Federal Judge’s Ruling Allows for Bad Faith: Hubka v. Paul Revere Life Insurance Company

IN A CASE BROUGHT against the Paul Revere Life Insurance Company by attorney Frank Darras on behalf of a disabled San Diego chiropractor, a federal judge handed down an important decision denying the insurance company’s attempt to summarily excuse itself from bad faith and punitive damages liability.

At issue in the case was Paul Revere’s abrupt termination of benefits. The company claimed that the chiropractor, Dr. Mark Hubka, although unable to perform his chiropractic duties, was still able to perform his duties as a small business owner running his chiropractor’s office. Moreover, the insurance company then used its own “in-house” doctor, who had never personally seen Dr. Hubka, to deem him “not disabled.”

After Darras filed suit against Paul Revere for wrongful termination of Dr. Hubka’s benefits, the insurer moved for a summary judgment dismissing the bad faith charges, arguing that under California law the withholding of policy benefits “if reasonable or based on a legitimate dispute as to the insurer’s liability does not expose the insurer to bad faith liability.”

United States District Court Judge Judith N. Keep thought otherwise. In a clearly worded decision, the judge denied the motion, asserting: “There is evidence that a reasonable juror could conclude that Paul Revere used their in-house medical consultant’s opinion as a pretext to end disability payments, contrary to the weight of the medical evidence and without an expert chiropractic opinion as advised by the independent medical examiner. Such conduct could reasonably be construed as a ‘conscious disregard of the plaintiff’s rights.’”

With bad faith proceedings against Paul Revere looming, the Hubka case is yet to be resolved. But Judge Keep’s ruling will make it much more difficult for insurance companies involved in federal legal proceeding to use the opinions of so-called in-house medical consultants as a pretext for denying disability benefits.