Opinion
Case No. 05cv353 BTM(JMA).
March 7, 2006
ORDER GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT
Defendant Progressive Casualty Insurance Company ("Defendant" or "Progressive") has filed a motion for summary judgment. For the reasons discussed below, Defendant's motion is GRANTED.
I. FACTS
This action arises out of an automobile accident that occurred on May 22, 2003. On that day, Bill Willis was a passenger in a van driven by George Marquez. (Undisputed Fact 6.) Marquez was an employee of DaCare, Inc. ("DaCare") and was driving Willis from a DaCare facility that provided retirement programs for the elderly. (Undisputed Fact 5.) The van was struck by a small pickup truck driven by Jose Molina, an uninsured driver. (Undisputed Fact 4.) Both Marquez and Willis were injured.The van was owned by DaCare and was insured by Progressive under policy no. 01607890-001 (the "Policy"). (Undisputed Fact 2; Def.'s Exh. C.) The Policy provided uninsured motorist coverage of $1,000,000 per accident. (Undisputed Fact 2.) The Policy provided:
We will pay damages, other than punitive or exemplary damages, which an insured is entitled to recover from the owner or operator of an uninsured auto for bodily injury sustained by the insured caused by an accident and resulting from the ownership, maintenance or use of an uninsured auto.
The term "insured" includes "[a]ny other person occupying your insured auto." The Policy also provides that it excludes amounts paid or payable under workers' compensation law.
On May 23, 2003, DaCare informed Progressive about the car accident. (Brown Decl., ¶ 6.) Progressive was told that Willis had a punctured lung and fractured rib and was admitted to a hospital. (Def.'s Exh. D-2.) On May 27, 2003, Eileen Bowen, a claims adjuster for Progressive who was assigned to the case, talked to Elizabeth Machado, the owner of DaCare. (Brown Decl., ¶ 8.) Machado told Bowen that Willis was 84 years old, was a Medicare recipient, and, according to Willis' wife, was on a respirator. (Id.; Def.'s Exh. D-6.)
On May 28, 2003, Progressive received information (apparently from Robert O'Brien, Machado's husband) that Willis was still on a respirator, non-responsive and not expected to survive if there was no change in his condition. (Pl.'s Exh. 1 (003_WIL00030)).
On May 29, 2003, Bowen had a tape-recorded telephone conversation with Marquez. Marquez stated that he had bruised his left shoulder, left bicep, left forearm, right thigh and right ankle and that x-rays showed that he had a bone spur in his neck and two bone spurs in his elbow. (Def.'s Exh. G at 14.) Marquez also said that his chiropractor noticed swelling in the middle of his back on the right side and thought a vertebrae might be bruised. (Def.'s Exh. G at 18.) Bowen explained the uninsured motorist coverage to Marquez. (Bowen Decl., ¶ 19.) Marquez told Bowen that he was not sure whether he would be making a claim for uninsured motorist benefits.
On June 3, 2003, Bowen called Scripps Memorial Hospital, where Willis was being treated, in an attempt to contact JoAnn Willis. (Bowen Decl., ¶ 12.) Bowen left a message for Mrs. Willis to call her back. (Id.) However, later that day, Scripps informed Bowen that they were unable to give the message to Mrs. Willis and suggested that Bowen contact another family member. (Id.)
On or about June 9, 2003, Bowen had a telephone conversation with Robert Willis, Bill Willis' son. (Bowen Decl., ¶ 13.) Robert told Bowen that his father was off the respirator and doing better but had pneumonia and was not out of danger yet. (Bowen Decl., ¶ 13; Exh. D-16.) He also told her that Mrs. Willis was also admitted to Scripps Memorial Hospital because of stress from the accident and her own health problems. (Id.) Robert gave her Mrs. Willis' phone number. (Id.) Bowen explained to Robert that Jose Molina was not insured and also explained the uninsured motorist coverage provided by the Policy. (Id.)
On or about June 10, 2003, Bowen had a telephone conversation with Mrs. Willis. Mrs. Willis told her that her husband had a punctured lung and bruised lung that caused his heart to get overworked. (Bowen Decl., ¶ 14; Def.'s Exh. D-17-19.) Mrs. Willis explained that he had two surgeries for internal bleeding. (Id.) She told Bowen that her husband would never be the same and would eventually have to go to a nursing home. (Id.) Bowen explained the uninsured motorist coverage to Mrs. Willis and asked her if Bowen could send her medical authorization forms for her to sign on behalf of Mr. Willis. (Id.) Mrs. Willis said that she first wanted to meet with someone in person. (Id.)
On or about June 11, 2003, Robert O'Brien of DaCare informed Bowen that Marquez was going to retain an attorney because he claimed to have a "brain stem" injury as a result of the accident. (Bowen Decl., ¶ 15.) On or about June 13, 2003, O'Brien informed Bowen that DaCare's workers compensation insurer would be providing coverage for George Marquez' injuries.
On June 17, 2003, claims adjuster Tyler Cook had an in-person meeting with Mrs. Willis at Scripps Memorial. Cook explained the uninsured motorist coverage to Mrs. Willis and obtained from her an authorization to obtain Mr. Willis' medical bills and records. (Undisputed Fact 23; Bowen Decl., ¶ 20.)
On or about June 25, 2003, Bowen had a telephone conversation with Robert Willis (Bowen Decl., ¶ 21; Def.'s Exh. D-35-36.) Robert informed her that the doctors were telling him that his father would not be able to hold a real conversation or be able to walk again. Bowen again explained the uninsured motorist coverage and told him that she would order medical records and medical bills to date. Robert Willis confirmed that as far as he knew, Medicare was paying the bills.
On June 26, 2003, Progressive personnel held a reserve conference for purposes of discussing and setting up a reserve. (Pl.'s Exh. 1, 003_WIL00083.) During this conference, it was discussed that although Willis previously had problems with dementia, he was semi-independent and probably would not ever be able to resume that lifestyle. A computer log note dated June 24, 2003 indicates, "[W]e are still in the investigative stages in the determination of [Willis'] injuries and prognosis. We don't have any prior medical documentation." (Pl.'s Exh. 1, 003_WIL00082.)
On or about June 27, 2003, Bowen received a telephone call from "Patty" from the law office of Michael Pines. (Bowen Decl., ¶ 2.) Patty said that the Willis family was considering hiring Michael Pines as their attorney and inquired about the amount of the limits on the DaCare Policy. (Id.) Bowen told Patty that Progressive required a letter confirming that the Pines law office represented the Willis family. (Id.) Bowen also explained that it was necessary to get permission from DaCare to disclose the policy limit information. (Id.)
Shortly thereafter, Bowen received a telephone call from Daniel Tamez of the Michael Pines firm. (Bowen Decl., ¶ 23.) Tamez asked about the amount of the uninsured motorist policy limits, and Bowen reiterated that he needed to send her a letter confirming that he represented the Willis family. (Id.) Tamez said that Mrs. Willis would be signing a power of attorney that week. (Id.) Tamez and Bowen also talked about Medicare paying Willis' hospital bills. (Id.) Tamez agreed with Bowen's assessment that Medicare would drastically discount the amount of the hospital bills. (Id.)
On or about June 30, 2003, Bowen received a letter of representation from the Michael Pines law firm. (Def.'s Exh. J.) The letter enclosed a release of information authorization.
On or about July 2, 2003, the Torrance claims office placed an order with copy service Compex to copy Bill Willis' medical records from Scripps Memorial. (Bowen Decl., ¶ 25.)
On that same day, Bowen had a telephone conversation with Tamez during which Bowen told Tamez the amount of the available uninsured motorist limits. (Undisputed Fact 31; Bowen Decl., ¶ 27.) Tamez verified that Medicare was paying for Mr. Willis' medical bills. (Id.) Bowen confirmed that Jose Molina was an uninsured driver. (Id.)
In a letter that was faxed and mailed to various people at Progressive between July 11-15, 2003, Pines made a demand for the uninsured motorist policy limit as well as the medical payment limit. (Pl.'s Exhs. 4-6, 8.) The letter indicated that Willis' medical bills were at least $691,489.61 and attached a Scripps Memorial Hospital bill. The letter also stated:
Mr. Willis and his wife do not want the economic damages claim to possibly die with him in the event that he should pass away before this case is settled. Therefore, it is requested that this case be given the HIGHEST PRIORITY and that your BRANCH CLAIMS MANAGER and other higher authority outside your branch office should review this letter immediately.
The letter did not include any medical records other than a letter from Dr. James Schwendig which stated that "Mr. Willis has been diagnosed with Dementia of the Alzheimer's type, and the injuries he received have exacerbated his cognitive functioning. Therefore, Mr. Willis is unable to manage his own affairs and will not be expected to in the future." (Def.'s Exh. M.)
In a letter dated July 15, 2003, Compex informed Progressive that they were unable to obtain the requested records because the Custodian of Records at Scripps Memorial told them that the records were presently unavailable for copying. (Def.'s Exh. N.) The Custodian was unable to provide a date when the records would be available for copying.
In a letter dated July 18, 2003, Tamez informed Progressive that Mr. Willis had been taken to the Emergency room for pneumonia and blood clots. (Def.'s Exh. O.)
On or about July 21, 2003, Bowen received from Compex billing records obtained from Scripps Memorial. (Bowen Decl., ¶ 31; Def.'s Exh. P.) No medical records were included.
In a letter dated July 24, 2003, Pines emphasized that "time is of the essence" and informed Progressive that "unless the policy is immediately unconditionally tendered in writing . . . we intend to immediately bring a Motion to compel UM Arbitration." (Pl.'s Exh. 10.)
On August 2, 2003, Bill Willis died. (Undisputed Fact 39.)
In September 2004, JoAnn Willis, Progressive, and George Marquez participated in a mediation. (Undisputed Fact 42; Patrick Decl., ¶ 3.) Bill Willis' estate's survivorship claim was settled for $722,000, JoAnn Willis' loss of consortium claim was settled for $178,000, and George Marquez's claim was settled for $6,000. (Undisputed Fact 43; Patrick Decl., ¶ 4.)
On September 23, 2004, JoAnn Willis signed a release agreement on behalf of the Bill Willis estate. (Def.'s Exh. U.) The agreement released Progressive from any claims, known or unknown, resulting from personal injuries or death arising from the automobile accident and being made under the uninsured motorist insuring agreement of the Policy. Mrs. Willis also signed a release agreement regarding her claims against Progressive. (Def.'s Exh. V.)
On January 13, 2005, JoAnn Willis, as successor-in-interest to Bill Willis, commenced this action in state court. The Complaint alleges causes of action for breach of contract, bad faith, and financial abuse of an elder (Cal. Welfare and Inst. Code §§ 15600, et. seq.). Defendant removed the action to this Court on February 22, 2005.
II. STANDARD
Summary judgment is appropriate under Rule 56 of the Federal Rules of Civil Procedure if the moving party demonstrates the absence of a genuine issue of material fact and entitlement to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). A fact is material when, under the governing substantive law, it could affect the outcome of the case.Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986);Freeman v. Arpaio, 125 F.3d 732, 735 (9th Cir. 1997). A dispute is genuine if a reasonable jury could return a verdict for the nonmoving party. Anderson, 477 U.S. at 248.
A party seeking summary judgment always bears the initial burden of establishing the absence of a genuine issue of material fact. Celotex, 477 U.S. at 323. The moving party can satisfy this burden in two ways: (1) by presenting evidence that negates an essential element of the nonmoving party's case; or (2) by demonstrating that the nonmoving party failed to establish an essential element of the nonmoving party's case on which the nonmoving party bears the burden of proving at trial. Id. at 322-23. "Disputes over irrelevant or unnecessary facts will not preclude a grant of summary judgment." T.W. Elec. Serv., Inc. v. Pacific Elec. Contractors Ass'n, 809 F.2d 626, 630 (9th Cir. 1987).
Once the moving party establishes the absence of genuine issues of material fact, the burden shifts to the nonmoving party to set forth facts showing that a genuine issue of disputed fact remains. Celotex, 477 U.S. at 314. The nonmoving party cannot oppose a properly supported summary judgment motion by "rest[ing] on mere allegations or denials of his pleadings." Anderson, 477 U.S. at 256. When ruling on a summary judgment motion, the court must view all inferences drawn from the underlying facts in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).
III. DISCUSSION
A. Breach of Contract
Plaintiff's first cause of action alleges that Progressive breached the Policy by failing to tender the uninsured motorist ("UM") policy limits ($1,000,000) before Plaintiff died. However, Willis' estate released all claims arising from the automobile accident and being made under the uninsured motorist insuring agreement of the Policy. (Def.'s Exh. U.) Plaintiff does not contest the validity of the release. Therefore, Defendant's motion for summary judgment is granted as to the breach of contract claim.
B. Bad Faith
Plaintiff's second cause of action alleges that Progressive breached the implied covenant of good faith and fair dealing. Plaintiff contends that Progressive delayed payment of the claim with the hope and expectation that Mr. Willis would die, thereby relieving them of the obligation to pay general damages. Plaintiff's claim fails because there is no evidence that Progressive was purposefully delaying payment in an effort to avoid paying general damages. To the contrary, the evidence establishes that there was a genuine dispute regarding the amount for which Progressive was liable with respect to Plaintiff's medical expenses. The evidence also shows that Progressive was still gathering the information necessary to make a determination regarding Plaintiff's special and general damages.
When benefits are due to an insured, delayed payments resulting from inadequate or tardy investigations, attempts by adjusters to reduce amounts legitimately payable, and other such tactics may breach the implied covenant of good faith and fair dealing because they frustrate the insured's primary right to receive the benefits of his contract. Love v. Fire Ins. Exchange, 221 Cal. App. 3d 1136, 1153 (1990). However, mere mistakes in claims handling are not bad faith. California Shoppers, Inc. v. Royal Globe Ins. Co., 175 Cal. App. 3d 1, 55 (1985).
Before an insurer can be found to have acted in bad faith in delaying or denying payment of policy benefits, it must be shown that the insurer acted unreasonably or without proper cause.Chateau Chamberay Homeowners Ass'n v. Associated Int'l Ins. Co., 90 Cal. App. 4th 335, 347 (2001). Where an insurer denies or delays the payment of policy benefits due to the existence of a "genuine issue" or "genuine dispute" as to the existence of coverage liability or the amount of the insured's coverage claim, the insurer cannot be held liable for bad faith. Id.; Fraley v. Allstate Ins. Co., 81 Cal. App. 4th 1282, 1292 (2000).
A court can conclude as a matter of law that an insurer's denial of a claim is not unreasonable, as long as there was a genuine issue as to the insurer's liability. Chateau Chamberay, 90 Cal. App. 4th at 347. The genuine dispute may be over legal or factual issues. Fraley, 81 Cal. App. 4th at 1292-93.
Here, there was a genuine dispute regarding the amount of special damages Plaintiff was entitled to under the Policy. Before Plaintiff made his policy limit demand, Progressive learned that Plaintiff's medical bills were being paid by Medicare. Progressive took the position that under Hanif v. Housing Auth. of Yolo County, 200 Cal. App. 3d 635 (1988), Plaintiff's recovery under the Policy for medical expenses was limited to the discounted amount paid by Medicare, not the amount billed by the hospital. Plaintiff's attorney disagreed, arguing that Hanif was distinguishable and that any attempt by Progressive to apply Hanif would be an act of bad faith. (Def.'s Exh. B.)
Plaintiff contends that Hanif is inapposite because Hanif involved Medi-Cal. Plaintiff argues that Hanif does not apply to Medicare payments because Medicare is governed by federal law. However, the reasoning of Hanif did not hinge upon the nature of the third-party paying for the medical services.
Hanif held that "when the evidence shows a sum certain to have been paid or incurred for past medical care and services, whether by the plaintiff or by an independent source, that sum certain is the most the plaintiff may recover for that care despite the fact it may have been less than the prevailing market rate." Hanif, 200 Cal. App. 3d at 641 (emphasis added); see also Nishihama v. San Francisco, 93 Cal. App. 4th 298 (2001) (holding that personal injury plaintiff was entitled to recovery of the reduced rates payed by Blue Cross, not normal rates charged for medical services). The Hanif court reasoned that allowing a plaintiff to recover the reasonable value of medical services, as opposed to the actual amount paid by Medi-Cal or the plaintiff himself, would overcompensate the plaintiff and would not be in keeping with the purpose of damages awards in tort actions — i.e., to compensate for loss or injury sustained and no more. Id. at 640-41.
Progressive's position that Hanif applied was reasonable. Therefore, there was a genuine dispute regarding the amount Plaintiff was entitled to recover for medical expenses under the Policy.
Plaintiff argues that even if Hanif applies, Plaintiff still had his general damages claim. However, Progressive did not have the necessary information to determine the value of Plaintiff's general damages claim. "There can be no `unreasonable delay' until the insurer receives adequate information to process the claim and reach an agreement with the insureds." Globe Indemnity Co. v. Superior Court of Los Angeles County, 6 Cal. App. 4th 725, 732 (1992).
Progressive did not have Plaintiff's medical records, which would have been necessary to evaluate both Plaintiff's special and general damages. See Pl.'s Exh. 1, 003_WIL00082. Progressive made reasonable attempts to obtain this information. Progressive hired a copy service to obtain the medical records within days after the Pines law office initially contacted Bowen and within a couple of weeks after first obtaining a medical authorization from Mrs. Willis. (Bowen Decl., ¶ 25.) Unfortunately, the copy service's attempts to obtain the records over the next few weeks proved to be unsuccessful. (Def.'s Exhs. N, P.) Given that less than a month passed between the time Plaintiff made his policy limit demand and Plaintiff's death, the Court cannot conclude that Progressive was engaging in dilatory tactics or otherwise acted unreasonably with respect to investigating the claim. The Court rejects Plaintiff's suggestion that Progressive was required to make a counteroffer based on the information it had heard about the serious nature of Willis' injuries.
Plaintiff claims that Progressive initially denied that Willis was an insured under the policy and argues that this misrepresentation proves bad motive on the part of Progressive. However, as pointed out by Defendant, Plaintiff has not presented any evidence that Progressive made such a misrepresentation. Plaintiff's only evidence is the Pines letter of July 11, 2003, which states: "Our file reflects that when our firm contacted you, you refused to give out any policy information, stating that Mr. Willis was not the `named insured.'" (Pl.'s Exh. 4.) Consistent with Bowen's Declaration, the letter just reflects that Progressive refused to provide information regarding the policy without DaCare's consent because Willis was not the named insured. There is no evidence that Progressive denied that Willis qualified as an "insured" under the Policy.
Plaintiff also claims that Progressive demanded that the treating hospital forward its bills to Medicare for payment so that Progressive could get a reduction in the amount of Willis' medical bills. Again, Plaintiff fails to produce evidence in support of his allegations. Furthermore, the evidence indicates that Medicare was paying Plaintiff's bills all along. (Bowen Decl., ¶ 21, 27; Def.'s Exh. M.)
For the reasons discussed above, Progressive did not act unreasonably in not paying the policy limit (or offering any other amount under the Policy) prior to Plaintiff's death. The Court need not reach Progressive's argument that it could not pay Plaintiff the policy limit because of Marquez's competing claim, which had to first progress through the workers' compensation system.
C. Elder Abuse
Plaintiff's third cause of action is for elder abuse under California Welfare Institutions Code § 15610.30. This claim fails for the same reasons Plaintiff's bad faith claim fails.
"Financial abuse" of an elder occurs when a person or entity "[t]akes, secretes, appropriates, or retains real or personal property of an elder or dependent adult to a wrongful use or with intent to defraud, or both." Cal. Welfare Inst. Code § 15610.30(a). "Wrongful use" occurs when the person or entity "takes, secretes, appropriates, or retains possession of property in bad faith." Cal. Welfare Inst. Code § 15610.30(b). "Bad faith" occurs when the person or entity "knew or should have known that the elder or dependent adult had the right to have the property transferred or made readily available to the elder or dependent adult or to his or her representative." Cal. Welfare Inst. Code § 15610.30(b)(1).
As discussed above, Progressive did not act unreasonably by not paying the policy limits prior to Plaintiff's death. Accordingly, Plaintiff cannot prevail on his financial abuse cause of action.
III. CONCLUSION
For the reasons discussed above, Defendant's motion for summary judgment [19-1; 19-2] is GRANTED. The Clerk shall enter final judgment in favor of Defendant and against Plaintiff.
IT IS SO ORDERED.