United States District Court, M.D. Pennsylvania
YVETTE KANE, District Judge.
Before the Court is Defendant State Farm Mutual Automobile Insurance Company's motion to dismiss Plaintiff Sharon Neal's complaint. (Doc. No. 5.) For the reasons that follow, the Court will grant the motion in part, and deny it in part.
On or about January 27, 2011, Plaintiff was a passenger in a car when it was rear-ended at a stop light in Harrisburg, Pennsylvania, causing Plaintiff to suffer serious injuries. (Doc. No. 1-1 ¶¶ 6-8.) Defendant was Plaintiff's medical insurance provider. (Id. ¶¶ 4-5.) After the incident, Plaintiff notified Defendant of her claim, and complied with the terms of her policy. (Id. ¶¶ 10-16.) Defendant proceeded to pay for Plaintiff's treatment. (Id.) Eventually, Defendant contracted Dr. Walter Peppelman to perform an independent medical examination (IME) of Plaintiff and her injuries, which he performed on May 10, 2012. (Id. ¶¶ 17-20.) Plaintiff alleges Dr. Peppelman has a conflict of interest, as he recently "split from a joint practice" with her primary physician. (Id. ¶ 41.) Plaintiff also alleges that "Dr. Peppelman does a substantial amount of work for Defendant and other insurance companies, and has, or may have been, continuously providing negative [IME] reports to Defendant and other insurance companies for the purposes of maintaining a steady source of business." (Id. ¶ 42.)
In his report, Dr. Peppelman noted, among other observations, that "[t]here may have been a cervical or lumbar strain and sprain from the accident but this has reached full recovery and she has reached pre-injury status." (Doc. No. 1-1 at 68.) Dr. Peppelman also observed in his report that Plaintiff's "physical examination shows significant findings of symptom magnification and inappropriate illness behavior." (Id.) On May 17, 2012, based on Dr. Peppelman's examination, Defendant notified Plaintiff that it "would not be honoring any additional medical treatment related to the motor vehicle accident." (Doc. No. 1-1 ¶ 21.) Plaintiff has continued to seek treatment for injuries allegedly arising out of the accident. (Id. ¶ 23.)
On July 23, 2013, Plaintiff filed a civil action in the Court of Common Pleas of Dauphin County, Pennsylvania, arising out of Defendant's failure to pay benefits. (Id.) The five-count complaint alleges that: (1) Defendant violated the Pennsylvania Motor Vehicle Financial Responsibility Law, 75 Pa.C.S. § 1716 et seq. (MVFRL); (2) Defendant breached its contract; (3) Defendant refused in bad faith to pay benefits in violation of 42 Pa.C.S.§ 8371, (4) Defendant violated the Pennsylvania Unfair Trade Practices and Consumer Protection Law (UTPCPL), 73 P.S. § 201.1 et seq.; and (5) Defendant is liable for deceit. (Id.) On September 4, 2013 Defendant removed the action to this Court on the grounds that complete diversity existed between the parties. (Doc. No. 1.) On September 11, 2013, Defendants filed the motion to dismiss the complaint. (Doc. No. 5.) The motion is fully briefed and ripe for disposition.
II. LEGAL STANDARD
A motion to dismiss for failure to state a claim upon which relief can be granted tests the legal sufficiency of the complaint. Kost v. Kozakiewicz , 1 F.3d 176, 183 (3d Cir. 1993). In reviewing a motion to dismiss, a court may "consider only the allegations in the complaint, exhibits attached to the complaint, matters of public record, and documents that form the basis of a claim." Lum v. Bank of America , 361 F.3d 217, 221 n.3 (3d Cir. 2004). The motion will only be properly granted when, taking all factual allegations and inferences drawn therefrom as true, the moving party is entitled to judgment as a matter of law. Markowitz v. Ne. Land Co. , 906 F.2d 100, 103 (3d Cir. 1990). The burden is on the moving party to show that no claim has been stated. Johnsrud v. Carter , 620 F.2d 29, 33 (3d Cir. 1980). Thus, the moving party must show that the plaintiff has failed to "set forth sufficient information to outline the elements of his claim or to permit inferences to be drawn that those elements exist." Kost , 1 F.3d at 183 (citations omitted).
A court "need not credit a complaint's bald assertions' or legal conclusions' when deciding a motion to dismiss." Morse v. Lower Merion Sch. Dist. , 132 F.3d 902, 906-908 (3d Cir. 1997). Although Rule 12(b)(6) standard does not require "detailed factual allegations, " there must be a "showing, ' rather than a blanket assertion of entitlement to relief.... [F]actual allegations must be enough to raise a right to relief above the speculative level.'" Phillips v. Cnty. of Allegheny , 515 F.3d 224, 231-32 (3d Cir. 2008) (quoting Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555 (2007)). Put otherwise, a civil complaint must "set out sufficient factual matter' to show that the claim is facially plausible." Fowler v. UPMC Shadyside , 578 F.3d 203, 210 (3d Cir. 2009) (quoting Ashcroft v. Iqbal , 556 U.S. 662, 678 (2009)).
Defendants move the Court to dismiss Count One, violations of the MVFRL; Count Three, bad faith; Count Four, violations of the UTPCPL; and Count Five, deceit. (Doc. No. 5.) Defendant also ask the court to dismiss Plaintiff's demand for attorney's fees under Count Two, breach of contract. (Id.) Because Plaintiff states that she does not object to the dismissal of the deceit claim or the claim for attorney's fees under Count Two, the Court will dismiss Count Five and the claim for attorney's fees in Count Two. (Doc. No. 8 at 12.) The Court will proceed to address the other counts, beginning with the claim for bad faith.
A. Count Three: bad faith
Plaintiff alleges that Defendant's denial of benefits associated with her policy was in violation of Pennsylvania's bad faith statute, 42 Pa. Stat. Ann. § 8371. In moving the Court to dismiss this claim, Defendant argues that Plaintiff's allegations of bad faith are conclusory, boilerplate assertions that fall short of the standard set by Twombly, and, as such, should be dismissed for failure to state a claim for which relief can be granted. (Doc. No. 7 at 6-8.) Defendants further argue that Plaintiff's allegations regarding Dr. Peppelman's bias in his examination of Plaintiff are directed solely toward Dr. Peppelman and therefore do not implicate Defendant. (Id.) Plaintiff counters that she has sufficiently alleged bad faith on the part of Defendant by its abuse of the independent medical examination process. (Doc. No. 8 at 10-11.)
Pennsylvania courts have defined bad faith as "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 bad faith." Morrison v. Mountain Laurel Assur. Co. , 748 A.2d 689, 691 (Pa.Super. Ct. 2000) (citations omitted). A plaintiff must "show  that the defendant did not have a reasonable basis for denying benefits under the policy and  that defendant knew or recklessly disregarded its lack of reasonable basis in ...