Larson v. Hartford Insurance Co.

MEMORANDUM ** Christy Larson appeals from a series of unfavorable district court rulings in her lawsuit against Hartford Insurance Company of the Midwest (“Hartford”)1 that ultimately resulted in the dismissal of all her state law claims. The facts are known to the parties and will not be repeated here unless necessary. I The district court did not abuse its discretion in denying Larson’s motion to compel discovery regarding Hartford’s compensation and evaluation policies, A district court has “broad discretion ... to permit or deny discovery.” Goehring v. Brophy, 94 F.3d 1294, 1305 (9th Cir. 1996). Larson fails to offer evidence that she was actually and substantially prejudiced. The [644] district court had already granted substantial discovery regarding compensation and evaluation and had reasonable concerns with the scope of her requests. See id. II The district court did not abuse its discretion in limiting Everette Herndon’s expert opinion testimony and gave several valid reasons for doing so. Larson does not confront the district court’s reasoning but instead makes an inapposite argument that Herndon was a qualified expert who had reviewed the record. III A The district court did not err in granting Hartford’s summary judgment motion and dismissing Larson’s claim for punitive damages. Linthicum v. Nationwide Life Ins. Co., 150 Ariz. 326, 723 P.2d 675, 681 (1986) (stating that “something more than the conduct required to establish the tort” is necessary to prevail on a claim for punitive damages). Larson fails to offer any evidence of intentional oppressive or malicious conduct beyond the minimum required for bad faith. The evidence offered was “insufficient to put punitive damages to a jury.” Farr v. Transamerica Occidental Life Ins. Co., 145 Ariz. 1, 699 P.2d 376, 384 (1984). B The district court did not err in granting Hartford’s summary judgment motion and dismissing Larson’s bad faith claim with respect to conduct occurring before December 29, 2010. An insurer acts in bad faith if it (1) behaves in an objectively unreasonable manner when denying a claim and (2) “either knew or was conscious of the fact that its conduct was unreasonable.” Zilisch v. State Farm Mut. Auto. Ins. Co., 196 Ariz. 234, 995 P.2d 276, 280 (2000). An insurer behaves in an objectively unreasonable way if the challenged claim is not “fairly debatable” or when the disputed claim is “fairly debatable” but the insurer fails to “exercise reasonable care and good faith” in defending it. Id. at 279. Hartford argues that the claim was always fairly debatable because there were multiple pieces of evidence indicating Larson may have concealed a prior or ongoing back problem. Tina Gustafson, the claims adjuster assigned to Larson’s case, cited the conflicting evidence and desire to review more details about prior claims relating to this injury several times,2 but Larson refused to sign the relevant release for months. When Gustafson finally received some of the records concerning Larson’s prior injuries on December 22, 2010, she approved the medical claim seven days later. Larson argues Gustafson’s reasons for the initial denial were pretextual and the inconsistencies were “immaterial,” but the record contained serious inconsistences with respect to the mechanism of the injury and whether her prior injury had not just flared-up. Larson’s claim was fairly debatable and Hartford did not act unreasonably in defending it. Assuming arguendo that Hartford’s behavior was objectively unreasonable, the evidence indicates Gustafson believed she had a reasonable basis to continue the investigation and to behave as she did. [645] Larson fails to raise a factual dispute about whether Hartford acted with the requisite ill-intent. Id. IV The district court did not err by overturning the jury verdict with respect to Larson’s remaining two bad faith claims. A renewed Rule 50 Motion for Judgment as a Matter of Law can only be granted if, construing the evidence “in the light most favorable to the nonmoving party, [it] permits only one reasonable conclusion, and that conclusion is contrary to the jury’s verdict. A jury’s verdict must be upheld if it is supported by substantial evidence.” Harper v. City of Los Angeles, 533 F.3d 1010, 1021 (9th Cir. 2008) (citation omitted). A In granting Hartford’s renewed Rule 50(b) motion on the bad faith claim relating to the fifty-six day delay in awarding disability benefits, the district court concluded that the evidence proved that Gus-tafson always had at least two reasonable bases for taking the time she did to approve Larson’s disability benefits: (1) she needed to confirm Larson’s wage rates, and (2) she needed to confirm which work days Larson missed because of her injury. The district court cited uncontra-dicted evidence supporting both reasonable bases, such as the fact that wage information was requested prior to December 29 but not received until February 23 and that the record provided support for Gustafson’s concern that the injury did not cause all her work absences. Additionally, there is no evidence showing that Gustaf-son acted without believing she had a reasonable basis or with reckless disregard— while Gallagher Bassett’s behavior was not ideal, even negligence is not enough to support a bad faith claim. Zilisch, 995 P.2d at 280. Larson is forced to speculate that the evidence and stated reasons for the delay were actually pretexts concealing a hidden conspiracy to delay or diminish the disability payment for no good reason. Such speculation is not substantive enough to support the jury verdict, and thus the district court did not err. B The district court also correctly granted Hartford’s renewed Rule 50(b) motion on Larson’s bad faith claim relating to her need for additional medical treatment after May 2011. Larson did not request treatment until September 2011 and never communicated a specific need or urgency to Hartford before then. The communication by Larson’s lawyer to Gallagher Bassett’s attorney in late May that Larson’s closed case should be reopened did not contain any specific request for treatment, just a statement that “[s]he needs further treatment.” Once Gallagher Bassett became aware of her specific medical needs, it moved quickly to begin the process for treatment. Additionally, there is no meaningful evidence Larson was ever denied treatment — her only proof to the contrary is that an attempt to arrange an appointment with a doctor in May was denied because she could not “get on their schedule.” No evidence shows that Gustaf-son even knew of this incident — let alone that she was the reason Larson could not get on the schedule. The district court (correctly) scolded Larson’s counsel for making unsupported assumptions of fact in his closing argument to try and make up for the lack of evidence supporting her claim. Bare speculation is not enough to support a jury verdict. The district court did not err in granting the motion. [646] V The judgment of the district court is AFFIRMED. Footnotes [**] This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. [1] References to Hartford include the actions of its agents, such as its third party adjustor Gallagher Bassett, that Hartford is responsible for, [2] Gustafson also cited inconsistences in the medical record about how Larson was injured when initially denying the claim. Given the inconsistencies and initial issues, it makes sense Gallagher Bassett would want to wait for more objective evidence before accepting Larson’s statements.