Zochert v. Protective Life Ins., 921 N.W.2d 479

Ivan and Lenore Zochert held a Protective Life supplemental cancer policy that required pathologic proof of cancer and a "written statement of the nature and extent of [the] loss" to support claims; policy specified benefit schedule and claims procedures.
Lenore had a July 5, 2012 biopsy positive for invasive ductal carcinoma; she underwent surgery August 14 and was later hospitalized for complications; she died August 2, 2013.
Ivan requested claim forms; Protective sent forms that instructed a pathology report must accompany the first claim and asked for itemized bills. Ivan initially submitted forms and a hospital billing summary (PHAS) but did not provide the July 11 pathology report or itemized physician bills.
Protective withheld some payments pending pathology confirmation and itemized bills; after receiving an August 14 pathology report it paid for the surgery, and later, after receiving the July 11 pathology report and itemized bills, it paid remaining benefits.
Ivan sued for breach of contract and bad faith; both parties moved for summary judgment. The circuit court granted Protective’s motion, finding the policy unambiguous and Protective paid benefits due once required proof was provided. Ivan appealed.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Ivan’s contractual good-faith claim is reviewable	Ivan argued the covenant claim was before the court and was properly raised below	Protective contended the contractual good-faith claim was not pleaded and thus not raised on appeal	Court: Claim was raised in response briefing and addressed below; reviewable on appeal
Whether Protective breached the implied covenant of good faith and fair dealing	Ivan argued Protective failed to investigate, failed to disclose/clarify benefits, and did not give equal consideration to insured’s interests	Protective argued the policy expressly required insured to provide proof (pathology and written statement/itemized bills); it followed policy and paid when proof received	Court: No breach. Policy unambiguous; insured must provide proof of loss; Protective reasonably awaited required documentation and processed payments promptly once received
Whether Protective committed tortious bad faith in handling claims	Ivan alleged conscious wrongdoing, unjustified delay, and other practices showing bad faith	Protective argued it had reasonable basis to delay/payment pending proof per policy; no evidence of conscious wrongdoing or causal link from alleged practices to claim handling	Court: No bad faith. Plaintiff received all policy benefits; no evidence insurer knowingly lacked a reasonable basis or recklessly disregarded facts

Harvieux v. Progressive N. Ins. Co., 915 N.W.2d 697 (Sup. Ct. S.D. 2018) (standard for reviewing summary judgment and first-party bad faith elements)
Nygaard v. Sioux Valley Hosps. & Health Sys., 731 N.W.2d 184 (Sup. Ct. S.D. 2007) (implied covenant does not override express contract language)
Trouten v. Heritage Mut. Ins. Co., 632 N.W.2d 856 (Sup. Ct. S.D. 2001) (recognition of insurance bad faith tort in certain first-party contexts)
Bertelsen v. Allstate Ins. Co., 796 N.W.2d 685 (Sup. Ct. S.D. 2011) (elements of bad faith and discussion of insurer duties)
United Ins. Co. of Am. v. Cope, 630 So.2d 407 (Ala. 1993) (insurer has no obligation to pay or evaluate claim until insured complies with policy proof-of-loss requirements)