Italo Pedicini v. Life Ins. Co. of Alabama
682 F.3d 522
6th Cir.2012Background
- Pedicini purchased a 1990 LICOA supplemental cancer-insurance policy providing unlimited benefits tied to the “usual and customary charges” for cancer treatment.
- In 2001 a new policy capped benefits at $25,000 per year and defined “actual charges” as charges made by the provider, the policy issued October 1, 2001.
- LICOA in February 2001 changed its payment practice to pay benefits equal to the amount accepted as full payment, rather than the billed amount, without notice to policyholders.
- Pedicini was diagnosed with cancer in February 2007 and learned that LICOA paid benefits based on discounted amounts rather than billed charges; he was instructed to document the amount accepted as full payment.
- The district court granted Pedicini summary judgment on the breach-of-contract claim and granted LICOA summary judgment on the bad-faith claims; the Seventh Circuit affirmed in part and reversed in part, remanding for further proceedings and possible discovery.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the term “actual charges” is ambiguous under Kentucky law. | Pedicini: billed charges;. | LICOA: amount accepted as full payment. | Ambiguous; interpreted in Pedicini’s favor. |
| Whether bad-faith claims survive after resolving breach-of-contract. | Pedicini argues lack of reasonable basis and concealment; disputed. | LICOA contends the claim was fairly debatable and warrants dismissal. | Reversed summary judgment for LICOA; remanded for further proceedings. |
| Whether the district court abused discretion in denying leave to amend and further discovery. | Pedicini sought to add discrimination claim and obtain more discovery. | Defendant argued untimely and unnecessary. | Not an abuse regarding the discrimination claim; remanded to consider on remand. |
Key Cases Cited
- Ward v. Dixie Nat’l Life Ins. Co., 257 F. App’x 620 (4th Cir. 2007) (ambiguous meaning of actual charges in some contexts)
- Guidry v. Am. Pub. Life Ins. Co., 512 F.3d 177 (5th Cir. 2007) (ambiguity of actual charges; policy interpretation)
- Empire Fire & Marine Insurance Co. v. Simpsonville Wrecker Service, Inc., 880 S.W.2d 886 (Ky. 1994) (fairly debatable coverage question limits bad-faith liability)