were reasonable because the claim was fairly debatable as
a matter of law, it must grant the summary judgment motion without
reaching the question of the insurer's knowledge.
Bushey, 670 A.2d at 810 (emphasis supplied). In so ruling, the Bushey court cited with
approval Dunn v. State Farm Fire & Cas. Co., 927 F.2d 869, 873 (5th Cir. 1991), for the
proposition that "whether [an] insurer had [an] arguable reason to deny [an] insured's
claim was [an] issue of law for [the] court[.]" Bushey, 670 A.2d at 810.
Likewise, in Murphy, the Vermont Supreme Court affirmed the trial court's
determination of the issue of bad faith as a matter of law. Murphy, 2014 VT 96,
at~~
8,
18 (affirming trial court's grant of summary judgment where the insurer "had a
reasonable, if debatable, basis to deny [p ]laintiffs claims under the policy" and noting
that "[m ]easured against our bad faith standard, we find no basis to disturb the trial
court's ruling"). In doing so, the Vermont Supreme Court was aware that the Vermont
trial court had unequivocally treated the first prong of the bad faith test as a question of
law. See Murphy v. Patriot Ins. Co., 2012 WL 9092654, at *7 (Vt. Sup. Ct. June 22,
2012) ("Whether an insurer has an arguable reason to deny an insured's claim is an issue
of law for the court to decide.").
Similarly, in Serecky v. National Grange Mutual Insurance, 2004 VT 63, 177 Vt.
58, 857 A.2d 775, the Vermont Supreme Court addressed whether the trial court erred in
"rejecting plaintiffs' claim of bad faith as a matter of law" and concluded that it did not,
noting that its decision in Myers v. Ambassador Insurance Co., 508 A.2d 689 (Vt. 1986)
held that the "determination of whether [an] insurer acted in bad faith presents a question
of law where, based on uncontroverted evidence, a 'reasonable man following the law
20
can draw but one conclusion on the issue[.]"' Serecky, 2004 VT 63,
at~~
11, 27 (quoting
Myers, 508 A.2d at 692).
In light of the foregoing, this court has no difficulty in predicting that the Vermont
Supreme Court would hold that, where the material facts are uncontroverted, the first
prong of the bad faith test presents a question of law for the court. Summary judgment
therefore may be granted even where, as here, the parties differ as to the import of the
facts:
The genuine issue rule in the context of bad faith claims allows a district
court to grant summary judgment when it is undisputed or indisputable that
the basis for the insurer's denial of benefits was reasonable-for example,
where even under the plaintiff's version of the facts there is a genuine issue
as to the insurer's liability[.]
Amadeo v. Principal Mut. Life Ins. Co., 290 F.3d 1152, 1161 (9th Cir. 2002).
Having determined that State Farm's request for partial summary judgment on the
first prong of the bad faith test presents a question of law for the court, the court turns to
whether Plaintiff's proffered expert witness's opinions on that question are admissible.
C.
Whether Mr. Fey's Expert Witness Opinions are Admissible.
In opposing summary judgment, Plaintiff proffers the Fey Expert Report and
asserts it creates a question of fact regarding whether State Farm acted in bad faith.
Although Mr. Fey couches many of his opinions in terms of whether State Farm has
violatedjndustry standards, he also opines, among other things, that State Farm "cannot
be deemed to have had, as of August 4, 2011 or November 18, 2011, a reasonable basis
to completely reject Gade's claim" and State Farm's "decision to reject the claim
outright, and its refusal to offer one penny, was not reasonable[.]" (Doc. 98-1 at 22.)
State Farm has moved in limine with regard to the Fey Expert Report, arguing that
Mr. Fey's opinions are inadmissible as to whether State Farm had a reasonable basis to
deny Plaintiff's 2008 UM claim because they constitute legal conclusions. It points to
two federal district courts that have specifically rejected Mr. Fey's opinions on that basis.
See Versai Mgmt. Corp. v. Landmark Am. Ins. Corp., 2013 WL 681902, at *3 (E.D. La.
Feb. 22, 2013) ("Fey will not be permitted to testify regarding whether Defendant's
21
conduct rises to the level of bad faith ... because such opinions are legal conclusions"
and noting that although "Fey may testify about insurance industry standards, ... he may
not ... render ultimate legal conclusions that Defendant acted in bad faith"); SJB Grp.,
LLC v. TEE Grp., Inc., 2013 WL 4499032, at *3 (M.D. La. Aug. 19, 2013) (excluding
Mr. Fey's opinions regarding the proper interpretation of an insurance contract because to
"allow an expert to give his opinion on the legal conclusions to be drawn from the
evidence both invades the court's province and is irrelevant") (internal quotation marks
omitted).
In the Second Circuit, it is well-established that an expert witness may not provide
testimony that constitutes a legal conclusion. See Densberger v. United Techs. Corp.,
297 F.3d 66, 74 (2d Cir. 2002) (reiterating the "well-established rule in this Circuit that
experts are not permitted to present testimony in the form of legal conclusions"); Nimely
v. City of New York, 414 F.3d 381, 397 (2d Cir. 2005) (holding "expert testimony ... that
usurps either the role of the trial judge in instructing the jury as to the applicable law or
the role of the jury in applying that law to the facts before it ... by definition does not aid
the jury in making a decision; rather, it undertakes to tell the jury what result to reach")
(internal citation, alteration, and quotation marks omitted); United States v. Scop, 846
F.2d 135, 139-40 (2d Cir. 1988) ("Rule 704 was not intended to allow experts to offer
opinions embodying legal conclusions" because such opinions "invade the province of
the court" and are inadmissible) (internal quotation marks omitted); see also In re Initial
Pub. Offering Sec. Litig., 174 F. Supp. 2d 61, 64 (S.D.N.Y. 2001) (collecting cases and
concluding that "every circuit has explicitly held that experts may not invade the court's
province by testifying on issues of law"). This rule applies not only to summary
judgment motions decided by the court, but also to testimony presented to a jury. See
Marx & Co. v. Diners' Club, Inc., 550 F.2d 505,509-10 (2d Cir. 1977), cert. denied, 434
U.S. 861 ( 1977) ("It is not for witnesses to instruct the jury as to applicable principles of
law, but for the judge."); see also Burkhart v. Washington Metro. Area Transit Auth., 112
F.3d 1207, 1213 (D.C. Cir. 1997) ("Each courtroom comes with equipped with a 'legal
expert,' called a judge, and it is his or her province alone to instruct the jury on the
22
relevant legal standards."). Accordingly, to the extent Mr. Fey offers opinions regarding
whether State Farm had a reasonable basis to deny Plaintiffs claim, he invades the
court's province by testifying on a question of law. Such opinions are inadmissible. See
Densberger, 297 F.3d at 74.
.
.
Mr. Fey's opinions regarding State Farm's alleged errors in processing Plaintiffs
claim are inadmissible for a different reason. In order to determine whether a claim is
fairly debatable as a matter of law, the court need not consider industry standards, or
determine whether State Farm's processing of Plaintiffs claim was sufficient or
consistent with those standards, or whether State Farm violated its own internal
standards, protocols, or policies. The Vermont Supreme Court has never held that these
external standards must be considered in evaluating the first prong of a bad faith claim. 11
Mr. Fey's opinions regarding certain insurance industry standards, while perhaps
admissible with regard to the second prong of the bad faith test, therefore have no
relevance with regard to whether Plaintiff has satisfied the first prong. See Smith v.
Allstate Ins. Co., 912 F. Supp. 2d 242,251-52 (W.D. Pa. 2012) (granting motion in limine
to exclude expert witness testimony that included opinions regarding compliance with
insurance company's internal policies, insurance industry standards, and whether
insurance company and its employees handled UIM claim in bad faith because the
"overwhelming majority of the information and opinions contained in [the expert's]
report are outside the permissible scope of expert testimony").
A claim that is fairly debatable does not lose that status simply because an adjuster
failed to adhere to insurance industry or internal standards in denying the claim. Rather,
a claim, is fairly debatable where an insurer had a reasonable, if debatable, basis to deny
a plaintiffs claim even if that reasonable basis is later proved incorrect. Murphy, 2014
VT 96,
at~
8. In Vermont, this determination is made based on the facts known to the
11
Indeed, as more fully addressed below, the Vermont Supreme Court has specifically rejected a
cause of action for negligent processing of an insurance claim. See Murphy, 2014 VT 96, at
~~ 11-16.
23
insurer at the time, not on whether the insurer has complied with industry or internal
standards. !d.
Because Mr. Fey's opinions are either conclusions oflaw reserved for the court or
irrelevant opinions regarding claims processing standards, they are inadmissible for
purposes of the pending motion. State Farm's Motion In Limine Re: Plaintiffs Proffered
Bad Faith Expert Witness (Doc. 98) is therefore GRANTED.
D.
Whether the Prange Opinion is Admissible.
Plaintiff contends that because State Farm received the Prange report after it
denied Plaintiffs 2008 UM claim on August 4, 2011 and November 18, 2011, it cannot
be deemed to be something State Farm considered in the context of processing Plaintiffs
2008 UM claim. See 14 Couch on Ins.§ 207:6 (3d ed. 2015) ("The test to be applied in
judging the insurer's conduct is the action of a reasonable person under the circumstances
which existed at the time the insurer refused payment.").
Courts have reached divergent conclusions regarding whether the opinion of a
biomechanical engineer is admissible at trial and for what purpose. The more recent
trend is to allow such opinions as a form of accident reconstruction provided that the
biomechanical expert does not testify regarding whether a specific accident caused or
contributed to a plaintiffs injuries. 12
12
See, e.g., Laski v. Bellwood, 2000 WL 712502, at *3 (6th Cir. May 25, 2000)
("[B]iomechanics are qualified to determine what injury causation forces are in general and can
tell how a hypothetical person's body will respond to those forces, but are not qualified to render
medical opinions regarding the precise cause of a specific injury.") (internal quotation marks
omitted); Boykin v. W EJCPress, Inc., 2015 WL 539423, at *6, *9 (S.D.N.Y. Feb. 6, 2015)
(denying motion in limine to bar expert witness's biomechanical analysis that opined that "forces
acting on Plaintiffs body were below injury thresholds and comparable to those experienced
during 'routine daily activities[]'" and noting that"[c ]ourts in other jurisdictions have admitted
accident reconstruction and biomechanics expert testimony based on evidence comparable to
what [expert witness] relied on here"); Rodriguez v. Athenium House Corp., 2013 WL 796321, at
*4-5 (S.D.N.Y. Mar. 5, 2013) (ruling biomechanical engineer may testify "about the nature and
amount of force generated by the accident in question and the observed effect of that force on a
human body in comparable accidents[,]" but is not qualified to offer a medical opinion as to
whether a specific accident caused plaintiffs injuries) (internal quotation marks omitted); Smith
v. BNSF Ry. Co., 2011 WL 7053631, at *5 (W.D. Okla. Sept. 14, 2011) ("In general,
24
In this case, the parties began discussing Plaintiffs 2008 UM claim in October of
2010. State Farm first consulted with Mr. Prange in August of2011 but did not receive
his report until March 2012. State Farm concedes that it did not rely on the Prange report
when it initially denied Plaintiffs claim on August 4, 2011. Thereafter, however, State
Farm continued to communicate with Plaintiffs counsel regarding Plaintiffs 2008 UM
claim, including inviting Plaintiff to submit additional information. On April27, 2012,
State Farm wrote to Plaintiffs counsel, forwarded the Prange report, and asked Plaintiffs
counsel to review it. In doing so, State Farm cited Mr. Prange's conclusion that the 2008
collision "provided no mechanism to create any cervical spinal disc injuries to [Plaintiff]
and provided no more potential for exacerbation of any pre-existing disc pathologies than
routine activities." (Doc. 19-31 at 8.) Plaintiff filed suit approximately eight months
later on December 31, 2012.
Based upon the undisputed facts, the Prange report is admissible for the limited
purpose of demonstrating that, pre-lawsuit, State Farm consulted with an expert witness
in the course of analyzing Plaintiffs 2008 UM claim. 13 It is also undisputed that State
Farm relied on the Prange report to buttress its August 2011 conclusion that there were
"causation issues regarding the injuries alleged in this matter" and "[b]ecause the impact
was so minor, we feel that this accident did not aggravate [Plaintiffs] condition[.]"
(Doc. 19-24 at 1.)
biomechanical engineers are qualified to offer expert opinion and that opinion may include
causation so long as a medical opinion is not offered").
13
See Keshish v. Allstate Ins. Co., 959 F. Supp. 2d 1226, 1233 (C.D. Cal. 2013) ("An insurer
may demonstrate the existence of a genuine dispute by showing that 'it relied on opinions from
experts while evaluating the insured's claim."') (quoting Maynard v. State Farm Mut. Auto. Ins.
Co., 499 F. Supp. 2d 1154, 1160 (C.D. Cal. 2007)); United Servs. Auto. Ass 'n v. Croft, 175
S.W.3d 457, 469 (Tex. Ct. App. 2005) ("[A]n insurer's reliance on an expert's report will not
support a finding of bad faith unless it is shown 'the report was not objectively prepared or the
insurer's reliance on the report was unreasonable."') (quoting State Farm Lloyds v. Nicolau, 951
S.W.2d 444,448 (Tex. 1997)).
25
E.
Whether State Farm Had a Reasonable Basis to Deny Plaintiff's 2008
UM Claim.
State Farm argues that it is entitled to judgment as a matter of law because it had a
reasonable basis to deny Plaintiffs 2008 UM claim. Plaintiff counters that State Farm's
refusal to make a settlement offer is indicative of its bad faith because there is no dispute
that the 2008 collision took place and she has two medical opinions indicating that her
injuries from that collision required spinal surgery. Plaintiff points to various aspects of
her medical records, which she argues State Farm misinterprets, and asserts that the 2008
collision exacerbated her pre-existing condition. As an "eggshell plaintiff," she asserts
that a reasonable insurer would recognize that she was entitled to some payment on her
2008 UM claim.
Plaintiffs arguments are primarily directed to perceived inadequacies in State
Farm's investigation of her 2008 UM claim. See, e.g., Doc. 97 at 7 ("State Farm did not
obtain an IME. According to State Farm, despite its repeated representations that it was
obtaining an independent physician review of the records, it did not obtain a records
review."). These arguments are generally misplaced in analyzing the first prong of a bad
faith claim. An insurance company has no obligation to perform a flawless investigation
or exercise perfect judgment in order to defeat a bad faith claim. See Murphy, 2014 VT
96,
at~~
11-16 (rejecting proposition that a bad faith claim may be predicated on a
negligent or inadequate investigation); Bushey, 670 A.2d at 809 ("[N]o insurer will be
liable for a good-faith error in denying or delaying a claim"); see also Adam v.
Stonebridge Life Ins. Co., 612 F.3d 967, 975 (8th Cir. 2010) ("Where an insurer has an
objectively reasonable basis to deny coverage, it has no duty to investigate further before
denying the claim") (internal quotation marks omitted); Erie Ins. Co. v. Hickman by
Smith, 622 N.E.2d 515, 520 (Ind. 1993) (holding that "the lack of diligent investigation
alone is not sufficient to support [a bad faith] award").
An insurer is also not required to accept an insured's own statements regarding
causation or even those of her treating physicians provided there is a reasonable basis to
doubt their reliability. In Bushey, the Vermont Supreme Court addressed this very issue:
26
Plaintiff emphasizes evidence he calls 'voluminous,' indicating that,
whether or not the extent of his injuries was clear from the outset, by
August 1991 defendant was aware that both of plaintiffs surgeons, who
had been treating him for approximately one year and had performed
surgery on him, were of the opinion that the shoulder injury resulted from
the accident. The evidence, however, supports the judgment that there was
a valid reason for an independent medical examination by defendant, whose
expert reported that he was unable to discern a clear cause-and-effect
relationship between the auto accident and the rotator cuff tear, and a fair
dispute about the amount of plaintiffs damages. The court properly
concluded that plaintiffs claim was fairly debatable as a matter of law.
Consequently, there was no occasion for the court to consider defendant's
possible bad faith.
Bushey, 670 A.2d at 810-11.
In this case, although Dr. Mahoney and Dr. Monsey supported Plaintiffs position
with regard to causation, State Farm had a valid basis to doubt the credibility of those
opinions and Plaintiffs Statement Under Oath because all three asserted that Plaintiffs
neck and back pain were no longer problematic prior to the 2008 collision. 14 The
undisputed facts, however, reveal that Plaintiff had a significant history of neck and back
pain, including two associated surgeries, and that she continued to be symptomatic prior
to the 2008 collision.
At the scene of the 2008 collision, although Plaintiff complained of a sore neck,
she did not go to the hospital or otherwise seek medical treatment until twelve days later.
When she sought treatment from her chiropractor, she did not mention the 2008 collision
until her third visit after the accident. Subsequent efforts to confirm her belief that the
2008 collision exacerbated her pre-existing condition yielded mixed results. Two of her
14
For example, Dr. Monsey opined that Plaintiff"had atraumatic neck pain in 2007, which
resolved with minimal care and had been asymptomatic until 112008 when she was in a motor
vehicle accident" (Doc. 97-19 at 1), when in fact in the years preceding the 2008 collision,
Plaintiff had reported to her medical treatment providers "neck pain that is fairly constant" (Doc.
19-10 at 1), "cervical spine discomfort for at least the last twelve months[,]" and occasional
numbness in her fingers of each hand. (Doc. 97-3 at 1.) Just weeks prior to the 2008 collision,
she reported "continued neck and dorsal pain which is frequent and ranging from 4-6 on 10
scale" and "neck and upper back pain and stiffness and extreme limitation of cervical motion[.]"
(Doc. 97-5 at 2-3.)
27
treating physicians advised her that her MRis before and after the 2008 collision revealed
no significant changes.
Moreover, although Plaintiff asserts that her potential status as an "eggshell
plaintiff' inexorably required State Farm to conclude that the 2008 collision exacerbated
her pre-existing condition, State Farm had a reasonable basis to conclude otherwise.
First, Plaintiff was simultaneously asserting that her pre-existing condition had fully
resolved prior to the 2008 collision. And second, as State Farm pointed out, the 2008
collision produced only a minor impact when Plaintiffs stationary vehicle was hit from
behind by a vehicle which she told Dr. Zweber was "going perhaps 10 mile[s] per hour."
(Doc. 97-7 at 1.) At the time, Plaintiff was wearing both a shoulder and lap belt. The
2008 collision required repair, not replacement, of Plaintiffs bumper; property damage
that Plaintiff declined to repair even though there was no deductible associated with it.
On January 4, 2008, the day after the 2008 collision, Plaintiff reported a UM claim
for only property damage to State Farm. Although she faults State Farm for not
affirmatively telling her that UM coverage was available for personal injuries, State Farm
was entitled to consider the fact that Plaintiff did not submit a claim for personal injury
arising out of the 2008 collision until October 5, 2010 when she sought insurance benefits
as a result of her 2009 collision. See Ardoin v. Firestone Polymers, L.L.C., 2010-0245,
p.I0-11 (La. 1/19/11), 56 So. 3d 215, 222 ("While not every delay in reporting an
accident necessarily discredits or casts serious doubt on the [plaintiffs] account of the
accident, we conclude the particular circumstances surrounding the failure to report the
alleged ... accident in this case do indeed discredit or cast serious doubt on the plaintiffs
claim[.]"). Based upon the undisputed facts known to it at the time, State Farm had a
reasonable basis to question whether Plaintiffs claimed injuries were caused by the 2008
collision. In such circumstances, a bad faith claim must fail. See Bushey, 670 A.2d at
810; see also Bellville v. Farm Bureau Mut. Ins. Co., 702 N.W.2d 468, 473 (Iowa 2005)
("[I]f reasonable minds can differ on the coverage-determining facts or law, then the
claim is fairly debatable.").
28
Plaintiff gains no further ground by arguing that State Farm was required to make
some form of settlement offer because State Farm's representative conceded in deposition
that State Farm was obligated to pay a UM claim for which Plaintiff suffered any injury.
While an insurer may have an obligation to pay that portion of a claim which is
uncontested, Plaintiffs entire 2008 UM claim was contested with the exception of the
$3 33 .40 in property damage, which Plaintiff decided not to repair. Plaintiff submitted
medical bills in the amount of $51,249.48 and lost wages in the amount of $51,249.48 as·
evidence of damages she incurred as a result of the 2008 collision and demanded State
Farm pay the UM policy limits. This demand, which Plaintiff never reduced, prompted
"a fair dispute about the amount of plaintiffs damages." Bushey, 670 A.2d at 810
(concluding on claim of bad faith that insurer was entitled to summary judgment where
claims for medical payments were "fairly debatable") (citing Wilson v. State Farm Mut.
Auto Ins. Co., 795 F. Supp. 1077, 1081 (D. Wyo. 1992)); see also Sullivan v. Allstate Ins.
Co., 2010 WL 3323726, at *9 (D. Vt. Aug. 3, 2010) (granting summary judgment in
favor of insurer on first prong of bad faith claim where "throughout the adjustment
process, there was a significant and legitimate debate regarding the value of [the
plaintiffs underinsured motorist] claim"). In such circumstances, State Farm was not
required to make any settlement offer on a fully contested claim. As the Bushey court
explained: "Thus, if a realistic question of liability exists, an insurer may withhold
payment while it determines whether there is a reasonable basis for the claim or the
amount demanded." Bushey, 670 A.2d at 810 (emphasis supplied); see also Vest v.
Travelers Ins. Co., 753 So. 2d 1270, 1275 (Fla. 2000) ("[T]he denial of payment does not
mean an insurer is guilty of bad faith as a matter of law. The insurer has a right to deny
claims that it in good faith believes are not owed on a policy.").
Finally, courts in other jurisdictions have held that if an insured could not obtain
summary judgment or a directed verdict on his or her underlying contract claim for
insurance benefits, the claim is, by definition, "fairly debatable." See, e.g., Oliver v. MIV
BARBARY COAST, 901 F. Supp. 2d 1340, 1348 (S.D. Ala. 2012) ("Ordinarily, if the
evidence produced by either side creates a fact issue with regard to the validity of the
29
claim and, thus, the legitimacy of the denial thereof, the ['normal' bad faith] claim must
fail and should not be submitted to the jury[.]") (quoting Mut. Serv. Cas. Ins. Co. v.
Henderson, 368 F.3d 1309, 1314 (11th Cir. 2004)) (emphasis omitted); Badiali v. NJ
Mfrs. Ins. Grp., 107 A.3d 1281, 1288 (N.J. 2015) ("[A] claimant who could not have
established as a matter of law a right to summary judgment on the substantive claim
would not be entitled to assert a claim for an insurer's bad faith refusal to pay the claim.")
(quoting Pickett v. Lloyd's, 621 A.2d 445, 454 (N.J. 1993)). Although the Vermont
Supreme Court has not required a plaintiff to establish that he or she could prevail on the
underlying contract claim in order to establish the first prong of a bad faith claim, in
Bushey, it cited with approval the Fifth Circuit's opinion in Dunn that "because [the]
insured would not have been entitled to [a] directed verdict on [the] contract claim, [the]
insurer clearly had [an] arguable reason[] to deny [the] claim[.]" Bushey, 670 A.2d at
810 (citing Dunn, 927 F.2d at 873). In the instant case, there can be no doubt that
Plaintiff is unable to establish, as a matter of law, that she is entitled to the policy limits
for her 2008 UM claim.
Having determined that Plaintiff cannot establish the first prong of her bad faith
claim, the court proceeds no further and does not reach the issue of State Farm's
knowledge. See id. (holding that "[i]fthe insurer prevails on either prong, the court must
grant the insurer's motion" and if the court decides the motion on the first prong of the
bad faith test it "must grant the summary judgment motion without reaching the question
of the insurer's knowledge."). For the reasons stated above, State Farm's Motion for
Partial Summary Judgment (Doc. 19) is GRANTED.
F.
Whether State Farm May be Liable for Bad Faith Processing of
Plaintiff's 2008 UM Claim.
In her Complaint, Plaintiff alleges that State Farm acted in bad faith by allegedly
failing "to respond to Plaintiffs November 21, 2011 request that it identify and confirm
the auto insurance policies in effect as of January 3, 2008 that afforded [UM] insurance
coverage to Plaintiff[.]" (Doc. 5 at 5,
~
41.) Although 23 V.S.A. § 941(g) requires
30
insurers to provide information regarding the scope of available coverage, 15 it does not
create a private cause of action for failing to do so. There is also no private cause of
action under the Insurance Trade Practices Act, 8 V.S.A. § 4734. See Wilder v. Aetna
Life & Cas. Ins. Co., 433 A.2d 309, 310 (Vt. 1981). Assuming arguendo that State Farm
unreasonably delayed the provision of UM coverage information to Plaintiff when she
requested State Farm confirm such coverage more than two years after the 2008
collision, 16 any such delay would not give rise to a claim of bad faith under Vermont law.
In Murphy, the Vermont Supreme Court extended its holding in Hamill v.
Pawtucket Mutua/Insurance Co., 2005 VT 133, ~~ 2-3, 179 Vt. 250, 252, 892 A.2d 226,
227, and specifically rejected the proposition that a plaintiff may bring a claim sounding
in negligence against his or her insurer for improperly processing a claim. Murphy, 2014
VT 96,
at~~
11-16. The court noted that "[t]he bad faith remedy would generally be
superfluous if mere negligence in handling a claim would be sufficient for liability[,]"
and joined "most other courts [that] have limited actions by insureds against their insurers
to breach of contract or the implied covenant of good faith and fair dealing and have
disallowed actions for negligence based upon an independent duty of care." I d.
at~~
13-
14. There is thus no cause of action under Vermont law for bad faith processing of a
claim outside the Vermont Supreme Court's two-prong bad faith test. As the Vermont
Supreme Court has observed, "[ s]uch a claim would fall well short of the knowing or
reckless conduct required for a finding of bad faith." I d. at ~ 24. 17 Plaintiff's bad faith
15
23 V.S.A. § 941(g) states that an insurer "[w]ithin 30 days ofreceipt of a written request by a
person reasonably claiming the right to recover damages after an accident ... under a [UM]
policy ... shall provide a statement, by a duly authorized agent of the insurer, setting forth the
names of the insurer and insured, and the limits of liability coverage."
16
The undisputed facts reveal that State Farm provided Plaintiff with information regarding the
scope of her UM coverage in a sufficiently timely manner to permit Plaintiff to submit and
pursue a claim thereunder.
17
In making this observation, the Murphy court cited with approval Chateau Chamberay
Homeowners Ass 'n v. Associated Int 'I Ins. Co., 108 Cal. Rptr. 2d 776, 787 (Cal. Ct. App. 2001)
("Sloppy or negligent claims handling does not rise to the level of bad faith"); Erie Ins. Co. v.
Hickman by Smith, 622 N.E.2d 515, 520 (Ind. 1993) (observing that "the lack of diligent
investigation alone is not sufficient to support an award" for bad faith); Sampson v. Am.
31
claim arising out of State Farm's processing of her 2008 UM claim is therefore
DISMISSED.
CONCLUSION
For the foregoing reasons, the court GRANTS Defendant State Farm's Motion for
Partial Summary Judgment (Doc. 19) and GRANTS State Farm's Motion In Limine Re:
Plaintiffs Proffered Bad Faith Expert Witness (Doc. 98).
~
SO ORDERED.
Dated at Burlington, in the District ofVermont, this
_!j_ day ofNovember, 2015.
Christina Reiss, Chief Judge
United States District Court
Standard Ins. Co., 582 N.W.2d 146, 152 (Iowa 1998) ("In a first-party bad faith claim, an
imperfect investigation, standing alone, is not sufficient cause for recovery if the insurer in fact
has an objectively reasonable basis for denying the claim") (internal quotation marks omitted);
and 14 Couch on Ins. § 207:25 (noting that proof of an "imperfect investigation" is not sufficient
basis for bad faith recovery).
32
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