McKinney v. Progressive Direct Insurance
19-6127
| 10th Cir. | Dec 9, 2021Background
- McKinney was injured as a passenger in a single-car crash; the vehicle/driver were insured by Progressive and McKinney had a separate CSAA policy.
- Progressive’s policy listed $100,000 per-person/$300,000 per-accident liability and the same limits for uninsured/underinsured motorist (UM) coverage; Progressive paid $100,000 liability but denied UM benefits invoking a broad UM exclusion.
- CSAA (McKinney’s insurer) obtained medical records, evaluated the claim (initial valuation ≈ $108k–$118k), and offered a small payment conditioned on a release; a later re-evaluation increased its offer, which McKinney did not accept.
- McKinney sued Progressive (breach of contract seeking UM benefits) and CSAA (bad faith for allegedly lowballing and failing to tender payment); case removed to federal court.
- The district court denied Progressive’s summary-judgment motion (found UM exclusion void under Oklahoma public policy) and granted summary judgment to CSAA on bad-faith claim; jury awarded McKinney $325,000 (reduced to $225,000 after Progressive’s $100,000 payment).
- On appeal the Tenth Circuit affirmed: UM exclusion voided and UM coverage applied; CSAA entitled to summary judgment on bad-faith claim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity of Progressive’s broad UM exclusion | McKinney: exclusion is invalid under Oklahoma public policy; UM coverage applies | Progressive: exclusion valid, so no UM recovery | Held: exclusion void under Oklahoma law (Lane); UM coverage applies |
| Applicable UM coverage limit after exclusion invalidation | McKinney: full UM limit paid ($100,000) | Progressive: if exclusion voided, coverage should be limited to $25,000 | Held: $100,000 per-person UM limit controls (policy limit paid/premium paid) |
| CSAA bad faith — investigation and low offer | McKinney: CSAA inadequately used medical authorization and lowballed valuation, showing bad faith | CSAA: conducted investigation, offered based on its valuation; legitimate dispute about damages | Held: no genuine dispute of bad faith; affidavit shows investigation and valuation were reasonable |
| CSAA bad faith — refusal to tender partial payment without release | McKinney: CSAA should have promptly paid undisputed portion | CSAA: refusal proper because liability payments and legitimate dispute over noneconomic damages; Quine factors satisfied | Held: refusal to tender without release not bad faith given investigation, valuation, disputed noneconomic damages, and no judgment/agreement fixing value |
Key Cases Cited
- Lane v. Progressive N. Ins. Co., 494 P.3d 345 (Okla. 2021) (Oklahoma Supreme Court: Progressive’s UM exclusion violates public policy and is void)
- Shotts v. GEICO Gen. Ins. Co., 943 F.3d 1304 (10th Cir. 2019) (bad-faith standard: insurer must lack reasonable good-faith basis to withhold payment)
- Oulds v. Principal Mut. Life Ins. Co., 6 F.3d 1431 (10th Cir. 1993) (articulates evidence required to show insurer bad faith)
- May v. Nat’l Union Fire Ins. Co. of Pittsburgh, 918 P.2d 43 (Okla. 1996) (distinguishes cases where UM coverage is imputed when policy lacks adequate UM protection)
- Gov’t Emps. Ins. Co. v. Quine, 264 P.3d 1245 (Okla. 2011) (refusal to tender partial UM payment without release not bad faith when certain conditions exist)
- Reorganized FLI, Inc. v. Williams Cos., Inc., 1 F.4th 1214 (10th Cir. 2021) (standard of review for summary judgment)