Opinion ID: 2156602
Heading Depth: 1
Heading Rank: 8

Heading: the evidence presented was insufficient to support a bad faith claim

Text: We next consider whether the evidence presented by the LeRettes was sufficient to submit Mary's bad faith claim related to initial denials concerning her hysterectomy to the jury. As to this issue, we conclude that the evidence related to Mary's bad faith claim was not sufficient to have been submitted to the jury and that the district court erred in denying United Wisconsin's motion for directed verdict addressing the entire bad faith cause of action. Accordingly, we reverse, and remand with directions to dismiss the bad faith claim. In Braesch v. Union Ins. Co., 237 Neb. 44, 57, 464 N.W.2d 769, 777 (1991), disapproved on other grounds, Wortman v. Unger, 254 Neb. 544, 578 N.W.2d 413 (1998), we first adopted the standard of care in bad faith claims as follows: To show a claim for bad faith, a plaintiff must show the absence of a reasonable basis for denying benefits of the [insurance] policy and the defendant's knowledge or reckless disregard of the lack of a reasonable basis for denying the claim. It is apparent, then, that the tort of bad faith is an intentional one. `Bad faith' by definition cannot be unintentional. Quoting Anderson v. Continental Ins. Co., 85 Wis.2d 675, 271 N.W.2d 368 (1978). We repeated this standard and further discussed the requirements for a bad faith claim in Radecki v. Mutual of Omaha Ins. Co., 255 Neb. 224, 583 N.W.2d 320 (1998), and in Williams v. Allstate Indemnity Co., 266 Neb. 794, 669 N.W.2d 455 (2003). In both Radecki and Williams, we affirmed the district court's grant of a directed verdict in favor of the insurer on bad faith claims. We stated in Radecki that if a lawful basis for denial actually exists, the insurer, as a matter of law, cannot be held liable in an action based on the tort of bad faith. 255 Neb. at 229, 583 N.W.2d at 325. We further stated that it must be determined whether, at the time of each denial, [the insurer] had an arguable basis on which to deny the claim and if the insurer had such a basis, [the insured's] bad faith cause of action fails as a matter of law regardless of the manner in which an investigation was or was not conducted. 255 Neb. at 230, 583 N.W.2d at 326. The question [w]hether a claim is fairly debatable is appropriately decided by the court as a matter of law . . . and such a determination is based on the information available to the insurance company at the time the demand is presented. Id. Upon the record presented, we conclude that because United Wisconsin had an arguable basis on which to initially deny precertification at the time of each such denial, the LeRettes' bad faith claim as to Mary's hysterectomy fails as a matter of law. In the present case, United Wisconsin denied Mary's request for precertification on two occasions. Mary invoked the appeal process provided in the contract, and ultimately, United Wisconsin granted her request. In this regard, we note that the timeframe during which the appeals were conducted and concluded were within the timeframes set forth in the policy. United Wisconsin initially denied Mary's request on the basis of Dr. Goldstein's opinion which concluded that the hysterectomy was not medically necessary. In his opinion, Dr. Goldstein noted Mary's age and concluded that the hysterectomy would not be appropriate until further treatment had been attempted and further testing had been done. United Wisconsin denied the request again based on the review by Dr. Yusah, who opined that precertification should be denied as not medically necessary and that other treatments should be attempted before resorting to a hysterectomy. Although the LeRettes presented evidence that Mary's doctor recommended the hysterectomy, United Wisconsin was allowed to rely in good faith on its own experts' opinions rather than the opinion of the insured's expert. See Morgan v. American Family Mut. Ins. Co., 534 N.W.2d 92 (Iowa 1995) (insurance company not obligated to disregard opinion of its own expert in favor of insured's expert's opinion), overruled in part on other grounds, Hamm v. Allied Mut. Ins. Co., 612 N.W.2d 775 (Iowa 2000). Indeed, we have observed that `[t]he insurer. . . must be accorded wide latitude in its ability to investigate claims. . . .' Braesch v. Union Ins. Co., 237 Neb. 44, 58, 464 N.W.2d 769, 778 (1991) (quoting Travelers Ins. Co. v. Savio, 706 P.2d 1258 (Colo. 1985)), disapproved in part on other grounds, Wortman v. Unger, 254 Neb. 544, 578 N.W.2d 413 (1998). The LeRettes' evidence did not indicate that United Wisconsin's experts' opinions were unsound or false or that there was an absence of a reasonable basis to deny benefits. The evidence presented by the LeRettes did not inject doubt as to the fact that United Wisconsin had an arguable basis to initially deny the request for precertification. The question of whether a claim is fairly debatable is appropriately decided by the court as a matter of law. Radecki v. Mutual of Omaha Ins. Co., 255 Neb. 224, 583 N.W.2d 320 (1998). As a matter of law, Mary's claim was fairly debatable and United Wisconsin had an arguable basis for initially denying benefits at the time of each such denial. Despite their failure to show an absence of a reasonable basis for initially denying Mary's claim, the LeRettes refer us to various actions by United Wisconsin related to the initial denials which the LeRettes claim nevertheless demonstrate that United Wisconsin acted with bad faith. However, as anticipated in Radecki, where as here, the insurer had an arguable basis on which to initially deny the claim, the bad faith cause of action fails as a matter of law regardless of the manner in which an investigation was or was not conducted. We conclude that the LeRettes did not present evidence to support a claim of bad faith. Therefore, the claim should not have been submitted to the jury, and the district court should have granted United Wisconsin's motion for directed verdict as to the entire bad faith cause of action at the close of the evidence. Because a directed verdict at the close of the evidence would have been appropriate, the district court should have granted United Wisconsin's motion to set aside the verdict and should have dismissed the claim. We therefore reverse the judgment on the cause of action for bad faith and remand the cause to the district court with directions to dismiss the claim. Because we reverse the judgment on the bad faith cause of action and remand the cause for dismissal of the bad faith claim, it is not necessary to address United Wisconsin's assignment of error with respect to jury instructions regarding the purported defense of misrepresentation by deceit.