12 Cal. App. 5th 1017
Cal. Ct. App. 5th2017Background
- Carmen Zubillaga was injured in a 2011 automobile accident; the other driver was at fault. Her Allstate policy provided $50,000 UIM coverage; she settled with the tortfeasor for $15,000 and claimed the remaining $35,000.
- Medical treatment: initial hospital visit showed no back tenderness; later she treated with a chiropractor and multiple physicians. MRIs showed disc protrusions at L5-S1; Dr. Lowenstein (pain specialist) recommended epidural steroid injections.
- Allstate made incremental offers (peaking at $15,584) and retained defense examiner Dr. Milton Legome, whose 2012 DME opined epidural injections were not indicated. Allstate relied on Legome without having him review later treating-physician records or reassessing after plaintiff received one epidural.
- Plaintiff underwent one lumbar epidural (June 2013) and submitted records from Dr. Neil Soni recommending up to three injections and estimating substantial future costs; Allstate increased its offer slightly but did not accept the $35,000 demand.
- An arbitrator awarded Zubillaga the full $35,000 UIM demand; Allstate paid. Zubillaga then sued for breach of contract and insurer bad faith; the trial court granted summary judgment for Allstate on bad faith based on the "genuine dispute" doctrine.
- On appeal, the court considered whether triable issues of fact existed on whether Allstate reasonably and in good faith investigated and relied on a genuine dispute to deny payment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Allstate's summary-judgment defense under the "genuine dispute" doctrine bars a bad-faith claim | Zubillaga: Allstate failed to adequately investigate Soni's post-DME epidural treatment and continued to rely on an outdated DME, creating triable issues on bad faith | Allstate: It reasonably relied on Legome's expert DME opinion to dispute need/value of epidural injections, so a genuine dispute existed | Reversed: Triable issues exist; insurer may not rely on stale DME opinions without reasonably investigating new, material treating-physician evidence |
| Whether reliance on an independent expert (DME) automatically protects insurer from bad faith | Plaintiff: Expert reliance does not automatically absolve insurer if insurer fails to investigate contrary/new evidence | Allstate: Reliance on expert opinions (Legome) justified dispute and summary judgment | Held for plaintiff on triable issues: Expert reports can support genuine dispute, but do not automatically shield insurer when new treating records were not considered |
| Whether the record showed as-a-matter-of-law that Allstate acted in good faith and on reasonable grounds | Zubillaga: Objective facts known to Allstate (receipt of Soni's records; plaintiff had an epidural; recommendation for more) required further inquiry, so reasonable jury could find bad faith | Allstate: Its follow-up offers and past DME show good faith evaluation and reasonable dispute over value/necessity | Court: Viewing facts favorably to plaintiff, a jury could conclude Allstate acted unreasonably; summary judgment improper |
Key Cases Cited
- Wilson v. 21st Century Ins. Co., 42 Cal.4th 713 (clarifies the "genuine dispute" doctrine and insurer's duty to thoroughly investigate)
- Chateau Chamberay Homeowners Assn. v. Associated Internat. Ins. Co., 90 Cal.App.4th 335 (explains application of genuine dispute rule and limits)
- Fraley v. Allstate Ins. Co., 81 Cal.App.4th 1282 (discusses insurer reliance on expert opinions under the genuine dispute doctrine)
- Bosetti v. United States Life Ins. Co. in City of New York, 175 Cal.App.4th 1208 (offers guidance on objective standard for reasonableness under genuine dispute rule)