Insurance — bad faith

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United States Court of Appeals For the Seventh Circuit

Civil

Insurance — bad faith

Where there is no evidence that an insurance company’s termination of disability benefits was anything but an honest mistake, summary judgment was properly granted to the insurer on its insured’s bad faith claim.

“Even if an insurance company has no reasonable basis for denying benefits, a claimant must also show that the insurer knew of, or recklessly disregarded, the lack of a reasonable basis for the denial in order to establish bad faith on the part of the insurer. Brown v. Labor & Indus. Review Comm’n, 671 N.W.2d 279, 288 (Wis. 2003). Here, nothing in the record before the district court showed or could have prompted a reasonable inference that Hartford knew about, or recklessly disregarded, evidence that it was applying the wrong standard to Blue’s claim. When Hartford made Blue’s original LTD benefits determination in 2001, the ‘any occupation’ standard had been in effect. Hartford did not adopt the ‘own occupation’ standard for the purpose of LTD benefits until 2002, at which point it made that standard retroactive to 1993. When the Hartford employee reviewing Blue’s claim in Georgia requested the relevant documents from the Minneapolis office, she received a policy listing the old ‘any occupation’ standard that was in effect at the time of Hartford’s initial approval of Blue’s LTD benefits in 2001. There is no evidence that the claim reviewer knew or suspected that the policy was incorrect or incomplete or that the Minneapolis office’s failure to send the correct documents was intentional or reckless. There is no issue of material fact that the application of the ‘any occupation’ standard was nothing more than an honest mistake.”

Affirmed.

11-3554 Blue v. Hartford Life & Accident Ins. Co.

Appeal from the United States District Court for the Western District of Wisconsin, Crocker, Mag. J., Flaum, J.