By Charles E. Haddick Jr.
Special to the Legal
On July 21, Chief Judge J. Curtis Joyner of the U.S. District Court for the Eastern District of Pennsylvania granted State Farm Mutual Automobile Insurance Company's Rule 12(b)(6) motion seeking dismissal of a bad faith claim in a class action complaint arising out of the denial of first-party medical benefits.
In McWalters v. State Farm Mutual Automobile Insurance Company, Joyner took up the question of whether the plaintiff class was precluded from pursuing a bad faith claim arising out of the non-payment of benefits under the Pennsylvania Motor Vehicle Financial Responsibility Law, specifically 75 Pa.C.S.A. §1797.
Joyner noted that Section 1797, under statutory construction rules, was more specific than the bad faith statute, and the specific provisions should prevail and be construed as an exception for the general provision. The judge also noted that under several federal decisions, the prevailing view was that Section 1797 pre-empts Section 8371, but also pointed out that "where an insurer’s malfeasance goes beyond the scope of Section 1797, courts have reconciled the two statutes and found bad faith claims to supplement claims under Section 1797," citing Hickey v. Allstate Property and Casualty.
Joyner examined the allegations in the class action complaint carefully and determined, "We surmise that the gravamen of Plaintiffs' bad faith claim is the denial of first party medical benefits and nothing more.
Indeed, there are no allegations that Defendant did not properly invoke or follow the PRO process, denied or refused coverage, improperly invoked a coverage exclusion or otherwise misinterpreted or misapplied the insurance contract."
The judge felt, based on that analysis, that the plaintiff's bad faith claim fell within the scope of Section 1797 and dismissed the bad faith claim on pre-emption grounds.
It is unclear as to how far this decision will reach, in light of the judge's correct observation that Section 8371 and 1797 claims often accompany one another. The biggest lesson practitioners can take from the ruling is that special attention should be paid to the pleading requirements when pleading parallel 8371 and 1797 claims.
Charles E. Haddick Jr. is a partner with Dickie McCamey & Chilcote. He welcomes feedback from readers, along with any suggestions for topics you would like to see discussed in this space. He can be reached at email@example.com.