IMPLAUSIBLY DENYING PAID CLAIMS.

The "plausibility" standard for stating a claim upon which relief can be granted in federal court has filed an appearance in an alleged breach of contract case based on denying covered insurance claims:

Here, Counterclaim Plaintiffs allege the existence of a scheme in which Counterclaim Defendants accepted claims submitted by Counterclaim Plaintiffs and others, reimbursed them, then later filed RICO actions like this one to recoup their payments and drive providers like Counterclaim Plaintiffs out of business. (See generally Countercl. ¶¶ 14, 20.) This far-fetched theory of the case fails to pass the laugh test. Moreover, neither of the two cases Counterclaim Plaintiffs cite in support of their plausibility argument is analogous to this case.  Notably, the plaintiffs in both of those cases sued their respective insurance companies for improperly denying their claims after inadequate review, despite promises to the contrary in standard-form contracts.  [Citations omitted.]  Of course, it would be plausible to infer that an insurer's practice of summarily denying insurance claims could result from an improper profit motive. However, to assume, as Counterclaim Plaintiffs urge, that Counterclaim Defendants summarily accepted and reimbursed their claims with the intention of engaging in costly and unpredictable future litigation for the purpose of gaining competitive advantage would place the Court far beyond the bounds of reason.  The Court refuses to accompany Counterclaim Plaintiffs on their flight of fancy.

Allstate Ins. Co. v. Avetisyan, 422 F. Supp. 3d 672, 676 (E.D.N.Y. 2019).

The Allstate Insurance Co. v. Avetisyan case is discussed along with many other first-party insurance cases addressing Breach of Contract, in 2 Dennis J. Wall, LITIGATION AND PREVENTION OF INSURER BAD FAITH § 9:13 (3d Edition Thomson Reuters and 2020 Supplements).

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