Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_05-cv-00493/USCOURTS-caed-2_05-cv-00493-0/pdf.json

Parties Involved:
Allstate Insurance Company
Defendant
Consuelo Mora
Plaintiff

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

----oo0oo----

CONSUELO MORA,

NO. CIV. S-05-0493 FCD/KJM

Plaintiff,

v. MEMORANDUM AND ORDER

ALLSTATE INSURANCE COMPANY,

Defendant.

----oo0oo----

This matter is before the court on defendant Allstate

Insurance Company’s (“defendant” or “Allstate”) motion for

summary judgment, or alternatively, partial summary judgment

pursuant to Federal Rule of Civil Procedure 56. By the motion,

defendant seeks summary judgment in its favor as to plaintiff

Consuelo Mora’s (“plaintiff”) two causes of action against it,

for breach of contract and tortious breach of the covenant of

good faith and fair dealing (“insurance bad faith claim”).

The court heard oral argument on the motion on January 13,

2006. By this order, the court now renders its decision granting

defendant’s motion. Plaintiff has failed to establish any

cognizable damage and as such both her claims must fail;

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Unless otherwise noted, the facts recited herein are 1

undisputed and/or the parties’ dispute with regard to the fact is

not material to the motion and thus it is not considered by the

court. (Def.’s Reply to Pl.’s Resp. to Def.’s Stmt. of

Undisputed Facts, filed Dec. 30, 2005 [“SUF”].) Plaintiff’s

evidentiary objections to defendant’s reply brief, filed Jan. 9,

2006, are overruled; defendant’s reply brief properly raises

arguments and evidence which rebut plaintiff’s opposition;

defendant does not present new arguments for the first time in

reply.

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alternatively, even were the court to find a triable issue with

respect to plaintiff’s damages, plaintiff has failed to

demonstrate a breach of the insurance contract or bad faith by

defendant.

BACKGROUND1

Plaintiff was involved in an automobile accident on May 21,

2003. Pursuant to her automobile insurance policy with defendant

(the “Policy”), after the accident, she presented bills for

medical expenses to defendant. The Policy, “Coverage CC” for

automobile medical payments, provides:

Allstate will pay to or on behalf of an insured person

all reasonable expenses the insured person becomes

legally obligated to pay for necessary medical treatment,

medical services or medical products actually provided

to the insured person . . . . Payments will be made

only when such expenses relate to bodily injury caused

by an auto accident.

(SUF ¶ 2.) All of plaintiff’s submitted medical bills were

timely paid by defendant until June 2004. 

At that time, Rheana Grant was the claims adjustor handling

plaintiff’s claim. (SUF ¶ 5.) In June, Ms. Grant reviewed

certain medical bills that contained a diagnostic code for a

degenerative condition as opposed to an acute or traumatic

condition. (SUF ¶ 7.) Ms. Grant decided that further

investigation was necessary to determine whether the bills

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related to an injury caused by the subject automobile accident. 

(SUF ¶ 8.) The Policy provides, in pertinent part, under the

caption “Unnecessary Or Unreasonable Medical Expenses:”

If the insured person incurs medical expenses which

we [Allstate] deem to be unreasonable or unnecessary, 

we may refuse to pay those expenses and contest them.

Unreasonable medical expenses are fees for medical

services which are substantially higher than the usual

and customary charges for those services. Unnecessary

medical expenses are fees for medical services which

are not usually and customarily performed for treatment

of injury, including fees for an excessive number,

amount, or duration of medical services.

(SUF ¶ 3.) The Policy further provides under the caption “Proof

Of Claim; Medical Reports:”

As soon as possible, any person making a claim must give

us written proof of the claim. It must include all details

we may need to determine the amounts payable. We may

also require any person making a claim to submit to

questioning under oath and sign the transcript.

The injured person may be required to take medical

examinations by physicians we choose, as often as we

reasonably require. We must be given authorization to

obtain medical reports and other records pertinent to

the claim.

(SUF ¶ 4.) 

Under these provisions, Ms. Grant wrote to plaintiff’s

counsel on June 24, 2004, explaining that “Allstate [could] no

longer guarantee payments for medical care which [plaintiff] may

have had or will have as a result of the [accident].” (SUF ¶ 9.) 

Allstate, she explained in the letter, only covers “reasonable

and necessary medical care to treat injuries resulting from an

auto accident.” (Id.) Ms. Grant requested that plaintiff submit

to an independent medical examination (“IME”) to determine

whether the subject medical bills met these requirements. (Id.) 

She also requested that plaintiff sign and return a medical

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records authorization release form to allow Allstate to obtain

her medical records which were necessary for the IME. (Id.)

In response, plaintiff’s counsel sent a letter to Ms. Grant

on July 6, 2004. He objected to the IME and indicated plaintiff

would not sign the medical records release form until Allstate

provided a copy of the subject policy. (SUF ¶ 10.) On July 8,

2004, Ms. Grant responded by letter, stating that it would take

approximately two weeks to obtain a copy of the policy. (SUF ¶

12.) In this letter, Ms. Grant also advised plaintiff’s counsel

that plaintiff’s file would be handled by Joe Crowley in the

future. (Id.) Thereafter, on July 22, 2004, Ms. Grant sent

plaintiff’s counsel the copy of the policy.

On July 29, 2004, Mr. Crowley wrote to plaintiff’s counsel,

again reiterating Allstate’s request for an IME and a signed

medical records release form from plaintiff. (SUF ¶ 14.) He did

not receive a response and again wrote to plaintiff’s counsel on

September 2, 2004 making the same request. (SUF ¶ 15.) Sometime

in October 2004, Mr. Crowley received from plaintiff’s counsel

the signed medical records release form. (SUF ¶ 16.) He then

subpoenaed plaintiff’s medical records. After receipt of the

records, he contacted CorVel Corporation to schedule an

orthopedic IME. (SUF ¶ 17.) CorVel made arrangements for the

IME with Dr. Auerbach. Mr. Crowley did not select Dr. Auerbach,

nor did he have any direct contact with him. (SUF ¶ 19.) CorVel

informed Mr. Crowley that plaintiff had chosen the date of

January 17, 2005 for the examination. (SUF ¶ 18.)

Dr. Auerbach issued his report on January 24, 2005. (SUF ¶

20.) After reviewing the report, Mr. Crowley recommended to his

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supervisor, Linda Mohr, that Allstate deny further medical

payments to plaintiff as not related to the subject automobile

accident. (SUF ¶ 21.) Ms. Mohr, however, disagreed and directed

Mr. Crowley, on February 3, 2005, to pay all pending bills. Mr.

Crowley did so, making various payments on February 25 and 28,

2005, March 16, 2005, May 2, 2005, and May 11, 2005. (SUF ¶ 22.) 

Said payments dated back to services rendered as early as

November 12, 2003 and ending at the latest on January 6, 2005. 

(Def.’s Resp. to Pl.’s Stmt. of Disputed Facts [“SDF”], filed

Dec. 30, 2005, ¶s 69-86.)

Plaintiff did not submit any further bills for medical

treatment to defendant. (SUF ¶ 23.) However, during plaintiff’s

deposition on August 4, 2005, she described a medical bill from a

Dr. Duffy, who she had seen for a consultation regarding her

condition, which she testified had not been paid. This was the

first time defendant learned of the bill. Mr. Crowley later

requested information about the bill from Dr. Duffy, including

diagnostic and procedure codes, to allow for processing of the

bill. Defendant thereafter paid Dr. Duffy’s bill. (SUF ¶ 23.)

In October 2005, Mr. Crowley received a fax from Dr. Duffy

recommending that plaintiff be evaluated and treated for

posttraumatic stress syndrome. (SUF ¶ 24.) On October 8, 2005,

Mr. Crowley wrote to plaintiff’s counsel requesting that

plaintiff submit to an IME regarding the diagnosis of

posttraumatic stress syndrome and whether the stress was related

to the accident. (SUF ¶ 25.) Thereafter, plaintiff consented to

the IME which was set to take place in December 2005. (SUF ¶

26.)

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STANDARD

The Federal Rules of Civil Procedure provide for summary

judgment where "the pleadings, depositions, answers to

interrogatories, and admissions on file, together with the

affidavits, if any, show that there is no genuine issue as to any

material fact." Fed. R. Civ. P. 56(c); see California v.

Campbell, 138 F.3d 772, 780 (9th Cir. 1998). The evidence must

be viewed in the light most favorable to the nonmoving party. 

See Lopez v. Smith, 203 F.3d 1122, 1131 (9th Cir. 2000) (en

banc).

The moving party bears the initial burden of demonstrating

the absence of a genuine issue of fact. See Celotex Corp. v.

Catrett, 477 U.S. 317, 325 (1986). If the moving party fails to

meet this burden, "the nonmoving party has no obligation to

produce anything, even if the nonmoving party would have the

ultimate burden of persuasion at trial." Nissan Fire & Marine

Ins. Co. v. Fritz Cos., 210 F.3d 1099, 1102-03 (9th Cir. 2000). 

However, if the nonmoving party has the burden of proof at trial,

the moving party only needs to show "that there is an absence of

evidence to support the nonmoving party's case." Celotex Corp.,

477 U.S. at 325.

Once the moving party has met its burden of proof, the

nonmoving party must produce evidence on which a reasonable trier

of fact could find in its favor viewing the record as a whole in

light of the evidentiary burden the law places on that party. 

See Triton Energy Corp. v. Square D Co., 68 F.3d 1216, 1221 (9th

Cir. 1995). The nonmoving party cannot simply rest on its

allegations without any significant probative evidence tending to

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28 According to plaintiff, at the time she filed suit on 2

February 14, 2005, said bills totaled $6,719.00. (SUF ¶ 27.)

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support the complaint. See Nissan Fire & Marine, 210 F.3d at

1107. Instead, through admissible evidence the nonmoving party

"must set forth specific facts showing that there is a genuine

issue for trial." Fed. R. Civ. P. 56(e). 

ANALYSIS

1. Damages

Preliminarily, the court considers the question of

plaintiff’s damages because absent evidence of damage to

plaintiff as a result of defendant’s delay in payment of certain

of plaintiff’s bills, plaintiff does not have a cognizable claim 2

against defendant, and defendant is entitled to summary judgment. 

Importantly, it must be noted at the outset that this case

involves a delay in payment of medical bills (for at most,

approximately one and half years), not a denial of

payment/coverage. At times, plaintiff describes her claims and

relies heavily on cases involving denial of coverage or payments;

that situation is not present here. It is undisputed that

defendant has paid, to date, every medical bill submitted to it

by plaintiff. Thus, for plaintiff to establish damages, at all,

she must tie her purported damages to the delay in payment by

defendant.

On the issue of damages, defendant moves for summary

judgment arguing that plaintiff conceded in her deposition that

she has not sustained any damages as a result of conduct by

defendant. Plaintiff conceded that: (1) with the exception of

Dr. Duffy’s bill, all medical bills had been paid by defendant

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(SUF ¶ 27); (2) no healthcare provider has made a claim or filed

a lawsuit against plaintiff for collection of an unpaid medical

bill (SUF ¶ 36); (3) she has not experienced any negative impact

on her credit rating because a medical bill has not been paid

(SUF ¶ 37); and (4) she had not been denied credit because of an

unpaid medical bill (Id.). Plaintiff also testified that she was

aware of the provisions in her Policy that if there was a

collection action or lawsuit against her, Allstate would provide

legal representation and contest the issue directly with the

healthcare provider. (SUF ¶ 38.) 

In response to the motion, plaintiff now claims, for the

first time, that her damages consist of her adversely affected

credit rating caused by defendant’s delay in payment of a medical

bill. Importantly, plaintiff obtained a credit report on

September 21, 2005, approximately seven weeks subsequent to her

deposition. That report from “Consumer.Info.com” disclosed one

medical bill, that had been submitted to defendant in the amount

of $1,535.00, that had not been paid and had been turned over to

collection. Plaintiff contends the report demonstrates she was

“damaged.” 

This belated attempt to establish damages appears contrived,

clearly contravenes her testimony, and is wholly insufficient. 

Plaintiff fails to proffer any evidence of cognizable damages,

much less quantify such damages. Aside from the report itself,

plaintiff offers no evidence her credit rating was adversely

affected. Plaintiff also fails to acknowledge that it is

undisputed that this bill was paid by defendant on February 25,

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28 In light of these circumstances, it appears plaintiff 3

could have easily corrected this erroneous report.

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2005, more than six months before the report. (SDF ¶ 69.) 3

Moreover, even if the court were inclined to consider the report,

it is nothing more than a “scintilla” of evidence of damages

which is insufficient to withstand summary judgment. Anderson v.

Liberty Lobby, Inc., 477 U.S. 242, 250-51 (1986) (nonmoving party

is required to provide more than “a mere existence of a scintilla

of evidence” to defeat summary judgment). 

Next, plaintiff argues that she was damaged in that she

refrained from applying for credit cards, at Macy’s and

Nordstrom’s, for fear that she would not receive them due to her

unpaid medical bills. This fact does not establish damage to

plaintiff attributable to any conduct by defendant. She chose to

not apply; she has no evidence of any denial of credit because of

defendant’s delay in payment of her medical bills. 

Finally, as a last attempt to establish damages, plaintiff

states that once she learned that certain bills of “Nova Care”

had not been paid, she stopped her medical treatment with them

because she was “too embarrassed” to continue. (Opp’n, filed

Dec. 22, 2005, at 20:3.) Similar to her refraining to apply for

certain credit cards, plaintiff cannot establish damage by virtue

of her choice to discontinue medical treatment. Plaintiff has no

evidence any healthcare provider denied her treatment due to

unpaid bills.

While not necessary to resolution of the motion in light of

the above findings, the court nonetheless discusses below its

findings regarding the other elements of plaintiff’s claims;

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there are further reasons to grant defendant’s motion. 

2. Breach of Contract

As to plaintiff’s breach of contract claim, plaintiff

likewise fails to proffer any evidence of a breach of the subject

Policy. Indeed, plaintiff concedes all submitted medical bills

have been paid by defendant. Plaintiff, nevertheless, argues

defendant breached the policy in investigating plaintiff’s

medical expenses which caused a delay in the payment of her

bills. Plaintiff, however, cannot demonstrate that defendant

acted contrary to the Policy when it requested an IME and

investigated the nature of certain of plaintiff’s medical

expenses as such investigation is expressly authorized by the

Policy.

First, the policy’s “med-pay” coverage extends only to

medical expenses that are actually incurred by the insured and

relate to an automobile accident (covered by the policy). (SUF ¶

2.) The policy further provides that such medical expenses be

both “reasonable” and “necessary.” (SUF ¶ 3.) In that regard,

the policy reserves defendant’s right to contest med-pay expenses

pending documentation regarding their reasonableness and

necessity. (Id.) To further that process, defendant is

authorized under the policy to require an injured person to take

an IME by a physician chosen by defendant; said requests for an

IME may occur as often as defendant “reasonably require[s].”

(SUF ¶ 4.)

Here, plaintiff proffers no evidence that defendant acted

contrary to or beyond the scope of these provisions. Defendant

promptly paid plaintiff’s medical bills until June 2004; at that

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To the extent plaintiff argues that Dr. Auerbach was 4

biased in favor of defendant, her arguments are unavailing: 

First, the policy permits defendant to choose the physician for

the IME; however, in this case, the choice of physician was made

by an independent provider, CorVel. Defendant did not choose Dr.

Auerbach or have any direct contact with him. Moreover,

defendant did not ultimately accept the findings of Dr. Auerbach,

that plaintiff’s injuries from the accident were resolved and her

present conditions were unrelated to the accident. Thus, even

assuming Dr. Auerbach was biased in favor of defendant, plaintiff

has no basis for relief as his opinions were not accepted by

defendant.

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time, Ms. Grant sought further information regarding certain of

plaintiff’s bills because they contained a code for a

degenerative condition which she believed may not be related to

the subject accident. (SUF ¶s 7-8.) Pursuant to the express

terms of the Policy, she requested plaintiff submit to an IME and

provide authorization for defendant to obtain her medical

records. (SUF ¶ 9.) Any delay in that process was largely due

to plaintiff’s own conduct by objecting to the IME and medical

records release, and then by choosing to schedule the IME in

January 2005. (SUF ¶s 10, 12, 14-18.) Dr. Auerbach timely

rendered his report, within a week of the examination, and 4

defendant made its decision to pay all pending bills within two

weeks thereafter. (SUF ¶s 20-22.) 

A breach of the policy cannot be found under these facts. 

The case of Nager v. Allstate Insur. Co., 83 Cal. App. 4th 284

(2000) is particularly instructive. In Nager, the court of

appeal considered the same Allstate policy language as involved

in this case. In considering plaintiff Nager’s bad faith

insurance claim, the court found that Allstate acted in

accordance with the policy in that:

/////

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Defendant argues that should the court find in its 5

favor on plaintiff’s breach of contract claim, it need not reach

plaintiff’s insurance bad faith claim because said claim requires

a breach of the subject contract. Defendant is incorrect.

“Breach of a specific provision of the contract is not a

necessary prerequisite” to an insurance bad faith claim. Carma

Developers (California), Inc. v. Marathon Development California,

Inc., 2 Cal. 4th 342, 373 (1992). 

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Allstate did not stonewall Nager’s med-pay claim or

take the position that soft tissue injuries or 

chiropractic treatments were not covered. To the 

contrary, Allstate promptly paid [the chiropractor’s]

first bill and only questioned subsequent billings

when the treatment charges appeared to exceed both his

original treatment plan and the amount it determined

was customary and reasonable for Nager’s diagnosis.

Allstate indicated its willingness to continue its

investigation and reevaluate the payments upon

further information from the medical providers.

(Id. at 291.) Similarly, here, defendant initially paid all

submitted medical bills; only when the bills denoted a changed

circumstance (evidence of a degenerative condition rather than an

acute trauma) did defendant contest the bills; after

investigation of the bills pursuant to the Policy’s express terms

(via the IME and production of plaintiff’s medical records),

defendant decided to pay all pending bills and promptly did so. 

There is simply no evidence defendant breached its contract with

plaintiff in this case.

3. Insurance Bad Faith Claim5

Under California law, all insurance contracts contain an

implied covenant of good faith and fair dealing. Egan v. Mutual

of Omaha Ins. Co., 24 Cal. 3d 809, 818 (1979). A cause of action

for breach of the implied covenant is characterized as “insurance

bad faith,” for which a plaintiff may recover tort damages. To

succeed on such a claim, the plaintiff must show that the insurer

erroneously failed to pay benefits under an insurance policy, and

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the failure to do so was without proper cause. Adams v. Allstate

Insur. Co., 187 F. Supp. 2d 1219, 1226 (C.D. Cal. 2002). 

While the question of whether an insurer has acted in bad

faith is generally one of fact, “where there is a genuine issue

of an insurer’s liability under a policy, a court can conclude

that an insurer’s actions in denying the claim were not

unreasonable as a matter of law.” Id. at 1226. Thus, a bad

faith claim can be dismissed on summary judgment if the defendant

can show there was a genuine dispute as to coverage. Guebara v.

Allstate Insur. Co., 237 F.3d 987, 993 (9th Cir. 2001).

Here, defendant has demonstrated a “genuine dispute” as to

coverage. Ms. Grant was prompted to further investigate

plaintiff’s medical bills due to a new diagnostic code (for a

degenerative condition) which she believed may have indicated

that the medical expenses were unrelated to the automobile

accident. Her assessment was later confirmed by Dr. Auerbach who

determined that plaintiff’s injuries attributable to the accident

had resolved and any current conditions were unrelated to the

accident. (SUF ¶ 20.) While defendant did not accept Dr.

Auerbach’s findings and instead paid plaintiff’s expenses, his

report is evidence of a genuine coverage dispute under the

Policy. Other than a conclusory challenge to the credentials of

Dr. Auerbach, plaintiff proffers no evidence in rebuttal. 

Under these facts, where a genuine dispute as to coverage is

present, plaintiff cannot withstand summary judgment on a claim

of bad faith. 

/////

///// 

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4. Punitive Damages

Because the court determines that defendant is entitled to

summary judgment on plaintiff’s bad faith claim, defendant is

also entitled to summary judgment on the related claim for

punitive damages. Adams, 187 F. Supp. 2d at 1231 (holding “a

plaintiff who is not able to survive summary judgment on an

insurance bad faith claim, is also unable to survive summary

judgment on a . . . claim for punitive damages”).

CONCLUSION

For the forgoing reasons, defendant’s motion for summary

judgment is GRANTED. The Clerk of the Court is directed to close 

this file. 

IT IS SO ORDERED.

 DATED: January 18, 2006

 /s/ Frank C. Damrell Jr. 

FRANK C. DAMRELL, Jr.

UNITED STATES DISTRICT JUDGE

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