Shotts v. GEICO, 943 F.3d 1304

In 2013 Shotts was injured in a car accident caused by Dana Pollard; Shotts had GEICO UM coverage with $25,000 limits and Pollard carried $25,000 liability through Farmers.
Farmers paid workers’ comp and offered the remaining Pollard policy limits to settle; Shotts notified GEICO before accepting Farmers’ offer.
GEICO opened a claim, investigated, confirmed Pollard’s fault, and waived its subrogation rights so Shotts could accept the tortfeasor’s offer.
GEICO’s evaluation concluded Shotts’s injuries exceeded Pollard’s limits by $3,210.87 and GEICO offered that amount; Shotts demanded a Burch "first‑dollar" payment up to UM limits and asked for reconsideration.
GEICO sought additional records and proposed peer review; Shotts sued for bad faith (inadequate investigation and failure to pay under Burch) and punitive damages; the district court granted summary judgment for GEICO.
The Tenth Circuit affirmed: it found a legitimate dispute over claim value, GEICO’s investigation reasonable, and GEICO’s waiver of subrogation extinguished any duty to make a first‑dollar payment; punitive damages failed as derivative.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Was GEICO's investigation unreasonable (bad faith)?	Shotts: GEICO conducted a biased, inadequate investigation and undervalued permanent injuries.	GEICO: Prompt, thorough investigation; reviewed records, imaging, took statement, sought more records and peer review.	No — investigation was reasonable; no specific evidence of sham or overlooked material facts.
Did GEICO violate Burch by failing to make a "first‑dollar" UM payment?	Shotts: His injuries exceeded tortfeasor limits, so GEICO must pay full UM amount promptly under Burch.	GEICO: It waived subrogation rights, so it could not recoup payments and thus had no duty to pay first dollar.	No — waiver of subrogation extinguished GEICO's duty to make first‑dollar payment; preventing double recovery.
Are punitive damages available?	Shotts: Punitive damages justified by alleged bad faith.	GEICO: No underlying bad faith, so punitive damages inappropriate.	No — punitive damages derivative of failed bad faith claims; summary judgment affirmed.

Buzzard v. Farmers Ins. Co., 824 P.2d 1105 (Okla. 1991) (UM coverage operative when tortfeasor lacks sufficient insurance)
Burch v. Allstate Ins. Co., 977 P.2d 1057 (Okla. 1998) (UM carrier must pay claim from first dollar up to UM limits absent equitable considerations)
Oulds v. Principal Mut. Life Ins. Co., 6 F.3d 1431 (10th Cir. 1993) (framework for bad‑faith summary judgment; legitimate dispute rule)
Timberlake Constr. Co. v. U.S. Fid. & Guar. Co., 71 F.3d 335 (10th Cir. 1995) (legitimate dispute precludes inference of bad faith)
Bannister v. State Farm Mut. Auto. Ins. Co., 692 F.3d 1117 (10th Cir. 2012) (insurer denial based on legitimate dispute requires additional evidence to send bad‑faith to jury)
Badillo v. Mid Century Ins. Co., 121 P.3d 1080 (Okla. 2005) (insurer's implied duty of good faith and fair dealing)
Phillips v. N.H. Ins. Co., 263 F.3d 1215 (10th Cir. 2001) (discusses relation of subrogation ability to payment duties)
Barnes v. Okla. Farm Bureau Mut. Ins. Co., 11 P.3d 162 (Okla. 2000) (no legitimate dispute -> bad faith inference)
Brown v. Patel, 157 P.3d 117 (Okla. 2007) (insurer must conduct a reasonable—though not perfect—investigation)