There are important holdings on Bad Faith Claims filed against an Uninsured Motorist/Uninsured Motorist ("U.M.") Insurance Company in Nevada. Two of them are posted here.
1. Failure to Pay Undisputed Covered Parts of the Insured's Coverage Claim.
A growing number of Courts is holding that failure or refusal to pay undisputed covered amounts under First-Party Insurance Policies can be the basis of a Claim for Bad Faith. The Bad Faith Claims may come at Common Law or under Statutes. See generally Dennis J. Wall, "Litigation and Prevention of Insurer Bad Faith" § 9:26 "Insurer's Payment of Undisputed Covered Amounts: Introducing the Concept -- Part Payment of Non-Property, First-Party Claims, And of Claims Generally" (West Publishing Company 2010 Supplement). A Federal District Court in Nevada has now held that Bad Faith Claims in such cases can be based on a U.M. Insurer's failure to follow its own Claims Manual.
In Download Storlie v. State Farm Mutual Auto. Insurance Co. (D. Nev. Case No. 2.09cv02205, Order Filed January 13, 2011) PUBLIC ACCESS, also published as 2011 WL 116881 (D. Nev. Order Filed January 13, 2011)(authorized password required to access Westlaw), a Federal Court held in effect that the complete absence of case law in Nevada "indicating that an insurer must advance the undisputed portion of an UM policy," id. at *6, did not prevent a Bad Faith Claim from accruing. First, provisions of the Defendant's "Auto Claim Manual" suggested to the Court that at least in some cases, the Defendant U.M. Carrier "does instruct its employees to advance the undisputed portions of an insured's UM policy benefits prior to the final settlement of an insured's claim." Id.
Further, refusal or other failure to pay undisputed covered partial amounts of Uninsured/Underinsured Motorist Claims could violate a statutory duty in Nevada "to effectuate prompt, fair, and equitable settlements of claims in which liability of the insurer had become reasonably clear." Id. at *8. The Federal Court wrote:
In this case, a reasonable trier of fact could conclude that Defendant's failure to tender any offer during the ten month span of time between when Defendant initially received notice that Plaintiff might be pursuing an UM cause of action and the time at which Plaintiff filed this lawsuit -- January to October -- demonstrated a failure on Defendant's part to effectuate the sort of prompt, fair, and equitable settlement contemplated in [Nevada's] Unfair Claims Practices Act [Nev. Rev. Stat. § 686A.310(1)(e)], particularly when coupled with Defendant's failure to pay the undisputed portion of Plaintiff's medical bills even after receiving notification that they had been sold to a collections agency.
Storlie v. State Farm Mutual Auto. Insurance Co., 2010 WL 116881 *8 (D. Nev. Order Filed January 13, 2011). (Link here to Chapter 686A of the Nevada Statutes.) Although the Federal District Court's decision does not refer to them, other States' Statutes have similar Unfair Claims Practices provisions.
2. Punitive Damages.
"Under Nevada law, in order to recover punitive damages a plaintiff must show by clear and convincing evidence that the defendant acted with oppression, fraud, or malice. [Citation omitted.] Oppression is a conscious disregard for the rights of others constituting cruel and unjust hardship. [Citation omitted.] Malice is present in conduct that is intended to injure a person or despicable conduct that is engaged in with a conscious disregard of the rights and safety of others." Storlie v. State Farm Mutual Auto. Insurance Co., 2010 WL 116881 *9 (D. Nev. Order Filed January 13, 2011).
In Storlie, the Plaintiff raised a genuine and material issue of fact in the eyes of the Federal Judge "particularly because over $9,000 of the policy was not in dispute and Plaintiff's medical bills had been submitted to collections." Put on notice that part of Plaintiff's medical bills were being submitted to a collections agency, "Defendant's actions look particularly arbitrary and callous," wrote the District Court. Id. The Plaintiff's Punitive Damages Claim survived the Defendant's Motion for Summary Judgment in that case accordingly. "Thus, summary judgment will be denied as to Plaintiff's request for punitive damages." Id.
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