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Robinson v. State Farm Mutual Automobile Insurnace Co.12/28/2000
Boise, September 2000 Term
2000 Opinion No. 136
Appeal from the District Court of the Fourth Judicial District, State of Idaho, Ada County. Hon. D. Duff McKee, District Judge.
Judgment entered upon jury verdict. Affirmed.
State Farm Insurance Co. appeals the district court's judgment entered upon a jury verdict of 9.6 million dollars arising from a bad faith insurance handling claim by its insured, Cindy Robinson.
I. FACTS AND PROCEDURAL BACKGROUND
A. Factual Background.
In 1991, Cindy Robinson (Robinson) purchased a standard automobile insurance policy from State Farm Mutual Automobile Insurance Company (State Farm), which included a $25,000 limit on medical payment coverage (MPC).
In January 1992, the left rear wheel of Robinson's automobile fell off as she was driving on the interstate, resulting in a jolt as the automobile dropped several inches to the ground.
Robinson maintained control of the vehicle and brought it to a stop. While she experienced no immediate symptoms, Robinson later began to notice pain in her back and within a few days sought medical attention. Robinson was treated conservatively in January and early February and was eventually diagnosed as having a herniated disc for which she underwent surgery in late February 1992.
Robinson reported the incident to State Farm in April 1992, and requested payment of the medical bills under the MPC provision of her policy. After an initial review, State Farm paid $1,662 of pre-surgery medical bills in July of 1992, but declined to pay any bills related to the surgery due to questions over causation.
State Farm sent Robinson's file to Medical Claims Review Service (MCRS), a medical records review company on State Farm's list of approved reviewers, asking for an opinion as to whether Robinson's herniated disc was causally related to the January 17 incident. State Farm routinely used the paper review services provided by MCRS in lieu of conducting more costly independent medical exams. MCRS issued a report to State Farm indicating that its review of the medical documentation did not support a causal relationship between the January 17 incident and the subsequent medical care for disc herniation.
Robinson was subsequently examined by a physician chosen by State Farm and a forensic chiropractor of her choosing. The results of both exams were sent to MCRS who again indicated a lack of causal relationship with the automobile incident. Based upon the review by MCRS, State Farm denied Robinson's claim for the surgery.
B. Procedural Background.
In August 1994, Robinson filed suit against State Farm alleging breach of insurance contract and bad faith handling of her claim. Robinson was later permitted to amend her complaint to include a claim for punitive damages.
In March 1995, Robinson's claim was reassigned to another claim representative. After review of her medical records by an orthopedic surgeon indicated a causal relationship between her injuries and the automobile incident, State Farm paid the remaining limits of Robinson's policy to her medical care providers.
At trial, Robinson introduced evidence that State Farm had engaged in a practice of referring claims to MCRS and other paper review companies, knowing that these companies would return a review favorable to State Farm. In addition, evidence was presented that State Farm failed to conduct a reasonable investigation of Robinson's claim prior to denying payment under the policy. State Farm introduced evidence attempting to rebut Robinson's assertion that it had acted in bad faith
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