United States District Court, D. South Dakota, Southern Division
ORDER DENYING PLAINTIFF'S MOTION FOR
E. SCHREIER UNITED STATES DISTRICT JUDGE.
Debbie Plucker, brought suit against defendant, United Fire
& Casualty Company, for breach of contract and bad faith.
A jury trial was held, and the jury found in favor of Plucker
on the breach of contract claim and United Fire on the bad
faith claim. Plucker now moves for attorney fees under SDCL
58-12-3. The court denies the motion.
purchased a car insurance policy from United Fire &
Casualty Company. Trial Exhibit 1. The policy included $5000
in medical payments coverage for Plucker if she was injured
in an accident. Id. at UF004921. While Plucker was
driving on Interstate 90, a semi-truck trailer on the other
side of the median and traveling in the opposite direction
lost a tire. The tire and its rim crossed the median, bounced
off of another tractor trailer, and hit the front of
Plucker's car. As a result of the accident, Plucker
started treating with Dr. Lanpher, her chiropractor.
the terms of the insurance contract, Plucker needed to grant
United Fire access to her medical records before she could
receive payment for her medical bills. Typically, United Fire
got an insured's medical records by having the insured
sign a medical release authorizing United Fire to have access
to the records. After the accident, United Fire sent Plucker
a copy of its standard medical release, but Plucker felt
uncomfortable signing the form as written. To alleviate her
concerns, Plucker redacted the parts of the medical release
that authorized the release of medical records related to
prior alcohol use, drug abuse, and psychiatric treatment.
Plucker also added language limiting the validity of the
release. United Fire did not accept the altered release and
told Plucker no medical provider would accept the changes she
made to the release.
alternative to signing an unaltered medical release, United
Fire told Plucker she could submit her own medical records.
Plucker attempted to retrieve her records from Dr. Lanpher,
but she was unable to get them. Plucker discussed with her
insurance agent the problems she was having with United Fire.
The insurance agent wrote to United Fire asking, “Why
are we treating our own insured like the enemy?” Trial
Plucker hired a lawyer, her lawyer wrote to United Fire three
times and asked it to reconsider its decision to not pay Dr.
Lanpher's bills. United Fire still did not pay the claim.
After Plucker filed her lawsuit, she signed a medical
authorization in essentially the same form as that provided
by United Fire and authorized the release of her medical
records to her attorneys. After her attorneys received and
disclosed the medical records to United Fire, United Fire
paid the claim in full. When the case went to trial, the jury
awarded Plucker $100 in damages on her breach of contract
claim. It found in favor of United Fire on the bad faith
now seeks $143, 660.48 as reasonable attorney fees and sales
tax under SDCL 58-12-3. Plucker argues United Fire acted
unreasonably by (1) not accepting Plucker's altered
medical release, (2) not sending Dr. Lanpher the altered
medical release, (3) telling Plucker she could submit her own
medical records, and (4) not otherwise helping Plucker obtain
the medical records. Docket 134 at 1-3.
court may award Plucker attorney fees if United Fire
“refused to pay the full amount of [Plucker's]
loss, and that such refusal [was] vexatious or without
reasonable cause . . . .” SDCL 58-12-3. The statute
allows for the collection of “reasonable attorney's
fees necessarily incurred in defending or enforcing a valid
insurance contract right.” All Nation Ins. Co. v.
Brown, 344 N.W.2d 493, 494 (S.D. 1984) (citing Fla.
Rock, Etc. v. Cont'l Ins. Co., 399 So.2d 122 (Fla.
1981)). The purpose of the statute is to discourage insurance
companies from contesting valid claims. Id.
prevail on her motion for attorney's fees, Plucker must
prove three elements: (1) United Fire refused to pay the full
amount of Plucker's loss; (2) United Fire's refusal
to pay Plucker's claims was vexatious or without
reasonable cause; and (3) Plucker's legal fees are a
reasonable charge for the “work performed to enforce
the insurance contract claim.” Biegler v. Am.
Family Mut. Ins. Co., 621 N.W.2d 592');">621 N.W.2d 592, 606 (S.D. 2001)
(citing Isaac v. State Farm Mut. Auto. Ins. Co., 522
N.W.2d 752 (S.D. 1994); Brooks v. Milbank Ins. Co.,
605 N.W.2d 173 (S.D. 2000)). Here, Plucker has failed to
prove the second element-that United Fire's refusal to
pay Plucker's claims was vexatious or without reasonable
trial, both parties agreed that United Fire had a right to
obtain Plucker's medical records before paying her
medical bills. This is a standard practice in the insurance
industry. The South Dakota Supreme Court has explained that
if there is a reasonable basis for not paying an
insured's claim, the insurance company is not in
violation of SDCL 58-12-3. See Howie v. Pennington
Cty, 563 N.W.2d 116, 118-19 (S.D. 1997). Here, United
Fire attempted to process Plucker's claim by having her
sign a medical authorization that would give United Fire
access to her medical records. As an alternative to signing
the medical authorization, United Fire told Plucker she could
submit her medical records directly to United Fire. Plucker
took neither course of action until she brought suit. Because
United Fire had a right to review Plucker's medical
records, United Fire did not act in violation of SDCL 58-12-3
by refusing to pay Plucker's claim until it had copies of
Plucker's medical records.
primarily relies on five South Dakota Supreme Court
cases to support her motion for attorney's
fees; however, each case is distinguishable because United
Fire's conduct did not rise to the same level of
culpability as the defendants in the other cases. The first
case Plucker cites is Lewis v. State Department of
Transportation, 667 N.W.2d 283');">667 N.W.2d 283 (S.D. 2003). In
Lewis, the South Dakota Department of Transportation
denied plaintiff's medical claim for the replacement of
his veneers after a metal box struck him in the face.
Id. at 285, 291. The South Dakota Supreme Court
reasoned that the denial was without reasonable cause because
the claim administrator gave “inconsistent
justifications” for denying the plaintiff's claim
and because the administrator did not provide a medical
opinion to contradict the plaintiff's doctor.
Id. at 291-292. Here, United Fire's response and
actions remained consistent throughout the handling of
Plucker's claim. United Fire repeatedly explained that it
needed to receive Plucker's ...