Key Takeaway
Court ruling establishes bad faith and GBL 349 claims against insurers who pressure IME doctors to deny no-fault benefits, allowing consequential damages.
Brown v Government Employees Ins. Co., 2017 NY Slip Op 08774 (3d Dept. 2017)
(1) “Plaintiff alleged that she became permanently disabled as a result of injuries that she sustained in an automobile accident in March 2012. Following an independent medical examination (hereinafter IME), defendant denied no-fault insurance benefits on the basis that plaintiff’s injuries were preexisting and were not causally related to the accident. In December 2014, plaintiff commenced this action asserting causes of action for breach of contract, violation of General Business Law §§ 349 and 350 and intentional infliction of emotional distress, based on allegations that defendant pressured the physicians that it employed to conduct IMEs to attribute injuries to preexisting conditions and thereby facilitate the denial of claims, and seeking, among other relief, damages for emotional distress and punitive damages.”
“ held that plaintiff had adequately stated a claim for consequential damages for economic loss and pain and suffering. ”
(2a) “In that regard, allegations that an insurer engaged in a practice of failing to investigate claims in good faith, or of denying claims without regard to their viability, are sufficient to state a cognizable claim for deceptive practices pursuant to General Business Law § 349”
(2b) “Moreover, “he battle over whether plaintiff can meet her obligation of a threshold showing that her claim was predicated upon a deceptive act or practice that was consumer oriented is best reserved for a motion for summary judgment after discovery”
(2c) “In her complaint, plaintiff alleged that defendant engaged in a consumer-oriented pattern and practice aimed at the public at large of wrongfully denying claims for no-fault benefits by pressuring the physicians it hired to perform IMEs to provide medical reports that would support the denial of benefits and, further, that she suffered injury as a result of that practice. Such allegations are sufficient to plead a cause of action pursuant to General Business Law § 349 “‘at this early prediscovery stage’”
(3) Emotion damages barred
(4) “Plaintiff’s claim for punitive damages was likewise properly dismissed. Punitive damages may be recovered for breach of contract “only where a defendant’s conduct was (1) actionable as an independent tort, (2) egregious, (3) directed toward the plaintiff and (4) part of a pattern directed at the public” (Dinstber v Allstate Ins. Co., 110 AD3d 1410, 1411 ). Plaintiff’s allegations that defendant engaged in unfair claim settlement practices do not allege a tort independent of the parties’ contract sufficient to state a claim for recovery of punitive damage”
As to point 4, the first three element can be alleged: (1) Point “1” is fraud which is being piggybacked on the breach and 349 COA; (2) Point “2” can be alleged depending on the injury alleged or the conduct at issue; (3) The plaintfif was the victim; (4) This is tough – how can you show it is directed at the public unless you have the goods from seeing a pattern…
