Source: http://pa.findacase.com/research/wfrmDocViewer.aspx/xq/fac.20180316_0000732.MPA.htm/qx
Timestamp: 2019-04-21 20:59:36+00:00

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FindACase | Levine v. Washington National Insurance Co.
Levine v. Washington National Insurance Co.
WASHINGTON NATIONAL INSURANCE COMPANY, Defendant.
This is an action by a policyholder against his insurer for breach of contract and for the statutory tort of bad faith. The plaintiff, Corporal Isaac D. Levine, is a police officer with the Swatara Township Police Department. Corporal Levine purchased an accidental death and dismemberment policy with an individual short-term disability benefit from the defendant, Washington National Insurance Company (“Washington National”). In December 2012, Corporal Levine suffered a cervical spinal injury while at work-when lifting a heavy patrol bag, he reportedly felt a pop or pull in his back and neck area, followed by immediate and severe pain in his shoulder and upper back area. In February 2013, Levine submitted a written claim form to Washington National for payment of benefits under the accident insurance policy. Washington National denied coverage under the policy on the ground that the incident did not constitute a covered accident, as it was not a sudden, unexpected, and unforeseen event.
On November 9, 2015, Levine filed this lawsuit in the Court of Common Pleas for Dauphin County, Pennsylvania. On December 3, 2015, the defendant removed the action to federal court on the basis of diversity jurisdiction.
On March 22, 2017, Washington National filed its motion for summary judgment, together with a statement of material facts and a brief in support. (Doc. 43; Doc. 44; Doc. 45). On April 11, 2017, Corporal Levine filed his response to the motion, together with a counter-statement of material facts and a brief in opposition to summary judgment. (Doc. 47: Doc. 48; Doc. 49). On April 25, 2017, Washington National filed its reply brief. (Doc. 51). The matter is now ripe for disposition.
On or about March 6, 2009, Corporal Levine applied for an accident insurance policy with Washington National. At the time, he was employed as a police officer with the Swatara Township Police Department. He was later promoted to police corporal.
On May 1, 2009, Washington National issued “Accidental Death and Dismemberment Policy with Disability Individual” number XXXXXXX882 (the “Policy”) to Levine in accordance with his application. The Policy pays certain cash benefits directly to the policyholder in the event of a Covered Accident. For example, the Policy pays up to $800 for a ruptured disc, up to $100 for physician's visits, and up to $400 for physical therapy. The Policy also provides short term disability benefits, but the parties dispute the total amount of coverage afforded under this provision. On or about January 4, 2011, Corporal Levine submitted a second application on the Policy, adding his wife as an insured as well.
Between January 4 and April 21, 2013, Corporal Levine worked “light duty” at the police department. While on light duty, Levine was able to review paperwork, conduct document research, make and take phone calls, hold pre-tour briefings, attend departmental meetings, and interact with people who came into the police department to file police reports, but he was unable to perform any patrol duties. He was not permitted to drive, to take statements from informants or suspects, to advise individuals of rights and processes, to mediate disputes, to attend court, to collect evidence and substances from the street, or to be placed into antagonistic environments because he could not wear a uniform or defend himself. While on light duty, Corporal Levine was not paid any less for his work time, but he was unable to earn overtime pay for court hearings.
Between April 22, 2013, and September 29, 2013, Corporal Levine was out of work completely on doctor's orders, and during this time period he received temporary total disability workers compensation benefits. On July 8, 2013, Levine underwent disc replacement surgery.
On September 30, 2013, Corporal Levine returned to work with a “light duty” restriction. On December 17, 2013, Levine was cleared to return to work on full-duty status, which he did on December 20, 2013.
On November 20, 2013, Washington National received an “appeal of claim denial” letter from counsel representing Corporal Levine. On January 28, 2014, Washington National responded to Levine's attorney, upholding its denial of benefits.
On November 9, 2015, Corporal Levine filed this lawsuit, seeking the following policy benefits, plus punitive damages, attorney fees, and interest: (a) $800 for suffering a ruptured disc; (b) $100 for physician visits; (c) $400 for physical therapy visits; and (d) 1/30th of his monthly pay or $208.36 per day for 349 days of disability, totaling $72, 717.64.
In his complaint, Corporal Levine has asserted claims against Washington National for breach of contract and for the statutory tort of bad faith, actionable under 42 Pa. Cons. Stat. Ann. § 8371. Washington National has moved for partial summary judgment. With respect to the bad faith claim, Washington National contends it is entitled to summary judgment because: (1) Levine's bad faith claim is barred by the applicable statute of limitations; (2) Washington National had reasonable basis for the denial of coverage-the notation in his original physician statement suggesting that he received medical treatment on December 4, 2012, more than two weeks before the incident in which Levine claimed to have been injured; and (3) Washington National had an additional, independent reasonable basis for denial of coverage-that Levine was not in fact totally disabled. With respect to the breach of contract claim, Washington National contends that it is entitled to summary judgment because: (1) Levine failed to give Washington National notice of his claim or proof of loss as required by the Policy; (2) there is no evidence that Levine was totally disabled within 90 days after the alleged accidental injury as required by the Policy; and (3) Levine's claim for disability benefits is limited to payment of $2, 000 per month for a maximum of twelve months. Washington National has not moved for summary judgment with respect to Levine's claims for ruptured disc, physician's visit, and physical therapy benefits under the Policy.
the term bad faith includes any frivolous or unfounded refusal to pay proceeds of a policy. For purposes of an action against an insurer for failure to pay a claim, such conduct imports a dishonest purpose and means a breach of a known duty (i.e., good faith and fair dealing), through some motive of self-interest or ill will; mere negligence or bad judgment is not bad faith. Therefore, in order to recover under a bad faith claim, a plaintiff must show (1) that the defendant did not have a reasonable basis for denying benefits under the poicy; and (2) that the defendant knew or recklessly disregarded its lack of reasonable basis in denying the claim.
Keefe v. Prudential Prop. & Cas. Ins. Co., 203 F.3d 218, 225 (3d Cir. 2000) (citations and internal quotation marks omitted). “These two elements- absence of a reasonable basis for denying a claim under the policy and knowledge or reckless disregard of the lack of such reasonable basis-must be proven by clear and convincing evidence.” Cozzone v. AXA Equitable Life Ins. Soc. of the U.S., 858 F.Supp.2d 452, 458 (M.D. Pa. 2012) (citing Klinger v. State Farm Mut. Auto. Ins. Co., 115 F.3d 230, 233 (3d Cir. 1997)).
Section 8371 does not itself include a limitations period, and the Supreme Court of Pennsylvania has not yet addressed the issue, but Pennsylvania's federal courts have previously held that the state's two-year tort statute of limitations applies to a bad faith action brought under 42 Pa. Cons. Stat. Ann. § 8371. Skirica v. Nationwide Ins. Co., 416 F.3d 214, 223-24 (3d Cir. 2005); Haugh v. Allstate Ins. Co., 322 F.3d 227, 236 (3d Cir. 2003); Cozzone, 858 F.Supp.2d at 458; CRS Auto Parts, Inc. v. Nat'l Grange Mut. Ins. Co., 645 F.Supp.2d 354, 364-65 (E.D. Pa. 2009); McCullough v. Nw. Mut. Life Ins. Co., No. 2:05cv0105, 2007 WL 4440954, at *3-*4 (W.D. Pa. Oct. 24, 2007). Moreover, these precedents hold that the limitations period for a § 8371 claim commences when the insurer first provides definite notice of its denial of coverage. See Sikirica, 416 F.3d at 224; Cozzone, 858 F.Supp.2d at 458; CRS Auto Parts, 645 F.Supp.2d at 365; McCullough, 2007 WL 4440954, at *3.
“For purposes of applying Section 8371, one must look to the date on which the defendant insurance company first denied the insured's claim in bad faith.”. . . [C]ontinuing denials of coverage after the initial denial of coverage do not give rise to separate acts of bad faith. To that end, an insured “may not separate initial and continuing refusals to provide coverage into distinct acts of bad faith.” Thus, where an insurer clearly and unequivocally puts an insured on notice that he or she will not be covered under a particular policy for a particular occurrence, the statute of limitations begins to run and the insured cannot avoid the limitations period by asserting that a continuing refusal to cover was a separate act of bad faith.
CRS Auto Parts, 645 F.Supp.2d at 365 (quoting Adamski v. Allstate Ins. Co., 738 A.2d 1033, 1040, 1042 (Pa. Super. Ct. 1999)) (citations omitted).

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