*1 Company Mutual Insurance v.
Joel St. John Record No. 990161 14, 2000 January Present: All the Justices *2 (Drash brief), on L. & Philip Flannagan, appellant. Bradfield Allen, Allen, brief), (Allen, Allen & Courtney A. Van Winkle *3 for appellee. (Burle Curiae: Trial Association U. Virginia
Amicus Lawyers brief), on of Stromberg, appellee. the Court.
JUSTICE LACY delivered of deter- In this we consider whether the trial court appeal properly faith under mined that an insurance did not act good company 8.01-66.1(A). Code §
I. John, nose, knee, neck, Joel a had his St. twelve-year-old boy, 17, and back in an automobile accident on 1994. His May injured mother scheduled an with his and with family appointment physician 24, 1994, had treated father. On Joel who Joel’s May chiropractor knee and nose was treated his for his by family injuries. physician deBarros, M. the chi- The next Joel examined Dr. David by day Dr. deBarros’ examination disclosed of objective findings ropractor. indi- of a shoulder fixations of the spine, positive findings depression tear or nerve or stretching, pos- either a muscle cating compression the head test while flexing itive which showed pain Schepelmann’s called a that had moved оut of to the and a vertebra right, position, deBarros, T-12 subluxation. to Dr. all these According injuries were caused automobile accident. by week, treated Joel was for these conditions three times a
Initially then week for on and twice a four weeks. reevaluation Following once August his treatments were reduced to a week. Joel reevaluated and his treatment continued at a fre- was periodically his at consistent with condition the time of reevaluation. Joel quency 5, Dr. care was dismissed from deBarros’ 1995. April Joel was an insured under an automobile insurance liability pol- issued to by his father Nationwide Mutual Insurance icy Company $1,960 (Nationwide). A medical claim of for Joel’s treat- expense ment was submitted Nationwide. Nationwide referred Walker, Dr. James W. for and review evaluation chiropractor, review, Joel’s medical records. Based on Dr. Walker’s Nationwide 1994, $378.50 incurred to June for paid expenses prior and disallowed all incurred after that date.
Joel, friend, as his mother next filed.suit against Nationwide General District Court of thе City Richmond recov seeking of the medical costs for the ten months of care ery chiropractic disal lowed to the by Nationwide. Nationwide removed the case Circuit Court of the Richmond. a verdict jury returned in favor City $1,581.50, of Joel for amount bal approximately unpaid ance of the 8.01-66.1(A), medical bills. Code Citing chiropractic Joel askеd the trial court to double the amount damages award fees because Nationwide acted in bad faith attorneys’ June refused for care incurred after chiropractic 1994.* The trial court determined that Nationwide’s refusal was not made in $3,162.00 faith and entered
[*] motor vehicle found pany’s ance as when the $2,500 or less in excess of the insured’s to in and expenses. amount Code § good Whenever The refusal was not defined in provisions double the amount otherwise due faith. 8.01-66.1(A) the policy amount of the payments *4 judge or failure insurance made of motor insurance of of 38.2-124 provides: this subsection shall in a coverage issued court of good vehicle company therefor medical denies, faith, deductible, extended proper such insurance, the refuses or fails to licensed in this Commonwealth is company jurisdiction company $2,500 under be if and any, together construed to include payable or less and the refusal was not made to the insured and under the shall persons that such with be liable under of motor vehicle covered under the terms оf reasonable provisions to its insured a claim of denial, the to the insured in an an provisions refusal or failure insurance com- is to write insur- attorney’s of a subsequently insurance, of the fees
75 $1,500. an Nationwide filed appeal fees of attorneys’ damages plus did not that the court erred in holding trial asserting 8.01-66.1(A). in faith under good act §
n.
We
relevant
our
begin
addressing
legal
principles
First,
we
although
of the trial court’s
in this case.
judgment
review
to be
aby
not
considered the
trial
have
previously
principles
applied
an insurer acted in bad faith within
whether
considering
judge
8.01-66.1(A),
of
in the
we have addressed that issue
meaning
§
an
recover
context of 38.2-209. That section allows
insured to
costs
§
fees
action
deсlaratory
and reasonable
in
attorneys’
insurer,
if the
court deter
insured
trial
brought by
not
it denied
mines that
insurer was
faith when
acting
or refused
under
In CUNA Mutual
coverage
policy.
payment
Norman,
Co. v.
Insurance
Va.
S.E.2d
726-27
was intended
be both reme
(1989), we observed
38.2-209
§
dial and
and concluded that
standard of reasonableness
punitive
be
the conduct of the insurer. Seе also
evaluating
should
applied
Glide,
(1990).
Ins. Co. v.
240 Va.
Section like is statute. a remedial § $2,500 limited to or less. Without autho statutory It is claims of rization for of damages, together attorneys’ recovery multiplied fees and recover such claims expenses, expеnse litigation that course of 8.01- many would action cases. Section preclude 66.1(A) as a statute in the same manner as 38.2- operates punitive § an bad force an because both insurer whose faith dealings punish to incur the the similar insured expense litigation. Considering statutes, we that the of reason two conclude standard purposes ablenеss enunciated in CUNA be utilized when applying should 8.01-66.1(A).
The standard of reasonableness the consideration requires acted issues when whether an insurer following determining 8.01-66.1(A): bad faith differ in the
whether reasonable minds could interpretation exclusions; whether defining coverage policy provisions the facts the insurer had made a reasonable investigation claim; and circumstances the insured’s whether underlying *5 76
evidence discovered
a denial of
reasonably
liability;
supports
whether
that the insurer’s refusal to
used
appears
a
in
merely as
tool
settlement
and whether
negotiations;
defense the
at
insurer asserts
trial raises an issue
first
of
or a
debatable
reasonably
of law or fact.
impression
quеstion
CUNA,
38,
Next,
standard,
while the
on the
agreed
reasonableness
parties
this
disagreed
they
quantum
required to
proof
prevail
standard.
Nationwide asserts
State Farm Mutual Automobile
136,
Insurance v.
235
Floyd,
(1988),
Va.
Nothing
that the
Floyd suggests
established
principles
case
for
are
in this case.
appropriate
Floyd,
In
an insured
application
to show
clear and
evidence that
required
its
convincing
insurer acted in bad faith
failed to settle a
tort
previous
action
in a
resulting
excess of the
judgment
limits
144,
However,
Id.
insured.
at
dence in Floyd is inconsistent with the remedial applied purpose and, otherwise, 8.01-66.1(A) absent an legislative directive evidentiary insured’s burden under this remedial statute is pre of the evidence standard. ponderance
A third to our reviеw that the facts are principle relevant is reviewed most favorable to the below. light party prevailing The trial court’s be will unless it from judgment upheld appears that the evidence is or without evidence to plainly wrong 8.01-680; 309, Little, 319, it. v. RF&P 247 Va. Corporation We (1994). 440 S.E.2d now these apply principles issue in this case.
m. of Joel’s to deny payment that its decisiоn asserts Nationwide reasonable. after June incurred medical expenses investigation a reasonable it conducted contends that connected medical records Dr. Walker to review engaging suf- Joel debatable whether reasonably and that it was Joel’s claim of the accident. as a result or neck injury back fered *6 that concluded Walker, medical records Joel’s reviewing after Dr. between direct causal relationship difficult to draw any “it was alone],” of T-12 subluxation accident and the diagnosis vehicle [of indicating made Dr. deBarros by were findings that other objective very good the doctor didn’t keep and that “since “sprain/strain” care through consider to legitimate chiropractic records ... was ’94, Dr. though that time.” Even but not care beyond June 15th of the rela- concerning at this some hesitation point Walker expressed T-12 subluxation diagnosed by the accident and the between tionship deBarros, Dr. deBarros’ diagnosis Dr. Walker did not question Dr. treatment for had been and recommended injured payment that Joel for those injuries. Joel had received of time limitation on the length Walker’s recommended
Dr. not alter his conclusion should be made does which payment treatment was for some appropriate. Nationwide by payment bills, the medical treatment for at least a Nationwide paid portion There in the accident. injured that Joel was acknоwledging thereby fore, that whether contradict its assertion Nationwide’s own actions 14, fairly accident was May were caused 1994 by Joel’s injuries debatable. in the that even if Joel was injured
Nationwide also argues accident, treatment 14, so minor that his were injuries 1994 May However, Dr. Walker’s unnecessary. weeks was medically after three 15, limitation 1994 post-June recommended payment June 15 that the treatment beyond on his bills not based opinion was Instead, fact that based on the was necessary. not medically was not the treatment was required tell or Walker couldn’t whether Dr. records.” “didn’t very good Dr. deBarros keep because addressed treatment was of continued necessity The medical which and Dr. deBarros of Dr. Walker in the depositions pre-trial his Dr. Walker maintained position in evidence at trial. were admitted the basis for his decision the lack of record keeping Dr. deBarros after June 15. for treatment not to recommend payment that Joel’s inju- of medical certainty to a reasonable degree testified 78 14, accident, causеd
ríes were and that all the treat- by May ment administered Joel for those neces- injuries reasonably Dr. deBartos testified in detail sary. regarding periodic condition, treatment, of Joel’s evaluations the conditions requiring for that treatment until Joel necessity from discharged Dr. deBarros’ care. was not contradicted Dr. testimony This Walker.
Thus, trial, had no medical evidence that prior accident, were not caused injuries by May no medical that the medical treatment received Joel after June opinion accident, did not relate to received in the and no medi- injuries cal that the 15 treatment was post-June medically not neces- Nevertheless, and reasonable. Nationwide refused to sary balance Joel’s medical bills and remaining thus forced matter a trial. proceed review, Based on this we conclude that there is the record for the trial court’s determination that Nationwide acted bad faith in Joel’s claim refusing for medical incurred after June and the trial court’s was not judgment We, therefore, clearly erroneous. affirm the will the trial court.
Affirmed. COMPTON, in JUSTICE the result. concurring On the while rid- May 12-year-old plaintiff injured in a vehicle his mother that ing by collided with another operated collision, the vehicle. In the sustained a nose blow his and plaintiff accident, one knee. As a result of he the tenderness in his developed neck and back.
The was entitled to medical plaintiff coverage payments of automobile insurance issued defendant Nation- policy liability by wide Mutual The Insurance contract Company. provided for, defendant would all reasonable and necessary expenses other medical and from among things, chiropractic resulting expenses the accident. accident,
A week after the “family thе treated his by plaintiff doctor.” The next the was examined day, by plaintiff chiropractor, the who found had sustained muscular and soft-tissue plaintiff inju- neck and back the accident. The was treated by ries his plaintiff he treatment about until released from the chiropractor was of the the accident. The following chiropractor opinion, months thаt his treatment degree certainty, a reasonable within as a were medically necessary and services rendered the plaintiff accident. of the sustained the result injuries plaintiff a claim to defendant When the submitted parents plaintiff’s under the medical pro- reimbursement of medical payments expenses chiro- referred the claim to another of the defendant vision policy, the and to render an to review medical records plaintiff’s practor of the treatment as it the medical necessity plaintiff’s review, this related to the accident. the Following chiropractor opined he causal that based on the medical records “couldn’t draw direct the and between accident” the made relationship diagnosis by plain- on the tiff’s of “T-12 subluxation.” err chiropractor Preferring the he felt even the medical records were though side plaintiff, unclear, the defendant’s that the medical care advised chiropractor rendered for about one month after the accident “could be con- only as the sidered” related to accident.
The defendant’s refusal full amount of medical claimed lawsuit. generated this In January plaintiff, Mend, his filed mother as next this action through seeking recovery $1,960, breach and of contract “breach of defendant’s alleging to deal faith.” duty faMy plaintiff Mai, In an October the breach of contract claim was 1998 jury time, $378.50 At that defеndant had litigated. paid plaintiff’s claim. had
The sole issue to the was whether defendant presented jury breached its contract with More had to specifically, jury plaintiff. determine whether treatment and services rendered plain- tiff’s were as a result chiropractor medically necessary injuries in the sustained accident. plaintiff and fixed contract found favor of jury plaintiff $1,581.50, reduced the sum at the amount claimed
damages defendant had paid. the trial discharge of the moved
Following jury, plaintiff court to double and reasonable fees and attorney’s “award damages *8 cost,” 8.01-66.1(A). on Code Without additional evi- relying taking motion, oral the dence court the following argument, granted not in faith.” gоod “that defendant’s denial of was finding payment The defendant that the October 1998 judgment appeals portion faith. order which found defendant failed act in good “denies, When an insurer under these circumstances or refuses $2,500 less,” fails its insured a claim of or Code 8.01- court, 66.1(A) denial, authorizes the trial “that such upon finding faith,” or refusal failure was not made in the to find good liable insurer for “double the amount otherwise due and payable” the with policy’s provisions, “together attorney’s reasonable fees and expenses.”
In the of an insurer is a evaluating when there performance insured, it that acted in bad faith in withholding to an courts payment should a “reasonableness standard.” CUNA Mut. Ins. v. apply Co. Norman, 33, 38, (1989). Va. 375 S.E.2d 726-27
In actions insurers based breach of contract for fail- upon faith, ure to good use held “that be we have bad faith must proved clear and evidence in cases convincing of this kind.” Farm State Mut. Ins. Auto. Co. v. 235 Va. Floyd, 366 S.E.2d “ (1988). This the is because ‘bad faith’ runs counter to concept the that presumption contracting parties have acted faith.” good Id. contention,
Contrary it no plaintiff’s makes sense this insurance contract action bad faith to alleging adopt preponderance- of-the-evidence standard of Bad faith means same in proof. context, insurance contract no matter under what circumstances lack of faith is be sought proved. hold, however, I
Applying foregoing would рrinciples, case, trial court did not err bad faith in this finding given record with which was The two testified presented. chiropractors video deposition. defendant’s deposition chiropractor taken about three weeks before trial. The deposition plaintiff’s Thus, taken chiropractor was two weeks to trial. well in prior trial, advance of defendant armed with the information that the an witness would plaintiff’s give unqualified while its own would an necessity give witness inconclusive opinion effect, on the In subject. to trial defendant’s prior representatives knew, known, or should have had no evidence to rebut the evidence on issue the case. plaintiff’s only motion, when the made his Additionally, plaintiff post-vеrdict there was no from the insurer to offer charge evidence request faith, of bad an had been made the action allegation that filed. The court was not on the any testimony presented subject of reasonableness from a claims or claims adjuster supervisor upon claim, how insurer evaluated the the medical testi- finally given *9 to deny its decision insurer’s reasoning or mony, upon to trial. force the the claim plaintiff Therefore, court. I trial would affirm judgment