Recently, the Ohio Seventh District Court of Appeals issued a decision in Marshall v. Colonial Ins. Co., 2016-Ohio-8155, on an insurer’s obligation to handle its insured’s claim in good faith. In that case, Marshall suffered severe injuries in an automobile accident caused by Grundy. Marshall sued Grundy alleging certain tort claims and Colonial (his insurer) asserting a claim for uninsured/underinsured (UM/UIM) motorist coverage. Marshall, with Colonial’s approval, settled with Grundy for the limits of Grundy’s auto policy. Because Marshall’s medical bills far exceeded those limits, he looked to Colonial for UM/UIM coverage. Colonial refused to pay the claim for years, until an arbitration panel compelled it to honor its coverage obligations.
Thereafter, Marshall brought a bad faith action against Colonial, alleging that Colonial failed to: (1) respond to multiple arbitration demands for years, (2) obtain “a medical opinion by a surgeon during the main decision-making phases of claims processing,” and (3) produce employees for deposition. Id. at ¶76. Marshall also pointed to “the length of time it took for [Colonial’s] first settlement offer, the low amount of the only offer, and the failure to amend the offer.” Id. Notwithstanding Colonial’s conduct, the trial court granted summary judgment in its favor.
The Seventh District reversed, holding that, at the summary judgment stage, the issue is not whether Colonial proved it handled the claim in good faith and had a reasonable justification for its conduct; rather, the focus is on whether there is evidence from which reasonable minds could differ on whether Colonial lacked good faith in denying coverage. Id. at ¶81. The Seventh District concluded that “[c]onsidering the combination of acts and omissions, it cannot be said the record is devoid of any evidence tending to show a lack of good faith,” and “[e]ven if certain circumstances would not individually qualify as bad faith conduct, the overall circumstances are relevant and must be viewed in the light most favorable to [Marshall].” Id. at ¶83.
Although Marshall involved Colonial’s handling of a UM/UIM motorist claim, the principles set forth in that case apply equally to the handling of other types of insurance claims. Specifically, an insurer does not act in good faith when it refuses to pay a claim without reasonable justification for the refusal, and Ohio courts will look to the totality of circumstances in deciding whether a bad faith claim should be decided by a jury. Policyholders should be cognizant of the circumstances in Marshall, so that they can better evaluate whether their insurers have acted in a manner inconsistent with an insurer’s duty of good faith in handling their claims, thus giving rise to a triable bad faith claim.