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Phillips v. USAA Casualty Insurance Co.

United States District Court, E.D. Washington

April 27, 2017

USAA CASUALTY INSURANCE COMPANY d/b/a “USAA, ” a TEXAS corporation, Defendant.


          THOMAS O. RICE Chief United States District Judge.

         BEFORE THE COURT is Plaintiff Richard H. Phillips' Motion for (Partial) Summary Judgment (ECF No. 42). The matter was heard with oral argument on April 26, 2017. Troy Y. Nelson and Ryan M. Best represent Plaintiff. Bradley E. Smith and Derek T. Taylor represent Defendant. The Court has reviewed the record and files herein, heard oral argument and is fully informed. For the reason discussed below Plaintiff's Motion is GRANTED IN PART.


         The instant case arises out of an underinsured motorist claim submitted to Defendant USAA by its insured, Plaintiff Mr. Phillips. The material facts are not in dispute for this motion.

         The underlying accident occurred on November 29, 2013. ECF No. 45 at ¶ 5. Relevant to the issue before the Court, Plaintiff settled with the at-fault driver for $25, 000 and exhausted his PIP benefits of $10, 000 through USAA.[1] On March 19, 2014, Plaintiff told USAA that he was “getting better[, ]” that his doctor said that the release date of his treatment will be around the first of April, and that he is a multi-sport athlete who works out every day. ECF No. 53 at 74. Plaintiff did not seek treatment for eight months after March, 2014, but then sought chiropractic treatment and acupuncture until October 1, 2015. ECF No. 52 at 4-5.

         On October 13, 2015, Plaintiff was involved in a similar motor vehicle accident, where Plaintiff complained of tingling in his lower back and right upper neck, for which Plaintiff received chiropractic care and acupuncture under his PIP policy. ECF Nos. 43-1 at 59; 53 at 79-83.

         Mr. Philipps' counsel sent a letter dated April 19, 2016 to USAA seeking to recover under Mr. Phillips' Underinsured Motorist policy. The letter sought to settle Mr. Phillips claim for the $100, 000 policy limit, citing (1) special damages of $96, 000 (amounting to a claim of $61, 000 in special damages after accounting for Plaintiff's recovery of $10, 000 from his PIP insurance and $25, 000 from the at-fault driver's insurance policy) and (2) other unquantified damages for rehabilitation, economic loss, and impact on Plaintiff's life. ECF No. 43-1 at 2-3. Included with the letter was a March 15, 2016 declaration from board-certified orthopedic surgeon Russell S. Vanderwilde, M.D. ECF No. 43-1 at 53-54.

         The declaration states that Dr. Vanderwilde performed an MRI study[2] and that on a more probable than not basis and based on a reasonable degree of medical certainty (1) Mr. Phillip's torn shoulder and hip are related to the motor vehicle accident of November 29, 2013 and (2) Mr. Phillips is going to require surgery to repair the torn labra in his shoulder and hip, and that but for the accident, Mr. Phillips would not have had to incur the treatment bills, pain, suffering and disability caused by his shoulder and hip injuries. ECF No. 43-1 at 53. The letter states the shoulder and hip operation will cost $35, 000 and $40, 000, respectively, and that Mr. Phillips will need one year of rehabilitation. ECF No. 43-1 at 53. The declaration did not mention the October 13, 2015 accident.

         USAA sent a letter to Plaintiff's counsel dated May 6, 2016 offering $45, 000 ($16, 000 less than the unpaid, claimed special damages and $55, 000 less than the policy limit); the letter stated the “offer represents the fair value of the claims.” ECF No. 43-1 at 11. Plaintiff's counsel followed up with a letter dated May 9, 2016 requesting a check for the undisputed amount and informing USAA that Mr. Phillips would be pursuing an Insurance Fair Conduct Act claim for the remaining $55, 000, asserting the offer is in bad faith and grossly under-evaluates the damages. ECF No. 43-1 at 14. The letter noted that Mr. Phillips is willing to give USAA 20 days to do a fair investigation and to pay a fair settlement. ECF No. 43-1 at 15.

         USAA replied with a letter dated May 27, 2016, stating that it issued the undisputed amount; the letter did not mention the remaining disputed amount. ECF No. 43-1 at 18. Plaintiff's counsel then sent a letter dated May 31, 2016 noting that the May 27 letter did not address the disputed amount. ECF No. 43-1 at 20. USAA replied by letter dated June 1, 2016, stating that USAA is “willing to negotiate, if you are able to come off of the policy limit demand.” ECF No. 43-1 at 22. Counsel for Mr. Phillips renewed its demand for payment on June 1, 2016, ECF No. 43-1 at 24-26, to which USAA replied on June 13, 2016 requesting copies of the medical records and stating that USAA will be requesting a peer review of the records upon receipt of the requested films. ECF No. 43-1 at 29.

         On July 11, 2016, USAA confirmed receipt of the requested medical records and stated that the records had been forwarded for a peer review and that, when USAA receives the peer report they will contact Mr. Phillips for further negotiations. ECF No. 43-1 at 40. USAA sought a peer review from Christopher Boone, M.D., who issued a report on August 9, 2016 challenging Dr. Vanderwilde's assertion that the hip and shoulder tears were caused by the November 29, 2013 accident.

         Mr. Phillips filed a Complaint against USAA CIC in the Washington State Superior Court for Spokane County on September 27, 2016. ECF No. 1. Plaintiff is now seeking partial summary judgment. ECF No. 42.


         Summary judgment may be granted to a moving party who demonstrates “that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). The moving party bears the initial burden of demonstrating the absence of any genuine issues of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The burden then shifts to the non-moving party to identify specific facts showing there is a genuine issue of material fact. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986). “The mere existence of a scintilla of evidence ...

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