MEMORANDUM & ORDER
Plaintiff Barbara German Kosierowski brought this action
alleging that defendant Allstate Insurance Company acted in bad
faith in its handling of her claim for underinsured motorist
benefits under her policy. Allstate now moves for summary
judgment. Because the plaintiff has not shown the existence of a
genuine issue of material fact through evidence that a reasonable
jury could find to be clear and convincing, the motion will be
The facts in this case are, for the most part, undisputed. On
October 7, 1992, Kosierowski was injured when her vehicle was
rear-ended by a car driven by an underinsured motorist (UIM). The
tortfeasor was insured for only $15,000, but Kosierowski had a
policy with Allstate that provided UIM coverage up to $100,000.
By letter dated August 9, 1993, Joseph Mallon, plaintiffs
attorney, informed Allstate that the tortfeasor's insurer had
tendered its $15,000 limits and requested Allstate's consent to
settle Kosierowski's claim against the tortfeasor. In response,
Allstate sent a form letter asking Kosierowski to provide
information about the tortfeasor before it would agree to settle
the claim. Mallon informed Allstate that Kosierowski had no duty
to perform this investigation and that Allstate was required to
notify her within thirty days whether it would consent to
Allstate consented to settlement, and no action occurred in the
case for almost two years following the settlement with the
tortfeasor. On October 11, 1995, Mallon demanded UIM policy
limits of $100,000, stating that Kosierowski had suffered lost
wages and loss of earning capacity in excess of $118,000 and
compensable medical expenses in excess of $12,000. On October 23,
1995, Allstate said that it would schedule plaintiffs independent
medical examination (IME) after receiving Kosierowski's
employment records, her medical records for the preceding tell
years, and information pertaining to her marital and family
status. Mallon provided some of this information by letter dated
January 10, 1996, and asked Allstate to schedule an IME, which
was performed by Dr. Bocher on February 7, 1996. Dr. Bocher
issued a report on February 23, 1996, finding that Kosierowski
had various soft tissue injuries. The report concluded that her
symptoms were persistent and could continue indefinitely.
Over the next two months, Allstate requested additional
information on plaintiff's
medical and wage losses, and Mallon repeatedly brought up the
possibility of arbitration should a settlement not be reached. On
April 26, 1996, he unequivocally demanded such arbitration in
accordance with the policy provisions. Allstate named Hugh
Donaghue as its outside counsel, and on May 24, 1996, he named
Alexander DiSanti as Allstate's arbitrator. Although Mallon had
already identified Kosierowski's arbitrator, Allstate requested
that name again. On May 29, 1996, Mallon telephoned Donaghue and
informed him that Kosierowski had selected an arbitrator and
requested scheduling of' the plaintiffs sworn statement. More
than four months later, on October 8, 1996, Donaghue scheduled
the statement for October 28, 1996. A neutral arbitrator was not
selected until October 15, 1996. It was shortly after these
events, by letter dated November 8, 1996, that Mallon informed
Allstate that he was considering a bad faith suit.
On November 20 and 22, 1996, Allstate ran Kosierowski's claim
through Colossus, a computer program used by Allstate to
calculate the settlement value of claims. The first evaluation
produced a settlement range of $11,624 to $13,824, although
Huber, the adjustor on the case, independently evaluated the case
as worth $50,000 to $60,000. On the same day, Allstate made an
offer of $50,000 to Kosierowski. Two days later, with the
addition of different variables, Colossus produced a settlement
range of $50,760 to $61,060. On December 5, 1996, Allstate gave
Huber $100,000 in settlement authority, but Huber did not
exercise that. authority, instead asking Mallon what he thought
of the $60,000 offer. Mallon said that the offer was $50,000, not
$60,000; after negotiations, Huber made an offer of $80,000.
Kosierowski agreed to accept $80,000 but would not release the
bad faith claim. Allstate next offered $100,000 to settle the bad
faith and the UIM claim, and Mallon refused, stating that
plaintiff was still willing to accept $80,000 without a release
of the bad faith claims. Finally, on December 8, 1996, Allstate
agreed to settle the case for $100,000 with no release of the had
faith claim. Kosierowski accepted this offer.
Following these events, Kosierowski brought a claim of bad
faith against Allstate for its handling of her case. Allstate now
moves for summary judgment, arguing that (1) plaintiff has no
evidence to support an award of punitive damages; (2) plaintiff
has not presented sufficient facts from which a jury could
conclude that Allstate acted in bad faith; (3) plaintiff has no
proof that she suffered any harm by Allstate's actions; and (4)
plaintiffs expert opinion does not provide clear and convincing
evidence that Allstate acted without a reasonable basis. As the
plaintiff has not presented evidence that a reasonable jury could
find to be clear and convincing that Allstate acted in bad faith,
the court does not reach defendant's first and third contentions.
A. Bad Faith
Pennsylvania law provides that
In an action arising under an insurance policy, if the court
finds that the insurer has acted in bad faith toward the insured,
the court may take all of the following actions:
(1) Award interest on the amount of the
claim from the date the claim was
made by the insured in an amount
equal to the prime rate of interest
(2) Award punitive damages against the
(3) Assess court costs and attorney fees
against the insurer.
42 Pa.C.S.A. § 8371.
In Terletsky v. Prudential Property and Casually Insurance
Company, 437 Pa. Super. 108, 649 A.2d 680 (1994), the Pennsylvania
Superior Court explained that bad faith by an insurer is
any frivolous or unfounded refusal to
pay proceeds of a policy; it is not necessary
that such refusal be fraudulent.
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
Terletsky, 649 A.2d at 688. The plaintiff must demonstrate "(1)
that the insurer lacked a reasonable basis for denying benefits;
and (2) that the insurer knew or recklessly disregarded its lack
of reasonable basis." Klinger v. State Farm Mut. Auto. Ins. Co.,
115 F.3d 230, 233 (3d Cir. 1997). While an insurer is required to
accord the interests of its insureds the same consideration it
gives its own, it is not required actively to submerge its own
interests. See Hyde Athletic Indus. v. Continental Cas. Co.,
969 F. Supp. 289, 307 (E.D.Pa. 1997); Leo v. State Farm Mut. Auto.
Ins. Co., 939 F. Supp. 1186, 1190 (E.D.Pa. 1996).
To prevail on a bad faith claim, a plaintiff must prove both
elements by clear and convincing evidence. See Polselli v.
Nationwide Mut. Fire Ins. Co., 23 F.3d 747, 750 (3d Cir. 1994);
Leo, 939 F. Supp. at 1190. Accordingly, the plaintiffs burden in
opposing a summary judgment motion is commensurately high because
the court must view the evidence presented in light of the
substantive evidentiary burden at trial. See, e.g., Anderson, 477
U.S. at 255, 106 S.Ct. 2505; Quaciari v. Allstate Ins. Co.,
998 F. Supp. 578, 581 (E.D.Pa. 1998).
B. Plaintiffs Allegations
The plaintiff makes the following specific allegations of bad
1. Allstate unreasonably delayed the
resolution of Kosierowski's claim by
refusing to appoint defense counsel
and name an arbitrator and by failing
to schedule a statement under
oath for many months.
2. Allstate unreasonably made no settlement
offer for more than a year
following plaintiffs demand, even
though its own doctor's medical
opinion supported plaintiffs position;
when settlement was eventually offered,
it was unreasonably low.
3. Allstate improperly attempted to use
settlement of plaintiffs UIM claim
as leverage to obtain a release of the
bad faith claim.
4. Allstate improperly asked Kosierowski
to perform investigations that
were Allstate's responsibility.
5. Allstate applied improper business
practices to plaintiffs claim.
The court will consider each claim in turn.