No Bad Faith Where Insurer’s Valuation of Claimant’s Injuries is in the Ballpark

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In Hicks v. Progressive Casualty Insurance Co., 2015 U.S. Dist. LEXIS 71985 (C.D. Cal. June 1, 2015), the district court held that Progressive did not breach the implied covenant of good faith and fair dealing through its investigation of, and subsequent dispute of, plaintiff Chris Hicks’ damages in an arbitration of Hicks’ underinsured motorist claim.

Hicks was a passenger in an automobile driven by his mother and insured by Progressive when, on August 12, 2006, the automobile was involved in an accident with a drunk driver. Hicks began treatment with a chiropractor 25 days after the accident, who opined that he suffered an acute strain or sprain of his cervical and thoracic spine and that the accident exacerbated an annular tear in his cervical spine he had from a previous accident. Hicks then treated with a neurologist and an orthopedist. He also received additional chiropractic care. An MRI ordered by the orthopedist revealed an annular fissure at C2 and a 3 mm disc bulge. The orthopedist opined that Hicks likely would require spinal surgery at some point.

Hicks brought suit against the drunk driver. An expert retained by the drunk driver minimized the annular fissure and stated no surgical intervention was required. Hicks settled with the drunk driver for the driver’s policy limit of $100,000; however, defense counsel informed Progressive that the only reason it settled for the policy limit was the “DUI issue.”

Hicks then turned to Progressive to recover the remaining $150,000 under his mother’s underinsured motorist coverage. Hicks and Progressive went to arbitration. Progressive had Hicks examined by another neurologist and had a radiologist review the MRI. The neurologist minimized the annular fissure and stated no surgical intervention was required. The radiologist questioned the original reading of the MRI. Progressive offered Hicks approximately $5,000 and claimed the case was worth less than what he settled with the drunk driver. The arbitrator awarded Hicks $200,000, which after offsets, was worth $98,000 in new money from Progressive.

Hicks then brought this claim against Progressive for breach of the implied covenant of good faith and fair dealing. The district court held that Progressive’s claims handling was not in bad faith. The district court stated that undisputed evidence established that Progressive reviewed and considered all of the evidence available to it and that the evidence was capable of different competing reasonable interpretations concerning the cause and extent of Hicks’ injuries. Additionally, the district court noted that there was no evidence that the opinions of the experts retained and relied upon by Progressive were unreasonable or that Progressive chose the experts dishonestly. The district court also found persuasive that Progressive never claimed Hicks was uninjured or that there was no coverage. The district court thus concluded that there was a genuine dispute concerning the amount of Hicks’ asserted damages and that Progressive’s investigation into and handling of Hicks’ claim was reasonable as a matter of law. Therefore, it granted Progressive’s motion for summary judgment.