Temple v. Hartford Insurance Company of the Midwest
2:12-cv-02357
D. Ariz.Aug 26, 2014Background
- Temple, a Stanley Steemer employee, claimed workers’ compensation benefits after a January 9, 2012 fall on workplace stairs.
- Hartford insured Temple’s claim; Gallagher Bassett served as the claims adjuster; Murray investigated and denied disability benefits initially.
- Murray questioned medical documentation, based denial on lack of work-related evidence, and relied on an IME timeline to delay benefits.
- Medical records from Mayo Clinic later showed Temple’s prior conditions; surveillance suggested Temple moved freely, prompting questions about restrictions.
- An IME in April 2012 found work-related injury; after receipt of records, Temple’s disability claim was ultimately accepted and benefits paid in May 2012/2014.
- Temple asserted bad-faith handling and sought punitive damages; the court denied summary judgment on multiple theories and allowed claims to proceed to trial.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Bad faith denial and processing of the claim | Temple contends insurer failed to investigate and acted unreasonably. | Gallagher Bassett argues investigation was proper and denial pending IME was reasonable. | Gulf denied summary judgment; reasonable jury could find bad faith. |
| Aiding and abetting insurer’s bad-faith conduct | Agents can be liable for aiding and abetting insurer’s duty violations. | No primary bad-faith violation by Hartford, so secondary liability cannot attach. | Court holds agents may be liable; denial of summary judgment on aiding and abetting claims. |
| Punitive damages | Evidence shows willful, egregious conduct supporting punitive damages. | Even if bad faith, punitive damages require clear and convincing evidence of evil mind. | Reasonable jury could find requisite evil mind; summary judgment denied. |
| Admissibility of Temple’s insurance bad-faith expert | Weedon’s testimony is reliable under Daubert and 702. | Expert should be struck as unreliable. | Court denies motion to strike; Weedon permitted. |
Key Cases Cited
- Rawlings v. Apodaca, 151 Ariz. 149 (Ariz. 1986) (punitive damages require evil mind and awareness of risk)
- Zilisch v. State Farm Mut. Auto. Ins. Co., 196 Ariz. 234 (Ariz. 2000) (insurer owes good-faith duties; objective then subjective fair-debatability)
- Kumho Tire Co. v. Carmichael, 526 U.S. 137 (U.S. 1999) (extends Daubert gatekeeping to all expert testimony)
- Trus Joist Corp. v. Safeco Ins. Co. of Am., 153 Ariz. 95 (Ariz. 1986) (objective reasonable standard for insurer conduct)
- Desert Mountain Prop. Ltd. P’Ship v. Liberty Mut. Fire Ins. Co., 225 Ariz. 194 (App. 2010) (insurer not liable for bad faith simply for defending a claim)