Insurer Issues: Volume 1-What is a Good Faith Attempt to Settle?


Hughes v. Progressive Direct Ins. Co., 2012 U.S. Dist. LEXIS 139345 (D. Md. Sept. 27, 2012)

In July 2006, Jarrett Pratt struck a vehicle being driven by Joseph Hughes in Baltimore City. Hughes sued both Pratt and his insurance company, Geico, for uninsured motorist coverage benefits. Pratt was insured by Progressive and had a policy with coverage limits of $100,000.00 per accident.

Before the matter proceeded to trial, Progressive offered the $100,000.00 policy to Hughes. Geico was placed on notice of the offer but did not respond in writing within 60 days after receipt of notice. Hughes, therefore, sought to enforce settlement via Motion. Progressive did not join the Motion. Geico argued that an email sent to Hughes was notice and the Court ultimately agreed that an email was proper notice.

The matter proceeded to trial and a judgment was entered in favor of Hughes, of which Geico paid $500,000.00. Hughes filed a suit against Progressive for bad faith in handling the claim, alleging, among other things, that Progressive failed to use good faith by not joining the Motion to Enforce Settlement, appeal the denial of the Motion, attend a court-ordered mediation, pressure Geico to resolve the claim, depose physicians or schedule independent medical examinations. Progressive filed a Motion to Dismiss arguing the offer of policy limits before trial was a good faith attempt to settle. This Motion is the basis of this decision.

In determining whether bad faith to settle exists, the Courts have looked to find one or more of the following factors: the severity of the Plaintiff's injuries giving rise to the likelihood of a verdict in excess of policy limits, lack of proper and adequate investigation of the circumstances of the accident, lack of skillful evaluation of Plaintiff's disability, failure of the insurer to inform the insured of a compromise offer within or near policy limits, attempts to induce the insured into a settlement within policy limits, and actions which demonstrate a greater interest in the insurer's monetary interests than the financial risk attendant to the insured's circumstances.

Progressive offered the policy limits in settlement prior to trial. While there may have been unreasonable delay in the offer, this alone is not sufficient to find bad faith. Therefore, Hughes did not adequately state a claim upon which relief can be granted as to Progressive's bad faith to settle.