For the second time in a year, a federal judge rejected a plaintiff’s attorney’s argument that an insurance carrier acted in bad faith by using the Mitchell Decision Point program when calculating the value of a Colorado policyholder’s underinsured motorist claim.
U.S. District Judge Kathleen M. Tafoya in Denver denied a motion that sought summary judgment in favor of plaintiff Austin Benson in a bad faith suit against Allstate Fire and Casualty Insurance Co.
Denver attorney Heather E. Hackett argued that Allstate’s use of Mitchell Decision Point violated the state’s collateral source rule. The statute requires insurers to pay the full cost of any covered medical treatment, before any discounts provided by insurance network agreements are granted, and without deducting payments from other insurers.
Judge Tafoya said in her decision that just because the Mitchell program may produce data that is inadmissible in court, that doesn’t necessarily mean it cannot be used at all.
“Plaintiff has provided no evidence from which the court could conclude that the use of MDP software as part of the evaluation process engaged in by Allstate adjusters is per se unreasonable, especially given the testimonial evidence that use of MDP was only a part of the overall process,” she said in an opinion issued Monday.
Benson suffered injuries to his spine, head, neck and left shoulder during an April 2015 single-vehicle car accident. He was driving his friend Jocelyn Thomas’ car on Highway 15 in Clarke County, Nevada, when Thomas unexpectedly leaned over him and jostled the steering wheel, causing the vehicle to run off the road.
Allstate insured both Thomas and Benson separately under a policy issued to his father. The carrier paid $50,000, the maximum limits of Thomas’ policy, but Benson claimed that did not cover the full extent of his losses. He filed an underinsured motorist claim under his father’s policy with Allstate, which he says has a limit of $100,000.
Allstate initially offered to settle the claim for $10,000. After Benson submitted $57,970.21 in medical bills, an Allstate claims adjuster determined that only $25,501 of those charges were reasonable and customary, according to Benson’s civil complaint. What’s more, the adjuster deducted $10,000 in Medical Payment Benefits Law payments that Benson had received. An Allstate attorney later agreed to remove that deduction.
Benson refused to accept the $20,000 final offer and filed suit, claiming he was entitled to not only the $100,000 policy limits but also an additional $200,000 in punitive damages for the unreasonable delay in paying the claim.
During discovery, Benson’s attorneys asked Allstate to reveal how the Mitchell Decision Point program works. The insurer refused. In August, Hackett filed a motion for summary judgment.
The motion says that Allstate’s adjuster testified that she did now know how the Decision Point program arrived at different amounts than the medical bills that were submitted.
“Reliance on other undisclosed information to ignore the billed amount of medical bills in order to devalue an insured’s claim is unreasonable on its face as it directly contradicts controlling Colorado law,” the motion states.
Judge Tafoya found that the case isn’t so clear cut. She said the facts are in dispute, as to whether Allstate based its decision to deny the claim was based on the Mitchell software or was reached after a fair review of the entire claim file. Moreover, the question of whether an insurer’s decisions are reasonable involves both questions of law and fact, Tafoya said.
“Ultimately, the jury must determine whether Allstate’s methodology for evaluating plaintiff’s injuries and required medical care was reasonable, including its use of the MDP software program,” the opinion states. “This central factual dispute cannot be resolved on summary judgment.”
Chief District Judge Marcia S. Krieger heard a similar argument in a case decided last April. In that case, plaintiff Linda Murway argued that Allstate had acted in bad faith by using Mitchell Design Point when calculating its settlement offer.
Even though a jury awarded Murway the entire $250,000 limit of her policy, Murway filed a separate bad-faith action after the case was resolved.
Judge Krieger ruled that Murway’s claim had already been decided in the first action and she could not have a second bite of the apple.
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