Opinion ID: 2651525
Heading Depth: 3
Heading Rank: 3

Heading: Insurer duties under Mississippi law

Text: Mississippi places a duty on insurers to properly investigate the claims asserted by their insured. Specifically, “[u]nder Mississippi law, insurers have a duty ‘to perform a prompt and adequate investigation and make a reasonable, good faith decision based on that investigation’ . . . .” Broussard, 523 F.3d at 627-28 (quoting Liberty Mut. Ins. Co. v. McKneely, 862 So. 2d 530, 535 (Miss. 2003)). “A proper investigation means obtaining ‘all medical information relevant to a policyholder’s claim.’” McLendon v. Wal-Mart Stores, Inc., 521 F. Supp. 2d 561, 565 (S.D. Miss. 2007) (quoting Lewis v. Equity Nat’l Life Ins. Co., 637 So. 2d 183, 187 (Miss. 1994)). To do so, an insurer must “make a reasonable effort to secure all medical records relevant to the claim.” Stewart v. Gulf Guar. Life Ins. Co., 846 So. 2d 192, 204 (Miss. 2002) (citation and internal quotation marks omitted). 6 State Farm argues that James must establish the lack of an arguable or legitimate basis by clear and convincing evidence. While it is clear that the second part of the punitive damages test under State Farm Mut. Auto. Ins. Co. v. Grimes, 722 So. 2d 637, 641 (Miss. 1998), does require clear and convincing evidence, see Miss. Code Ann. § 11-1-65, State Farm has identified no Mississippi court that has squarely addressed the question of whether establishing the lack of an arguable basis requires a similarly heightened standard. Moreover, the plain language of the Mississippi statute limits its heightened standard to proof of “actual malice, gross negligence which evidences a willful, wanton or reckless disregard for the safety of others, or . . . actual fraud.” Miss. Code Ann. § 11-1-65(1)(a). This plainly addresses the second part of the punitive damages test, not the threshold issue that we consider today. Therefore, as State Farm has presented no contrary authority, we hold that the lack of an arguable or legitimate basis requires only proof by a preponderance of the evidence. 8 Case: 11-60458 Document: 00512514313 Page: 9 Date Filed: 01/28/2014 No. 11-60458