Bad Faith Blog

The Tenth Circuit affirmed summary judgment in favor of State Farm on the insureds’ count for bad faith relating to a property damage claim. The court found State Farm relied upon a legitimate dispute of the scope of coverage in initially denying and delaying agreement to an appraisal. The court further found the insureds had produced no evidence to support their claim State Farm performed an inadequate investigation of the claim. The insureds disputed the findings of State Farm’s investigation was insufficient to infer the investigation was inadequate.

Summary: Dr. Jonathan Cohan purchased a disability insurance policy from Provident Life and Accident Insurance Company, which was a subsidiary of Unum Group (Unum). The policy was to provide Cohan with replacement income and measured the amount of benefits by the income received from his occupation at the time of disability. When he became disabled in 2011, Cohan made a claim on his policy. Unum initially paid benefits to Cohan, but later terminated his benefits and demanded repayment because Cohan obtained income from sources other than his occupation. Cohan sued Unum for breach of contract and bad faith. Unum moved for summary judgment, which was granted by the United States District Court of Nevada.