Casson v. Nationwide Ins. Co.

• Decision Date: 27 May 1982
• Parties: Mark A. CASSON, Plaintiff, v. NATIONWIDE INSURANCE COMPANY, Defendant. . Submitted:
• Court: Delaware Superior Court

Page 361

455 A.2d 361

Mark A. CASSON, Plaintiff, v. NATIONWIDE INSURANCE COMPANY, Defendant.

Superior Court of Delaware,

New Castle County.

Submitted: May 27, 1982.

Decided: Sept. 20, 1982.

Plaintiff's Motion for Summary Judgment. Denied. Defendant's Motion for Partial Summary Judgment. Granted.

Stephen P. Casarino of Tybout, Redfearn, Casarino & Pell, Wilmington, for plaintiff.

Mason E. Turner, Jr. of Prickett, Jones, Elliott, Kristol & Schnee, Wilmington, for defendant.

WALSH, Judge.

This case involves an action for damages arising from the alleged breach of the Personal Injury Protection (P.I.P.) clause of an automobile insurance contract issued by the defendant, Nationwide Insurance Company (Nationwide) to the plaintiff, Mark A. Casson.

Initially, plaintiff sought reimbursement for lost earnings he sustained following an automobile accident which occurred on July 5, 1979, but later amended his complaint to seek attorney's fees as well as punitive damages for malicious breach of contract, and tortious breach of an insurer's duty of good faith dealing with an insured. After discovery, plaintiff filed a motion for summary judgment on the issue of breach of contract while Nationwide seeks partial summary judgment on plaintiff's claim to punitive damages and attorney's fees.

The following factual basis for determination of these motions has been drawn from the pleadings and the discovery record and, to the extent necessary, is viewed from a perspective which favors the respective non-movant. Shultz v. Delaware Trust Co., Del.Super., 360 A.2d 576 (1976).

Immediately following the accident, plaintiff went to the Wilmington Medical Center where he was treated for a back complaint and released. The following week, plaintiff consulted his family physician who referred him to Dr. Theodore Strange, an orthopedic specialist, for treatment. On July 10, 1979, x-rays of plaintiff's cervical, dorsal and lumbar spine were found to be within normal limits.

Plaintiff first saw Dr. Strange on July 27, 1979, and according to plaintiff's deposition he continued treatment with him on a monthly basis until the doctor's retirement in approximately August of 1980. There is, however, no other evidence of record which indicates that plaintiff was under active treatment with Dr. Strange between the visits of January 10, 1980, and August 19, 1980, which lends some justification to Nationwide's belief that he had abandoned efforts toward recovery. Beginning in September, 1980, plaintiff began treatment with Dr. Monteleone and was still under his care at the time plaintiff was deposed on March 26, 1981. Dr. Monteleone reported to Nationwide on March 9, 1981, that plaintiff was unable to work.

From December, 1977, until the time of the accident, plaintiff had been employed as an ironworker's apprentice. Due to the nature of this work which involved climbing, lifting and pulling heavy weights, Dr. Strange advised plaintiff not to return to this employment. Since the accident, plaintiff has neither returned to this employment nor sought another type of work. During August and September 1980, plaintiff did make several visits to the union hall to inquire about "light duty," but was informed that no such work was available for an ironworker. Plaintiff's apprenticeship was terminated by the union in November 1980, due to his inability to complete the on-the-job training.

The policy issued to plaintiff by Nationwide provides for Personal Injury Protection (P.I.P.) benefits including compensation for medical expenses and loss of earnings for "bodily injury" received while the occupant of a motor vehicle involved in an accident. In addition to the statutorily mandated $10,000.00 minimum coverage, Casson had $90,000 of extended coverage in force at the time of the accident.

In accordance with the policy requirements, plaintiff provided written notice of the accident which was received by Nationwide on July 12, 1979. Plaintiff's claim for P.I.P. was originally adjusted by Pamela Meredith who, after obtaining verification of wages from his employer and verification of disability from Dr. Strange, began making payments of net lost earnings on September 5, 1979, retroactive to the date of the accident.

Dr. Strange's first report to Nationwide, in August, 1979, indicated that Casson "was disabled or unable to work from July 5, 1979, to present," and that it was undetermined as to when he would be able to return to work. Subsequent reports dated October 22, 1979, and January 17, 1980, based on recent examinations of the plaintiff echoed Dr. Strange's previous determination.

On January 14, 1980, when payments made under plaintiff's claim approached $10,000.00 his case was transferred to Aleta Callahan, an office adjuster, who continued paying benefits. On January 18, 1980, Callahan sent a request to Dr. Strange asking whether it was advisable for plaintiff to undergo rehabilitation. The response dated January 23, 1980, indicated that a program designed to strengthen plaintiff's back muscles and increase motion in that area would be advisable. Callahan discussed the possibility of rehabilitation with the plaintiff in early March, 1980. Callahan's deposition indicates that plaintiff verbally agreed to rehabilitation at defendant's expense and his case was assigned to International Rehabilitation Associates (I.R.A.). However, when I.R.A. later contacted plaintiff to set up his rehabilitation, he refused to participate.

Plaintiff has undergone physical therapy for his condition at Possum Park Medical Center as prescribed by Dr. Strange, three times each week beginning shortly after the first examination by Dr. Strange and continuing until Dr. Strange's retirement, when it was discontinued for an undetermined period. Plaintiff indicated that therapy was taken at Rehabilitation Consultants upon the recommendation of Dr. Monteleone, but was discontinued January 28, 1981, because plaintiff claimed it did not help his condition.

In addition to the information provided by Dr. Strange, Nationwide had plaintiff examined on several occasions by a physician of its selection, Dr. Joseph Arminio. Dr. Arminio examined plaintiff on February 26, 1980, and determined that he was "incapacitated from performing the heavy work as an ironworker." The incapacity was found to continue in June of that year by Dr. Arminio who was told by plaintiff that he did not want "trigger area injections" which Dr. Arminio suggested as a diagnostic procedure.

On July 14, 1980, Callahan presented plaintiff's file to Mr. Coates, the District Manager, for review. Coates decided to have plaintiff's "lost earnings" benefits discontinued as of that date due to his refusal to undergo rehabilitation or to maintain active medical treatment, and because there was no updated medical information.

On August 19, 1980, plaintiff was again examined by Dr. Strange who continued his same diagnosis. In a letter to plaintiff's counsel dated September 12, 1980, concerning this examination, Dr. Strange stated that since Casson was not recovering, his condition was apparently permanent. A report of this examination was also sent to defendant on December 8, 1980, echoing all previous reports that plaintiff had been disabled since the accident and that it was undetermined as to when he could return to work.

Two other physicians examined the plaintiff. Dr. Phoon found tenderness in the lower dorsal spine but was of the opinion that such a soft tissue injury should have healed since the accident. On three occasions in January and February of 1981, plaintiff visited Dr. David Stevens in connection with his claim for health and accident insurance coverage under a policy with First Federated Life Insurance Company. Dr. Stevens reviewed laboratory tests, myleograms, x-rays and EMG's and concluded that although plaintiff's subjective symptoms were real, there was no objective evidence supporting his complaint. Dr. Stevens diagnosed plaintiff's condition as a chronic post-traumatic lumbar strain, but based on the lack of objective findings was of the opinion that he was fit to return to his occupation as an ironworker.

I

In order for an insured to establish the contractual liability of an insurer for an alleged breach of an insurance agreement, he must show that (1) there was a valid contract of insurance in force at the time of the loss, (2) the insured has complied with all conditions precedent to the insurer's obligation to make payment, and (3) the insurer has failed to make payment as required under the policy. See generally, 46 C.J.S., Insurance, §§ 1271-1285 at 318-337. The only element here at issue is whether, viewing the facts in the light most favorable to Nationwide, plaintiff had complied with all conditions created by statute, explicit in the insurance policy, or implied by law.

Not every refusal to pay a claim of insurance will constitute breach of contract by the insurer. Lawton v. Great Southwest Fire Ins. Co., 118 N.H. 607, 392 A.2d 576 (1978). Absent waiver or estoppel, an insurer may assert substantial non-performance of any condition as a defense to any proceeding against it on a policy. Bacon v. American Insurance Co., 131 N.J.Super. 450, 330 A.2d 389, aff'd., App.Div., 138 N.J.Super. 550, 351 A.2d 771 (1974). Nationwide asserts that plaintiff was derelict in three areas of cooperation under the policy of insurance: (1) failure to provide updated medical information, (2) failure to maintain active medical treatment and (3) refusal by plaintiff to undergo rehabilitation. These contentions will be separately considered.

Nationwide's first basis, absence of updated medical records, is clearly without merit. The policy provides that the insured must submit to physical examinations by physicians selected by Nationwide whenever and as often as reasonably requested. The insured was also required to furnish Nationwide with medical reports and records as requested. The plaintiff...