Sampson v. American Standard Ins. Co.

• Decision Date: 29 July 1998
• Docket Number: No. 97-1098,97-1098
• Parties: Veronica SAMPSON, Appellant, v. AMERICAN STANDARD INSURANCE COMPANY, Appellee.
• Court: Iowa Supreme Court

Page 146

582 N.W.2d 146

Veronica SAMPSON, Appellant, v. AMERICAN STANDARD INSURANCE COMPANY, Appellee.

No. 97-1098.

Supreme Court of Iowa.

July 29, 1998.

Peter M. Soble, Rock Island, Illinois, for appellant.

Patrick L. Woodward and Patricia Rhodes Cepican of McDonald, Stonebraker & Cepican, P.C., Davenport, for appellee.

Considered by McGIVERIN, C.J., and CARTER, LAVORATO, NEUMAN and TERNUS, JJ.

McGIVERIN, Chief Justice.

Plaintiff Veronica Sampson appeals the district court's ruling entering partial summary judgment in favor of defendant American Standard Insurance Company (American Standard) and dismissing her first-party bad faith claim for failure to pay benefits under the uninsured motorist and medical expenses coverage provisions of an automobile insurance policy issued to her by American Standard. We affirm.

I. Background facts and proceedings.

On November 30, 1995, plaintiff Veronica Sampson was involved in an automobile collision with a vehicle driven by Katherine Williams. Neither driver appeared to be seriously injured in the collision and no ambulance was called to the scene. Sampson and Williams were both able to drive their vehicles after the accident. Sampson did not immediately seek medical attention for any injuries received from the accident, but did see Dr. Robert Illingworth at the Palmer College of Chiropractic (Palmer Clinic) for neck and headache pain later that day.

Following the accident, Sampson contacted defendant American Standard, her automobile insurance carrier. Sampson's automobile policy with American Standard provided $2000 in coverage for medical expenses and $25,000 in uninsured motorist (UM) coverage. American Standard appraised the damage to Sampson's vehicle and issued a check under Sampson's collision coverage to cover the costs of repairing the vehicle.

On December 18, Sampson spoke with American Standard claims adjuster, Rich Heller. Heller indicated that American Standard had concluded that Williams was 100 percent at-fault for the accident, but that Williams was not insured at the time of the accident. Heller then explained to Sampson the uninsured motorist benefits included in her policy. During this conversation, Sampson informed Heller that she had missed time from work, apparently from injuries she sustained from the accident. American Standard later issued checks to Sampson under the UM coverage to reimburse her for lost time from work and also made payments to Palmer Clinic under the medical coverage for treatment provided to Sampson between November 30 and December 13.

Heller and Sampson spoke again on January 29, 1996, and Heller's notes from this conversation report that Sampson advised Heller that she would receive treatment at Palmer Clinic for an additional three to four months. Heller's notes also indicate that American Standard agreed to wait until Sampson finished treatment to conclude her claim for benefits. On February 16, American Standard paid a supplemental repair bill for Sampson's vehicle and issued another payment to Palmer Clinic on March 21 under the medical expenses coverage for treatment provided to Sampson.

Heller and Sampson next spoke on April 1, at which time Sampson advised Heller that she was still having neck pain and that she was still being treated at Palmer Clinic. After their conversation, Heller wrote to Palmer Clinic requesting copies of Sampson's medical records, including preaccident records. Palmer Clinic responded to Heller's request on April 4. The records American Standard received from Palmer Clinic concerning Sampson began at page forty-nine with the first entry being for Sampson's visit the day of the accident. In a note to the file, Heller stated that Sampson's postaccident records "are replete with intervening accidents." This comment was apparently based in part on the fact that Sampson had received treatment at Palmer Clinic prior to the November 30 accident.

From his review of Sampson's case so far, Heller believed that Sampson had sustained a soft tissue injury. Based on his experience in adjusting soft tissue injuries, on May 1, 1996, Heller offered Sampson $1000, in addition to amounts previously paid, to settle the claim. ¹ Sampson rejected this offer and in response, demanded that American Standard pay her $25,000, the full limits of her UM coverage. Heller refused her demand. Sampson then made a comment about hiring an attorney. In response to this comment, Heller suspended his file to a later date to see if Sampson retained an attorney.

Sampson hired attorney Peter Soble shortly thereafter. At Soble's recommendation, Sampson was examined on May 13 by Dr. Robert Milas, a neurosurgeon. According to Dr. Milas, Sampson made no comments about ongoing medical problems, a history of neck pain, or problems with radicular pain prior to November 30, 1995, the day of the accident. Dr. Milas's diagnosis at the end of the examination was that of cervical radiculopathy.

On May 23, 1996, Dr. Illingworth from Palmer Clinic wrote to Heller stating that Sampson's medical expense coverage under the American Standard policy should cover the injuries she received from the November 30, 1995, accident. The letter also explained that Sampson had been treated at the clinic since March 23, 1992, for low back pain and that the November 30 accident aggravated her complaints of low back pain.

Dr. Milas next examined Sampson on May 28, 1996, after she had undergone an MRI scan. Dr. Milas's diagnosis after this examination was that Sampson had a syrinx or cavity in her spinal cord at the C6-C7 level. Attorney Soble wrote to Heller on June 7, enclosing a letter from Dr. Milas explaining his diagnosis and impliedly reasserting a demand to settle Sampson's claim for the full limits of UM coverage under the policy.

American Standard took no action concerning Soble's demand for the full limits of UM coverage under the policy. However, Heller wrote to Soble on July 18, stating that American Standard was continuing its investigation concerning Sampson's injuries. Heller explained that he had consulted with American Standard's medical services department concerning Sampson's injuries and that the department recommended that additional records be obtained. Heller thus requested additional records from Soble to "determine the value of Ms. Sampson's uninsured motorist claim" and stated he would contact Soble once American Standard had a chance to review the records.

Heller again wrote to Soble on July 25, noting that he had received Sampson's MRI films and that the films had been sent to the medical services department. On July 26, 1996, before American Standard could have the records reviewed by a specialist, attorney Soble demanded that the films be returned, based on his belief that American Standard had been given adequate time to review the records. Defendant complied with Soble's demand and returned the records.

Four days later, attorney Soble filed a petition on Sampson's behalf against American Standard in district court, asserting claims for breach of contract and bad faith for failure to pay benefits under the uninsured motorist coverage provision of the policy.

American Standard filed a motion for partial summary judgment concerning Sampson's bad faith claim. The district court concluded that the extent and compensable amount of the injuries Sampson sustained from the November 30, 1995, accident was fairly debatable. The district court thus concluded that American Standard had a reasonable basis for refusing to pay Sampson the full limits of UM coverage under the policy and granted American Standard's partial summary judgment motion.

The matter proceeded to trial concerning the value of Sampson's uninsured motorist breach of contract claim. The jury awarded Sampson $3574.32 for past medical expenses, $3000 for future medical expenses, $513 for past loss of wages, $2000 for past pain and suffering, and $3000 for future pain and suffering, totaling $12,087.32. The district court, however, later granted American Standard's motion for a directed verdict concerning Sampson's claim for damages for future pain and suffering and reduced the jury's verdict by the $3,000 awarded by the jury for that item of damages. The court entered judgment in Sampson's favor in the amount of $9,087.32, together with interest and costs.

On appeal, Sampson asserts that the district court erred in granting partial summary judgment concerning her bad faith claim against American Standard, but raises no issue as to the jury's verdict and the judgment concerning her uninsured motorist contract claim.

II. Standard of review.

Our review of a grant or denial of summary judgment is at law. Iowa R.App. P. 4; Gabrilson v. Flynn, 554 N.W.2d 267, 270 (Iowa 1996). Summary judgment is only appropriate when no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law. Iowa R. Civ. P. 237(c); Phipps v. IASD Health Servs. Corp., 558 N.W.2d 198, 201 (Iowa 1997). To determine whether there is a genuine issue of material fact, the court must examine the pleadings, depositions, answers to interrogatories, admissions on file, and affidavits. Iowa R. Civ. P. 237(c). The record here consists of the pleadings, affidavits and exhibits. We review the record in the light most favorable to the party opposing summary judgment; in this sense, we consider a motion for summary judgment as we would a motion for directed verdict. Smith v. CRST Int'l, Inc., 553 N.W.2d 890, 893 (Iowa 1996). Under this standard, summary judgment is inappropriate if reasonable minds would differ on how the issue should be resolved. Dickerson v. Mertz, 547 N.W.2d 208, 212 (Iowa 1996).

III. Sampson's bad faith claim.

A. Background law.

Sampson's bad faith claim stems from American Standard's refusal to settle the claim for the full limits of UM ($25,000) coverage under the policy. Specifically, Sampson contends the district court erred in...