Tuesday, April 4, 2017
Ninth Circuit Accuses Insurer of Acting in Self Interest
By a MetNews Staff Writer
The Ninth U.S. Circuit Court of Appeals yesterday reversed a summary judgment in favor of Progressive Casualty Insurance Company, saying that what the evidence showed was that the company acted in its self-interest.
The memorandum opinion, by Circuit Judges Stephen Reinhardt, Wallace Tashima and Jacqueline Hong-Ngoc Nguyen, reverses a decision by Judge Percy Anderson of the Central District of California.
Plaintiff Chris Hicks sued the insurer for bad faith in its handling of his claim for a back injury in a traffic accident on Aug. 12, 2006. He was 14 at the time.
His mother, who was driving the car in which Hicks was a passenger, was the insured.
Hicks settled with the insurance company of the drunk driver who caused the accident for $100,000, then sought additional funds under his mother’s policy with Progressive.
There was a $250,000 limit under that policy, and $150,000 of that sum remained available, after payments to Hicks’ mother, as well as his grandparents who were also passengers. At an arbitration, his attorney, while setting the value of the injuries at $500,000, offered to settle for $150,000.
Progressive, which had already paid $2,000 under the policy’s medical payments provision, offered an additional $3,350. It took the stance that there was a mere aggravation of injuries Hicks had sustained in an automobile accident when he was 6.
The arbiter awarded $100,000, minus the $2,000 payment that was previously made. Hicks sued in Los Angeles Superior Court, and Progressive removed the action to federal court based on diversity of citizenship.
Anderson on June 1, 2015, granted summary judgment to Progressive. Reciting that an insurer does not act in bad faith where there is a genuine dispute as to the value of a claim, he declared:
“Here, the undisputed evidence establishes that Progressive reviewed and considered all of the evidence available to it. That evidence, much of which comes from Plaintiffs own medical providers and statements he made to them, is capable of different competing reasonable interpretations concerning the cause and extent of Plaintiffs injuries. There is no evidence that the opinions of the experts retained and relied upon by Progressive were unreasonable or that Defendant chose the experts dishonestly. Defendant never asserted that Plaintiff was not injured, or that there was no coverage for his injury. Instead, Progressive disputed the value of Plaintiffs injury attributable to the covered accident. This dispute was genuine.”
Reversing the Ninth Circuit panel said:
“Viewing the facts in the light most favorable to Hicks. Progressive performed an inadequate and biased investigation into the accident—one that was designed to protect its own interests without any regard for Hicks’s interests. Progressive immediately formed an opinion that Hicks’s injury was caused by an earlier accident and never seriously considered any other possibility.”
The judges said Progressive based its view of the case on conversations with the driver of the other car and representatives of his insurance company “and failed to account for the substantial evidence that any prior injury had no bearing on the present case.”
They wrote that it was “uncontroverted” that Hicks’ back had healed prior to the 2006 collision and that there was “no evidence” that the constant pain he suffered consequent to the 2006 mishap was attributable to the earlier accident.
The panel noted that Progressive, itself, had reckoned the value of the claim at $175,000. It added:
“Throughout its investigation, Progressive sought to portray Hicks and his mother as liars. During arbitration, Progressive’s attorney attempted to undermine Hicks’s mother’s credibility by asking her whether she ‘[did] pornography.’ This is evidence of Progressive’s bias towards its insured.”
With respect to the questioning of Hicks’ mother, Anderson had declared that it was “protected by California Civil Code section 47(b)’s litigation privilege,” adding:
“Because Progressive’s counsel’s questioning of Plaintiffs mother during the arbitration is privileged under California law, it cannot provide a basis for bad faith liability.”
That section renders privileged a communication in a “judicial proceeding.”
The Ninth Circuit panel responded that “evidence of bad faith litigation tactics to show bias is not barred by California Civil Code section 47(b),” citing two decisions of the California Supreme Court.”
The case is Hicks v. Progressive Casualty Insurance Company, No. 15-55953.
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