Pennsylvania Court Holds Auto Carriers Subject To Bad Faith Statute

PA federal court in Pittsburgh recently ruled that an auto insurer may be sued for bad faith under Section 8371 (the bad faith statute) where the insured claims that medical benefits were cut off because of an abuse of the independent medical exam process. Roppa v. Geico Indemnity Co. (Case No. 2:10-cv-1428).

In this case the plaintiff was involved in an auto accident in June 2001 and was still receiving treatment for ongoing pain in 2009. The insurer requested an independent medical exam and the report concluded that the plaintiff had reached “maximum medical recovery”. Thus the insurer denied any additional medical treatments.

The plaintiff sued, making a bad faith claim under Section 8371. Defense counsel argued that the Motor Vehicle Financial Responsibility Law was the exclusive remedy for bad-faith suits in the context. However the court found that in situations where the dispute is over the “reasonableness and necessity of medical treatment”, Section 1797, which permits an insured to challenge an insurer’s refusal of medical payments, is applicable.

Thanks to Remy Lapidus for her contribution to this post.