Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_04-cv-02258/USCOURTS-cand-5_04-cv-02258-0/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 28:1441 Petition for Removal- Breach of Contract

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ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

No. C-04-02258 RMW

ERF/MAG

E-FILED on 8/8/05 

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

NATY RAMIL,

 Plaintiff,

v.

ALLSTATE INSURANCE COMPANY, 

Defendants.

Case No. C-04-02258 RMW

ORDER GRANTING IN PART AND

DENYING IN PART DEFENDANT'S

MOTION FOR SUMMARY JUDGMENT

[Re Docket No. 19]

Plaintiff Naty Ramil seeks unpaid benefits under her Med-Pay insurance contract with defendant

Allstate Insurance Company ("Allstate") and damages for bad faith. Allstate moves for summary judgment on

all claims. The motion was heard July 15, 2005. Forthe reasons set forthbelow, the court grants in part and

denies in part Allstate's motion for summary judgment.

I. BACKGROUND

In August 1989, plaintiff originally took out an automobile insurance policy with Allstate. Declaration

of Jodi Vicario ("Vicario Decl.") ¶ 4. Plaintiff insured her 2001 Toyota Camry with Allstate under policy

number 014954260, which included medical coverage with a $5,000 limit for injuries caused in automobile

accidents. Id. The language of the "Med-Pay Coverage" in plaintiff's policy reads:

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ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

No. C-04-02258 RMW

ERF/MAG

Allstate will pay to or on behalf of an insured person all reasonable expenses the insured

personbecomeslegally obligatedtopayfornecessarymedicaltreatment,services, or products

actually provided to the insured person. Ambulance, hospital, medical surgical, X-ray, hearing

aids, funeral service expenses, and professional nursing services are covered. Payments will

be made only when bodily injury is caused by an auto accident. The treatment, services, or

products must be rendered within five years after the accident.

Id., Ex. A at 0005. Allstate's contract allows it to make the determination of whether medical expenses 

are unreasonable or unnecessary.

If the insured person incurs medical expenses which we deem to be unreasonable or

unnecessary, we may refuse to pay those expenses and contest them. Unreasonable

medicalexpensesare feesformedicalservices whichare substantially higherthanthe usualand

customary charges for those services. Unnecessary medical expenses are fees for medical

services whichare not usually and customarily performed for treatment of the injury, including

fees for an excessive number, amount or duration of medical services.

Id., Ex. A at 00040 (emphasis added). The policy states that if the insured is sued by a medical services

provider because Allstate refused to paythe contestedmedicalexpenses,thenAllstatewillpayalldefense costs

and any judgment resulting against the insured individual, provided that the insured cooperates withthe insurer.

Id. at 41. Allstate claims that plaintiff, bysigningthe policy, agreed to "submit to medicalexaminations as often

as reasonably required" by a physician of the insurer's choosing. Id., Ex. A at 00041.

OnApril 18, 2002, plaintiff was driving her 2001 Toyota Camry when she was hit byanother vehicle

which ran a stop sign in a Safeway parking lot. Declaration of Jeffrey Butler ("Butler Decl.") ¶ 2, Ex. A at

112:11-114:9. The accident caused damage to the driver's side door of plaintiff's vehicle in the amount of

$4,328. Id. Declaration of Annette Robinson ("Robinson Decl.") ¶ 4, Ex. A, at 00345, 00367. Plaintiff claims

that the accident "triggered in her a fear of driving," for which psychologist Dr. Arthur Anton treated her at a

cost of $625.00. Declaration of Arthur Anton ("Anton Decl."), Ex. 3. Dr. Anton admitted that he treated

plaintiff ona "contingent fee basis,"expecting payment only if plaintiff recovered against Mr. Arriola, the other

driver involved in the April 2002 accident. De Hope Decl. ¶ 10, Ex. I. 

Plaintiff "suffered significant injuries as a result of this accident" and began treatment with Dr. Jose

Reyes, a physician, and Dr. Douglas George, a chiropractor, for her neck and back pain. Id., Ex. 5. Plaintiff

underwent treatment at least once a week for the next seven months until she had a second 

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ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

No. C-04-02258 RMW

ERF/MAG

accident in December 2002. She claims that she incurred medical bills for the April 2002 accident in the

amount of $9,455.00. AntonDecl., Ex. 5. Allstate claims that the cost for the treatment of plaintiff's injuries

amounted to $9,919.00. Butler Decl. ¶ 2, Ex. A at 143:16-25. Allstate reimbursed Dr. Reyes $1,271.81 for

his services. Robinson Decl., Ex. A at 00387.

On December 6, 2002, plaintiff was hit by a Santa Clara Transit bus that merged into her lane and

scraped the passenger side of her car, damaging her side rearview mirror. Butler Decl. ¶ 2, Ex. A at 181:17-

181:19. Plaintiff's car suffered damages in the amount of $234.77 and neither of plaintiff's passengers were

injured. Id. Plaintiff claims that she attempted to maneuver her car to avoid the collision, and the accident

aggravated her neck injury. Pl. Opp. at 5. After the accident, plaintiff drove immediately to Dr. Reyes' office

to receive further medical treatment. Declaration of Kimberly De Hope ("De Hope Decl.") ¶ 2, Ex. A at

96:17-21. Dr. George and Dr. Reyes treated her for the second injury, resulting in medical bills of $990.00

and $2,787.00 respectively. Declaration of John Shepardson ("Shepardson Decl."), Ex. 1. Allstate claims that

plaintiff had already been to Dr. Reyes' office earlier that morning for treatment of her injuries from the first

accident. Butler Decl. ¶ 2, Ex. A at p.162:15-17. 

On January 29, 2003, plaintiff claims that Allstate referred her to its Special Investigation Unit to

investigate her claims. Shepardson Decl., Ex. 8. At this point, Allstate placed a hold on payments to Dr.

Reyes. Id. To investigate plaintiff's claims, Allstate conducted anIndependent MedicalExamination("IME")

that was performed by Dr. Floyd Fortuin, a neurologist certified by the American Board of Psychiatry and

Neurology and professor at the medical school at the University of California, San Francisco with staff

privileges at the hospitalassociated withthatschool. Robinson Decl. ¶ 4, Ex. A at 00387. On April 10, 2003,

Dr. Fortuin conducted an IME of plaintiff and produced a report detailing her medicalhistory. Declaration of

Floyd Fortuin ("Fortuin Decl."), Ex. B. Dr. Fortuin concluded that plaintiff is a "chronic pain patient" who

should "seek treatment at Kaiser,"her primaryhealthcare provider. Id. The report stated that plaintiff's injuries

fromthe April 2002accident were, at worst, "minor cervicalstrain,"the treatment ofwhichwould cost no more

than$500.00 and that the December 2002 accident was "a non-injury event and would require no treatment."

Fortuin Decl. ¶ 4, Ex. B. Plaintiff alleges that Dr. Fortuin mischaracterized plaintiff's pain and injuries, failing

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1 Dr. Anton apparently only expected plaintiff to pay him if she received a money judgment

from Mr. Arriola. Id. at ¶ 10, Ex. I at 32:22-33:1. Plaintiff's suit against Mr. Arriola is still pending, and

therefore, Dr. Anton has not requested payment of the $625.00 bill from plaintiff, but plaintiff paid the bill

and now requests reimbursement from defendant. Id. at ¶ 10, Ex. I at 30:10-24; id. at ¶ 11, Ex. J. On

May 23, 2005, defendant sent a letter to plaintiff denying her request for reimbursement. Robinson Decl.

¶¶ 8-9, Ex. D. 

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

No. C-04-02258 RMW

ERF/MAG

to recognize thatshe suffered no significant pre-accident pain and neglecting to mention Dr. Anton'streatment

or bill. Pl. Opp. at 6-7.

On April 30, 2003, Allstate sent a letter to plaintiff's attorney, with a copy of Dr. Fortuin's report

enclosed, denying further payments to plaintiff. Robinson Decl. ¶ 7, Ex. C. The letter noted the payments

Allstate had made to plaintiff up to that point for the two accidents, and explained its right to refuse payment

of "unnecessary or unreasonable" medical expenses. Id. Allstate reminded plaintiff that it would pay any

defense costs or resulting judgment if one of plaintiff's doctorssued her. Id. Plaintiff argues that Drs. George,

Anton, and Reyes' medical treatments have all been both necessary and reasonable and that the terms of her

policy require Allstate to pay her doctors' fees.1 Shepardson Decl., Ex. 3 at 14-16. In response to plaintiff's

current action, Allstate retained Dr. Peter Cassini and Mark Zaslaw, PhD as expertsto examine plaintiff. De

Hope Decl. ¶ 8, Ex. G. Dr. Cassini is certified by the American Board of Psychiatry and Neurology, teaches

at Stanford UniversityMedicalCenter and is the Deputy Chief of that medicalcenter's neurology department.

Dr. Zaslaw is a clinicalpsychologist. Both Dr. Cassini and Dr. Zaslaw reached conclusions similar to those of

Dr. Fortuin. Id. at ¶ 8, Ex. G; id. ¶ 9, Ex. H. 

Plaintifffiled anactiononFebruary22,2005 inSanta Clara SuperiorCourt claimingbreachof contract

and bad faith. Compl. ¶¶ 7-9, 12-15. Allstate removed the case to this court based on diversity jurisdiction.

On June 10, 2005, Allstate filed the instant motion for summary judgment or alternatively, summary

adjudication. 

II. ANALYSIS

A. Summary Judgment Standard

Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and

admissions onfile,together withthe affidavits, if any, show that there is no genuine issue asto anymaterialfact

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2 Preliminarily, defendant moves to strike the Declaration of John Shepard in its entirety for

failure to timely serve the exhibits to the declaration. As it appears that defendants were in no way

prejudiced by the purported untimeliness of the exhibits, the court declines to strike the declaration in its

entirety.

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

No. C-04-02258 RMW

ERF/MAG

and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c). The moving

party bears the initial burden of establishing that there is no genuine issue of material fact. Celotex Corp. v.

Catrett, 477 U.S. 317, 322 (1986). After the moving party makes a properly supported motion, "the adverse

party's response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that

there is a genuine issue for trial. If the adverse party does not so respond, summary judgment, if appropriate,

shall be entered against the adverse party." Fed. R. Civ. P. 56(e); Celotex, 477 U.S. at 322; British Airways

Bd. v. Boeing Co., 585 F.2d 946, 951 (9th Cir. 1978). 

B. Defendant's Motion to Strike Plaintiff's Evidence

Inconjunctionwithitsreply, Allstate filed a motion to strike plaintiff's evidence submitted inopposition

to the motion for summary judgment. Plaintiff orally opposed this motion. Specifically, Allstate objects to the

exhibits attached to the declaration of plaintiff's counsel, John Shepardson, and to the declaration of Mr.

Everette Herndon, plaintiff's expert. 

1. Exhibits2

Allstate's objections to the exhibits attached to the ShepardsonDeclarationstemfromplaintiff'sfailure

to authenticate the exhibits. While Shepardson states that the documents were produced from Allstate's claim

file inresponse to this case, Allstate contendsthat these documents are otherwise unauthenticated. Plaintiff has

submitted four categories of documents as exhibits to the Shepardson Declaration(1) documents purportedly

produced by Allstate from the claim file, (2) declarations by 

plaintiff'switnesses,(3)bills,and (4) depositiontranscripts. While Allstate objects to the lack of authentication,

they do not seriously dispute that they are what plaintiff claims them to be. There are

two notable exceptions:(1) a deposition of Dr. Fortuin from an unrelated Contra Costa Superior Court case,

ShepardsonDecl., Ex. 10; and (2) documents from another case plaintiff's counselis pursuing against Allstate

(IME by a doctor unrelated to this case, Dr. Sosine, of an Allstate insured, Beverly Hughes, likewise without

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3 Plaintiff contends that these documents demonstrate Allstate's practice for the last seven

years of giving undue weight to IME reports that are favorable to denial of coverage. This argument is

without support.

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

No. C-04-02258 RMW

ERF/MAG

connectionto this case, id., Ex. 17; a letter from Allstate to Hughes denying benefits based uponthatIME, id.,

Ex. 18; and the depositionof anindividualplaintiff claims assessed Hughes' claim, id., Ex. 19). In addition to

being unauthenticated, these exhibits have no relevance to this case.3 Accordingly, the court strikes this

evidence.

2. Herndon Declaration

Allstate objects to the Declaration of Everette Herndon on the grounds that plaintiff failed to identify

Herndonas an expert as required under Federal Rule of Civil Procedure 26. Rule 37(c)(1) provides that "[a]

party that without substantial justification fails to disclose informationrequired byRule 26(a) . . . is not, unless

such failure is harmless, permitted to use as evidence at a trial, at a hearing, or on a motion any witness or

informationnotso disclosed." While defendant intimates that plaintiff's failure to disclose Mr. Herndon caused

it harm because it occurred three weeks after the court designated date for disclosure of rebuttal witnesses,

Allstate does notstate in what wayit was harmed. The February 28, 2005 designation listed Herndon's name,

generalbackground, and anticipated testimony topics. On the other hand, plaintiffmakes no attempt to defend

its failure to timely submit Herndon's expert report. Nevertheless the court finds that, absent evidence to the

contrary, the failure to timely submit Herndon's expert report did not cause Allstate harm, because Herndon

was disclosed before the cutoff for expert designations.

In the alternative, Allstate objects to Herndon's declaration because he opines on the duty of care,

which Allstate contends is a matter of law upon which expert opinion is not permitted. The court disagrees.

As set forthbelow, plaintiff has placed the standard of care inthe insurance industryat issue by asserting a bad

faith claim against Allstate. A professional standard of care is established by the accepted industry practice.

Spann v. Irwin Memorial Blood Centers, 34 Cal. App. 4th 644, 655 (1995); see also Diamond v. Grow,

243 Cal. App. 2d 396, 401-02 (1966) (evidence of industry custom may assist in the determination of what

constitutes due care); Pauly v. King, 44 Cal. 2d 649, 654 (1955) (jury's decision that duty of care was

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ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

No. C-04-02258 RMW

ERF/MAG

breached is supported by witness testimony concerning the accepted standard of practice in the building

industry); Honea v. City Dairy, 22 Cal. 2d 614, 619 (1943) (evidence concerning method ofinspectionused

in the industry is relevant to duty of care issue). Thus, Herndon's opinions on the duty of care are generally

admissible and relevant for purposes of assessing defendant's motion for summary judgment.

3. Anton and Reyes Declarations

Defendant objects to the declarations of Dr. Anton, the physician who treated plaintiff for fear of

driving, and Dr. Reyes, the physicianwho treated plaintiff's back problems after bothaccidents. Allstate seeks

to strike these declarations primarily on the grounds that the statements made therein contradict the testimony

given by these doctors at their depositions. As defendant points out, plaintiff may not create an issue of fact

by submitting witness declarations that contradict the witness's deposition testimony. Radobencko v.

Automated Equip. Corp., 520 F.2d 540, 544 (9th Cir. 1975) (contradictory testimony of plaintiff alone

cannot be used to defeat motions forsummaryjudgment "where the only issue offactresultsfromthe necessity

of choosing betweenthe plaintiff'stwo conflictingpurposes."). While the court does not strike these statements

fromthe affected declarations, it views any contradictorytestimony inlight ofthe NinthCircuit's cautionagainst

sham affidavits. 

4. George Declaration

Defendant alsoobjectsto the declarationofDr. George, plaintiff's chiropractor,as exceedingthe scope

ofpermissible testimony. Overall, it appears that Allstate protests that George was not designated as an expert

witness and seeks to restrict his testimony to that about which he has personal knowledge (for example,

defendants object to the lack of foundation for hisstatementsregarding previous surgeries, general frailty and

susceptibility to injury). 

Treating physicians are permitted to opine on the examination, diagnosis, and treatment of a patient.

Cf. Mangla v.University of Rochester, 168 F.R.D. 137, 139 (W.D.N.Y.1996) ("Experts are retained for

purposes oftrialand their opinions are based on knowledge acquired or developed in anticipationoflitigation

or for trial. A treating physician's testimony, however, is based on the physician's personal knowledge of the

examination, diagnosis, and treatment of a patient and not from information acquired fromoutside sources.").

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ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

No. C-04-02258 RMW

ERF/MAG

To the extent the testimony of Dr. George and Dr. Reyes can legitimately be considered related to their

treatment ofplaintiff, the court will permit the testimony on summary judgment. The court strikes Exhibit 1 of

Dr. George's declaration, the research findings and conclusions from the Spine Research Institute, finding its

inclusion to be an attempt to convert Dr. George into anexpert witness, in spite of not having been disclosed

as such. Aside from the broad statement that he relies upon it "for treatments, diagnosis and opinions," Dr.

George presents no basis for concluding that this document was necessary for or evenconnected to plaintiff's

treatment. Shepardson Decl., Ex. 14 ¶ 29.

5. Other Objections

Allstate has raised numerous other objections to the evidence, including a number of hearsay

objections. The court will address these objections only to the extent the material to which Allstate objects is

relevant to the motion for summary judgment.

C. Breach of Contract

Plaintiffsubmitsthatshe incurred a totalof$13,696.00 inmedicalexpenses and $625.00 inpsychiatric

bills as a result of the two auto accidents described above. The undisputed evidence establishes that Allstate

has paid her a portionofthese expenses, anamount of$1,271.81. Allstate contends that it has paid all it owes

under the policy; plaintiff arguesthat Allstate owes herfor allmedicalexpensesincurred as a result of the April

and December automobile accidents under the Med-Pay coverage. 

Allstate assertsthat it is entitled to summaryjudgment that it has not breached the terms ofthe insurance

contract because it paid all "reasonable" medical expenses. It arguesthat the terms ofthe policyprovided that

it had full discretion to determine what costs were reasonable and necessary. Nevertheless, Allstate contends

that it retained Dr. Fortuin to confirm its decision, going beyond what was required by the policy terms. Dr.

Fortuin concluded that "[n]ecessary treatment [for the April 2002 accident] would comprise exercises and

modalities at a reasonable treatment cost of no greater than $500." Shepardson Decl. Ex. 12 at A00511.

According to Dr. Fortuin, the December 2002 accident in which a bus clipped her right mirror "would be a

non-injury event and would require no treatment." Id. In further support of its position, Allstate cites the

depositiontestimony ofDr. George, one ofplaintiff'streating physicians, who stated that he felt that the amount

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ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

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of treatment plaintiff received was beyond what was reasonable and necessary. De Hope Decl. ¶ 5, Ex. D at

83:18-21 (plaintiff was treated 15 to 20 times beyond what was reasonable and necessary after her April

accident); id. at 95:6-18. 

Allstatemayhave arguably established that the treatment plaintiff received was excessive byrelying on

plaintiff's own treating physicians, however, the evidence regarding what constituted reasonable treatment (and

reasonable expense for such treatment)is not undisputed. While Allstate submits the testimony of its retained

expert, Dr. Fortuin, that medical treatment following plaintiff's first accident should have been $500 and that

no medicaltreatment should have been required following the second accident, the court cannot conclude that

these estimates are reasonable as a matter of law. 

Allstate argues that under the policy provision it had the discretion to determine whether plaintiff's

medical bills were excessive . Upon making such a determination, Allstate could satisfy its obligation to its

insured by defending and indemnifying her from claims by her doctors for payment. Allstate is correct that it

had the right to initiallydecide that plaintiff's medical bills were unreasonable and refuse to pay them until they

were determined to be reasonable and necessary. See Nager v. Allstate, 283 Cal.App. 4th283, 290 (2000)

(pointing out that under med- payprovisions the insurerretains the right to contest med-pay expenses pending

determination of their reasonableness and necessity in 

contrast to the insurer's right under a health insurance policy which provides less flexibility to the insurer to

question a treating physician's determination that treatment was "medically necessary."). 

However, Allstate did promise to pay any bills that were reasonable and necessary. Nothing in the policy

required plaintiff to wait until her doctors sued her to challenge Allstate's determination. Allstate has provided

no authority for the proposition that a dispute with an insured as to the reasonableness of medical expenses

sought under a medical pay provision can only be resolved by a claim asserted by the doctor against the

insured. A question of fact remains as to whether all reasonable expenses the plaintiff became legally obligated

to pay for necessary medical treatment have been paid by Allstate. 

Therefore, plaintiff's breach of contract claim survives defendant's motion for summary judgment.

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ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

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D. Bad Faith

1. Insurance Code § 790.03

The California Supreme Court has held that California Insurance Code § 790.03 confers no private

right of action for damages. Moradi-Shalal v. Fireman's Fund Ins. Companies, 46 Cal. 3d 287, 205

(1988). Therefore, any claim for damages under this section, punitive or otherwise, fails as a matter of law.

2. Covenant of good faith and fair dealing

An insurance policy is a contract to provide certain benefits enumerated in the policy terms. "Every

contract imposes upon each party a duty of good faithand fair dealing inits performance and its enforcement."

Foley v. Interactive Data Corp., 47 Cal. 3d 654, 683 (1988). This principle applies equally to insurance

policies. Kransco v. American Empire Surplus Lines Ins. Co., 23 Cal. 4th 390, 400 (2000). 

The implied covenant of good faith and fair dealing supplements express contractual covenants, "to

prevent the contracting party fromengaging inconduct that frustrates the other party's rights to benefits of the

agreement." Waller v. Truck Ins. Exchange, Inc., 11 Cal. 4th1, 36 (1995). "Absent that contractual right,

however, the implied covenant has nothing uponwhichto act as a supplement and 'should notbe endowed with

anexistence independent ofthe contractualunderpinnings.'" Id. (citingLove v. Fire Ins.Exch.,221Cal. App.

3d 1136, 1153 (1990)). 

To establish a breach of the implied covenant of good faith and fair dealing under California law, a

plaintiffmustshow:"(1) benefits due underthe policywere withheld; and (2) the reasonfor withholding benefits

was unreasonable or without proper cause." Love v. Fire Ins. Exch., 221 Cal. App. 3d 1136, 1151 (1990).

The reasonableness of an insurer's claims-handling conduct is ordinarily a question of fact, however, "it

becomes a questionoflaw where the evidence is undisputed and only one reasonable inference canbe drawn

fromthe evidence." Chateau Chamberay Homeowners Ass'n v. Associated Intern. Ins. Co., 90 Cal. App.

4th 335, 346 (2001). 

Plaintiffcontendsthat Allstate's behaviorinwithholding paymentsformedicaltreatment undertheMedPay benefit was unreasonable for two reasons: (1) because the evidence demonstratesthat Allstate breached

its duty to weigh and balance all available evidence in evaluating plaintiff's claim and (2) because Allstate's

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ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

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adjuster demonstrated hostility toward plaintiff.

Plaintiff arguesthat Dr. Fortuin works exclusively for defense firms and provided fundamentally flawed

conclusions in connection with his evaluation of her. She claims he failed to consider both the severity of the

damage to her car and her billfromDr. Antonfortherapyto overcome herfear of driving. She also repeatedly

argues, presenting supporting evidence to bolster her claim, that she is an eggshell plaintiff prone to neck and

back injury. Thus, plaintiff contends, Allstate committed bad faith by failing to fairly adjust her claim, instead

keeping its defenses in the forefront of the investigation. Downey Sav. & Loan v. Ohio Cas. Ins. Co., 189

Cal. App. 3d 1072, 1098 (1987). 

Contrarytoplaintiff'sassertions,however, Allstate retained the discretionundertheMed-Payprovision

to contest medical expenses "which we deem to be unreasonable or unnecessary, [and] we mayrefuse to pay

those expenses and contest them." Vicario Decl., Ex. A at 00040-41. Allstate probably has some obligation

to examine bills before it withholds payment but here it fulfilled any such good faith obligation. Dr. Fortuin

considered the damage to plaintiff's car, citing the amount and type ofdamage inhisIMEreport based on, inter

alia, photographs of the damage. Shepardson Decl., Ex. 12 at A00510. The court also notes that he

considered plaintiff's mental state in reviewing the medical records her post-accident treatment, id. ("The

diagnoses were anxiety and strains."), and inhis conclusions, id. ("She is harboring . . . depression, and other

stresses."). The factors plaintiff contends Dr. Fortuin did not consider are clearly present in his report and she

presents no other evidence that Allstate failed to appropriately weigh and balance conflictingmedicalevidence.

The court finds only one reasonable inference can be drawn from the undisputed evidence before it:

Allstate did not unfairly refer plaintiff's claimforinvestigation, nor did itfailto weigh relevant factorsinadjusting

plaintiff's medical claims. Allstate initially questioned plaintiff's need for continued medical treatment resulting

fromthe April 2002 accident because it noticed anoverlap betweentreatmentsforthe April 2002 accident and

the December 2002 accident. Because the December 2002 accident resulted in $250.00 of damage to

plaintiff's side view mirror and no injury to either of the two passengers, yet seemed to result in continued

unabated treatment for plaintiff, it is reasonable for Allstate to have referred the matterforspecialinvestigation

unit. Even assuming plaintiff's medical history bears out that she is, as she argues, an eggshell plaintiff, Allstate's

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decision to paymore thandouble the amount estimated byDr. Fortuin to be reasonable cannot be considered

an unreasonable withholding of policy benefits under the circumstances, even if it turns out Dr. Fortuin's

assessment was incorrect. Allstate referred the claim for investigation on reasonable grounds and Dr. Fortuin's

evaluationconsideredthe relevantfactors before reaching a conclusionasto reasonable medicalexpensesgiven

plaintiff's accidents and physicalcondition. Furthermore, as set forth above, even plaintiff's own chiropractor,

Dr. George, has stated that her treatments for the April 2002 accident exceeded what was reasonably

necessary. Under these circumstances, no reasonable jury could find that Allstate's behavior in requiring an

IME was so patently unreasonable as to constitute bad faith.

Plaintiff also contends that the same alleged failure to weigh or balance the evidence against Dr.

Fortuin's IME along with (1) an alleged statement by an Allstate adjuster that he would "not pay plaintiff a

dime"; (2) failure to address or pay Dr. Anton's bill; and (3)secretly sharingDr. Fortuin'sreport with defense

counsel in the action against the driverinplaintiff's April 2002 accident evidence a hostile approach by claims

personnel sufficient to evidence bad faith. The court finds these contentions to be without merit. Plaintiff lacks

evidence of the alleged hostile approach. She only offers an email from an unidentified Allstate employee to

an adjuster whose role is otherwise unexplained stating that plaintiff had reported that the adjuster had made

the statement at issue. This is hearsayand inadmissible as an admission. To counter plaintiff's contention that

AllstatefailedtoconsiderDr. Anton's $650 billinadjusting plaintiff's claim, defendant points out that Dr. Anton

did not expect to be paid until after successful conclusion of the civil action regarding the April 2002 accident.

Finally, plaintiff has cited no authorityforthe propositionthat an insurance company may not share the

cost of a medical exam with another party engaged in litigation or, that such action would constitute bad faith.

In sum, the court finds that plaintiff cannot establish that Allstate acted in bad faith and unreasonably

chose to contest the reasonableness of the medical expenses.

D. Punitive Damages

An insurer's breachofthe implied covenant ofgood faithand fair dealing givesrise to bothcontract and

tort remedies, including recoveryfor emotionaldistress and punitive damages. Silberg v. California Life Ins.

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Co., 11 Cal. 3d 452, 462 (1974); Gruenberg v. Aetna Ins. Co., 9 Cal. 3d 566, 574 (1973). Punitive

damages are awarded by the court for the purposes of deterrence and retribution. Cooper Indus., Inc. v.

Leatherman Tool Group, Inc., 532 U.S. 424, 432 (2001). The burden of proof required to establish punitive

damagesis "clear and convincing evidence." Cooper, 532 U.S. at 429; Mock v. Mich. Millers Mut.Ins. Co.,

4 Cal. App. 4th 306, 332 (1992).

Because plaintifffailed to raise a triable issue of fact on her bad faith cause ofaction, itfollowsthatshe

has also failed to raise a triable issue of fact with regard for his prayer for punitive damages. Thus, plaintiff's

bad faith claim does not survive defendant's summary judgment motion.

III. ORDER

For the foregoing reasons, the court denies defendant's motion for summary judgment that it did not

breach the terms of the insurance policy. There remains an issue of fact as to whether it paid reasonable

expenses as required under the Med-Pay coverage. The court grants defendant's motion as to plaintiff's bad

faith and punitive damages claims.

DATED: 8/8/05 /s/ Ronald M. Whyte 

RONALD M. WHYTE

United States District Judge

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Notice of this document has been electronically sent to:

Counsel for Plaintiff(s):

John A. Shepardson johnshepardson@hotmail.com 

Counsel for Defendant(s):

Jeffry Butler jzb@sonnenschein.com 

Kimberly De Hope ked@sonnenschein.com 

Cynthia L. Mellema cmellema@sonnenschein.com@firm.com

Counsel are responsible for distributing copies of this document to co-counsel that have not registered for efiling under the court's CM/ECF program.

Dated: 8/8/05 /s/ MAG 

Chambers of Judge Whyte

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