Court Opinion

ID: 9797405
Source: CourtListenerOpinion
Date Created: 2023-08-31 04:19:37.283362+00
Date Added: 2024-06-11T08:54:54.574007
License: Public Domain

CHIN, J., Dissenting.
I cannot agree with the majority’s conclusion that defendant 21st Century Insurance Company (21st Century) acted unreasonably and in bad faith when it delayed paying the policy limits on plaintiff’s *727underinsured motorist claim. The radiologist who viewed a postaccident cervical spine X-ray in conjunction with plaintiff’s own doctors, Community Hospital of Monterey Peninsula, and Pueblo Radiology concluded that plaintiff’s cervical spine appeared “normal,” with “[m]ild straightening of lordosis” but “no fracture, degenerative change or soft tissue swelling.” Plaintiff then went on an extended backpacking trip to Europe after the accident. All of this, together with plaintiff’s low initial medical bills, make 21 Century’s initial actions in evaluating coverage very reasonable.
It was not until after plaintiff returned from Europe, and before a planned trip to Australia, that she first sought the medical opinion of Dr. Southern, an orthopedist, for the cause of her continuing neck pain. Dr. Southern told plaintiff that if the magnetic resonance imaging scan he ordered was “markedly abnormal” she should postpone her trip to Australia. But when the results arrived he did not advise her to alter her plans, and she traveled in Australia for 10 months.
In June 2001, while plaintiff was still in Australia, her attorney sent a demand letter to 21st Century for a policy limits payment. The insurer invited plaintiff’s attorney to submit any additional medical records that might cause it to revise its claim value assessment, but the attorney said that he had nothing more to submit. After 21st Century offered plaintiff her medical payment reimbursement of $5,000 and denied the policy limits demand, plaintiff initiated statutory arbitration in July 2001, under Insurance Code section 11580.2.
Before the arbitration hearing, and after plaintiff returned from Australia in December 2001, she again saw Dr. Southern, who recommended a treatment regimen of physical therapy and antiinflammatory medications. He did not recommend surgery. It was not until plaintiff’s June 2002 deposition in the arbitration proceeding, and for the first time in the two-year postaccident period, that plaintiff revealed that one of her doctors (Dr. Spencer) had recommended spinal fusion surgery. Following that recommendation, however, plaintiff sought another medical opinion from Dr. Szper (a neurosurgeon) who noted a “slight disc bulge” but found “nothing in my eyes which appears to be surgical.” Dr. Szper recommended against surgery, and suggested plaintiff undergo pain management instead.
In light of plaintiff’s arbitration testimony that revealed the conflicting expert views, 21st Century promptly and reasonably sought an independent medical opinion to corroborate plaintiff’s medical expert’s opinions. The insurer’s medical experts, Drs. Nagelberg and Chafetz, initially opined that surgery was not advisable, agreeing with at least one of plaintiff’s own medical experts. It was not until after Dr. Nagelberg was given a full *728diskogram report that he recommended surgical intervention in a supplemental report to 21st Century. Thus, 21st Century fulfilled its statutory obligation to seek an independent medical opinion in light of Dr. Spencer’s opinion that plaintiff might benefit from surgery. (Ins. Code, § 790.10; Cal. Code Regs., tit. 10, § 2695.7, subd. (n) [mandates that insurer requesting medical examination for purpose of determining liability shall do so only when insurer has good faith belief that examination is reasonably necessary].) 21st Century thereafter revised its assessment of the claim’s value and authorized payment to the insured of the $85,000 remainder of her underinsured motorist policy limit.
I agree that we must evaluate the insurer’s reasonableness under a “totality of the circumstances” standard. But contrary to the majority’s view, the totality of the circumstances here shows that even plaintiff’s experts had difficulty agreeing on the extent of her injury or the proper course of treatment.
If an insurance company reasonably and legitimately disputes coverage, summary judgment for the insurer is proper in a bad faith action even if it is later determined that the insurer did owe policy benefits. (Chateau Chamberay Homeowners Assn. v. Associated Internat. Ins. Co. (2001) 90 Cal.App.4th 335, 347-349 [108 Cal.Rptr.2d 776] [tortious bad faith damages not imposed when insurer’s initial failure to discharge contractual obligations was prompted by bad judgment or negligence]; see also Croskey et al., Cal. Practice Guide: Insurance Litigation (The Rutter Group 2006) ][ 12:837.1, pp. 12C-13.) In other words, a mistaken withholding of benefits or delay in payment is not bad faith where it is reasonable or based on a genuine dispute as to the insurer’s liability. (See Rappaport-Scott v. Interinsurance Exchange of the Automobile Club (2007) 146 Cal.App.4th 831, 834-837 [53 Cal.Rptr.3d 245] [applying genuine dispute doctrine to preclude bad faith in underinsured motorist action]; see also Opsal v. United Services Auto. Assn. (1991) 2 Cal.App.4th 1197, 1205 [10 Cal.Rptr.2d 352] [before insurer can be found to have acted tortiously or in bad faith in refusing to bestow policy benefits, it must have done so “ ’ “without proper cause” ’ ”].) Given the fact that plaintiff’s own experts could not agree on the extent of her injuries, 21st Century reasonably disputed the extent and severity of plaintiff’s injuries.
The majority’s holding can only drive up the cost of underinsured motorist insurance—contrary to the clear public policy of keeping the costs of such insurance low. (See, e.g., Yoshioka v. Superior Court (1997) 58 Cal.App.4th 972, 984 [68 Cal.Rptr.2d 553] [noting that uninsured (and hence, underinsured) motorist laws reflect the electorate’s interest “in controlling the high costs of insurance”].) By allowing plaintiff to proceed with her lawsuit for bad faith even though a genuine dispute existed over the extent of her injuries *729until 21st Century paid the policy limits, the majority encourages unwarranted and costly lawsuits, the unnecessary hiring of doctors and lawyers, and the resulting increase in our automobile insurance premiums. 21st Century’s reasonable and cautious behavior in light of the facts here should be encouraged on behalf of all consumers, not punished.
Accordingly, I dissent.
Baxter, J., concurred.
On December 19, 2007, the opinion was modified to read as printed above.