Insurance Bad Faith in Disguise Fails
Post 4839
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Health Care Services Corp. (HCSC) moved to dismiss a suit by an insured because Montana law precludes King’s breach of the implied covenant of good faith and fair dealing claim. HCSC also argued that Montana statutory law prohibited King’s request for punitive damages and that the request should be stricken.
In Justin King v. Health Care Services Corp., No. CV-24-32-GF-BMM, United States District Court, D. Montana, Great Falls Division (July 15, 2024) the USDC resolved the various disputes.
FACTUAL BACKGROUND
King, a resident of Montana, sued HCSC, a business incorporated in Illinois, for HCSC’s alleged breach of contract with its insured King when HCSC denied King’s claim for coverage of a back surgery. HCSC insured King under an individual health insurance policy (“the Policy”). King requested pre-approval from HCSC for a two-level lumbar disc arthroplasty (“the surgery”). HCSC denied King’s pre-approval request on December 14, 2022, citing to a policy exclusion contained in the Policy. King nevertheless underwent the back surgery on October 12, 2023, at a clinic in Germany. King alleged that the Policy provided coverage for the surgery.
DISCUSSION
Count I: Breach of Contract
HCSC argued that King failed to allege facts sufficient to state a claim for breach of contract for Count I. HCSC contends that King failed to identify the contractual provision that would have required HCSC to cover his requested back surgery.
HCSC denied pre-approval for the surgery that King sought on the basis that the surgery was not appropriate, not medically necessary, and experimental.
The Food and Drug Administration (FDA) approved the use of a medical device known as the prodisc L for 2-level lumbar disc arthroplasties on April 10, 2020. The FDA concluded that the 2-level lumbar disc arthroplasty was safe and effective for King’s condition. Therefore, the complaint provides sufficient language for the Court to draw a reasonable inference that HCSC had breached the Policy.
Count II: Breach of Implied Covenant of Good Faith and Fair Dealing
HCSC argues that King’s claim of breach of the implied covenant of good faith and fair dealing should be dismissed because Montana law precludes the claim. King contended that HCSC misdescribes the cause of action of Count II.
The USDC concluded that King’s complaint presents an insurance bad faith claim in disguise. King failed to prove the distinction between the breach of the implied covenant claim and a common law bad faith claim..
Punitive Damages
HCSC argued that Montana law bars King from including a request for an award of punitive damages in the complaint. King concedes that Montana law bars the inclusion of punitive damages in an initial pleading. The USDC concluded it must dismiss the punitive damages claim in accordance with Mont. Code Ann. § 27-1-221(5).
However, King may file to amend the pleading for punitive damages after discovery begins.
Accordingly, IT WAS ORDERED that:
Defendant’s Rule 12(b)(6) Motion to Dismiss is GRANTED in part and DENIED in part.
Count II of Plaintiff’s complaint (Doc. 1) is DISMISSED.
Plaintiff’s punitive damages claim is DISMISSED.
ZALMA OPINION
The State of Montana does not like bad faith and claims seeking punitive damages. The plaintiff – to avoid the requirements of the state – composed its complaint to disguise its bad faith claim as a different type of tort. The attempt failed and the USDC limited the case to the simple breach of contract action and allowed that the plaintiff could amend his complaint to allege bad faith after discovery. When a plaintiff has a winnable breach of contract claim it should do so and give up the attempt to get rich with a bad faith suit.
(c) 2024 Barry Zalma & ClaimSchool, Inc.
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Anti-Public Adjuster Clause Is Effective in New York
Post number 5301
Read the full article at https://www.linkedin.com/pulse/public-adjusters-attempt-represent-insured-subject-zalma-esq-cfe-rubfc, see the video at and at and at https://zalma.com/blog plus more than 5300 posts.
Insurers May Contractually Prevent an Insured from Hiring a Public Adjuster
In Peter Barbato & North Jersey Public Adjusters Inc. v. Interstate Fire & Casualty Company, et al, No. 25-cv-5312 (JGK), United States District Court, S.D. New York (December 15, 2025) the plaintiffs, Peter Barbato and North Jersey Public Adjusters, Inc. (“NJPA”), filed suit against several insurance companies, including Interstate Fire & Casualty Company, Independent Specialty Insurance Company, and certain Underwriters at Lloyd’s of London.
FACTS
NJPA is a New Jersey-based public adjusting firm licensed in New York. The dispute centers on ...
Anti-Public Adjuster Clause Is Effective in New York
Post number 5301
Read the full article at https://www.linkedin.com/pulse/public-adjusters-attempt-represent-insured-subject-zalma-esq-cfe-rubfc, see the video at and at and at https://zalma.com/blog plus more than 5300 posts.
Insurers May Contractually Prevent an Insured from Hiring a Public Adjuster
In Peter Barbato & North Jersey Public Adjusters Inc. v. Interstate Fire & Casualty Company, et al, No. 25-cv-5312 (JGK), United States District Court, S.D. New York (December 15, 2025) the plaintiffs, Peter Barbato and North Jersey Public Adjusters, Inc. (“NJPA”), filed suit against several insurance companies, including Interstate Fire & Casualty Company, Independent Specialty Insurance Company, and certain Underwriters at Lloyd’s of London.
FACTS
NJPA is a New Jersey-based public adjusting firm licensed in New York. The dispute centers on ...
Proof of Highly Contaminated Water is Required for Extra Payments
Post number 5300
Read the full article at https://www.linkedin.com/pulse/acting-your-own-lawyer-foolish-barry-zalma-esq-cfe-mbg0c, see the video at and at and at https://zalma.com/blog plus more than 5300 posts.
Acting as Your Own Lawyer is Foolish
Evidence of Breach of Contract Survives Dismissal of All Other Charges
In Lee Lifeng Hsu and Jane Yuchen Hsu v. State Farm Fire And Casualty Company, C. A. No. N24C-09-020 CLS, Superior Court of Delaware (February 27, 2026) a claim to State Farm who paid approximately $61,000 after assessments but denied coverage for additional items including ceramic tiles, the kitchen floor ceiling, underlayment plywood, and numerous personal property items resulted in suit by the Hsu’s acting in pro per.
Facts
Lee Lifeng Hsu and Jane Yuchen Hsu (“Plaintiffs”) purchased a homeowners’ insurance policy from State Farm Fire...
Insurance Condition Requires Following the Intent of the Parties
Post number 5307
Principles of Contract Interpretation Compels Reading Contract as Written
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In Eastside Floor Supplies, Ltd. v. SCS Agency, Inc., Hanover Insurance Company, et al., No. 2024-01501, Index No. 609883/19, 2026 NY Slip Op 01488, Supreme Court of New York, Second Department (March 18, 2026)
In May 2019, a fire damaged business personal property belonging to the plaintiffs, which was stored in portable storage containers at their Manhattan premises. At the time of the fire, the plaintiffs were insured under a businessowners insurance policy (BOP) issued by the defendant Hanover Insurance Company which provided general coverage for business personal property, and which included a specific extension for “Business Personal Property Temporarily in Portable Storage Units” (the portable storage ...
ERISA Saves Fraudulent Claims Suit
Post number 5306
Read the full article at https://www.linkedin.com/pulse/failure-provide-well-pled-facts-defeats-most-action-zalma-esq-cfe-b4zuc and at https://zalma.com/blog plus more than 5300 posts.
Allegations of Fraudulent Insurance Billing Must be Pleaded with Specificity
In Genesis Laboratory Management LLC v. United Healthcare Services, Inc. and Oxford Health Plans, Inc., No. 21cv12057 (EP) (JSA), United States District Court, D. New Jersey (March 13, 2026) Genesis Laboratory Management LLC (“Genesis”), a New Jersey-based molecular diagnostic and anatomic pathology laboratory, provided COVID-19 related testing services and submitted claims for reimbursement as an out-of-network provider to United Healthcare Services, Inc. (“United”) and Oxford Health Insurance, Inc. (“Oxford”). Metropolitan Healthcare Billing, LLC (“Metropolitan”), owned by the same individual as Genesis, handled the billing for Genesis.
FACTUAL BACKGROUND
United and Oxford, who administer both ERISA and ...
ERISA Saves Fraudulent Claims Suit
Post number 5306
Read the full article at https://www.linkedin.com/pulse/failure-provide-well-pled-facts-defeats-most-action-zalma-esq-cfe-b4zuc and at https://zalma.com/blog plus more than 5300 posts.
Allegations of Fraudulent Insurance Billing Must be Pleaded with Specificity
In Genesis Laboratory Management LLC v. United Healthcare Services, Inc. and Oxford Health Plans, Inc., No. 21cv12057 (EP) (JSA), United States District Court, D. New Jersey (March 13, 2026) Genesis Laboratory Management LLC (“Genesis”), a New Jersey-based molecular diagnostic and anatomic pathology laboratory, provided COVID-19 related testing services and submitted claims for reimbursement as an out-of-network provider to United Healthcare Services, Inc. (“United”) and Oxford Health Insurance, Inc. (“Oxford”). Metropolitan Healthcare Billing, LLC (“Metropolitan”), owned by the same individual as Genesis, handled the billing for Genesis.
FACTUAL BACKGROUND
United and Oxford, who administer both ERISA and ...
