USAA Casualty Insurance Company v. Fosnaught

IN THE SUPERIOR COURT FOR THE STATE OF DELAWARE
USAA CASUALTY INSURANCE _ )
COMPANY, )
)
Defendant Below/Appellant, )
y C.A. No. N19C-05-054 CLS
)
JOSEPH FOSNAUGHT, )
)
Plaintiff Below/Appellee. )
ORDER
Date Submitted: July 15, 2019
Date Decided: October 14, 2019
Upon Defendant USAA Casualty Insurance's
Motion to Dismiss in Lieu of Answer
Denied.
Dennis A. Mason II, Esquire, The Freibott Law Firm, P.A., Wilmington, DE,
Attorney for Plaintiff Below/Appellee.
Lisa M. Grubb, Esquire, Marshall Dennehey Warner Coleman & Goggin,
Wilmington, DE, Attorney for Defendant Below/Appellant.
Scott, J.
USAA Casualty Insurance (“Defendant”) filed a Motion to Dismiss in Lieu
of Answer, arguing that Joseph Fosnaught (“Plaintiff”) lacks standing. For the
following reasons, Defendant’s motion is DENIED.
Background
On July 20, 2018, Plaintiff was injured in an automobile collision. Plaintiff
alleges he suffered injuries as a result of this collision, Plaintiff subsequently
received medical care from Christiana Care for these injuries.' At the time of the
collision, Plaintiff alleges he was insured by Defendant under an automobile
insurance policy that included personal injury protection (“PIP”) coverage with
limits of $300,000/$500,000."
After the accident, Plaintiff alleges that Defendant failed to pay the full
amount of PIP costs to which Plaintiff was entitled under the policy limits.°
Defendant alleges that it was only obligated to pay an amount which it considered
reasonable for the services rendered.’ Plaintiff and Defendant engaged in arbitration
proceedings to resolve this matter. On April 15, 2019, a Department of Insurance
Arbitration Panel awarded Plaintiff $2,394 in unpaid PIP expenses. Defendant
appealed this decision on May 8, 2019.
' Compl. { 3.
* Compl. § 4.
3 Compl. {4 6, 9; Def. USAA Insurance’s Mot. Dismiss {f 3, 7.
4 Def. USAA Insurance’s Mot. Dismiss § 3.
2
In his Complaint on Appeal, Plaintiff alleges Defendant’s conduct constitutes
a breach of contract and violates 21 De/. C. §§ 2118, 2118B. Plaintiff claims he is
entitled to special and statutory damages.’ In response to Plaintiffs complaint,
Defendant filed this motion to dismiss.
Parties’ Assertions
Defendant argues that Plaintiffs claim must be dismissed for lack of standing.
Defendant cites the Delaware Department of Insurance’s Bulletin 10 (“Bulletin 10”)
in support of its argument that Plaintiff lacks standing.° Specifically, Defendant
contends that Bulletin 10 gives standing only to medical providers to bring a claim
for lack of payment.’
In response, Plaintiff argues that he has standing to bring this claim as a matter
of contract law.® Plaintiff further contends that Bulletin 10, as an advisory opinion,
cannot trump Delaware’s statutorily-created financial responsibility laws.’ Plaintiff
also points to the existence of regulations creating an arbitration process for actions
> Compl. {§ 9-13.
® Def. USAA Insurance’s Mot. Dismiss JJ 5, 7, 13.
7 Def. USAA Insurance’s Mot. Dismiss § 5 (quoting Bulletin 10). Defendant cites
the following language in support of this proposition: “A dispute over the
remaining amount of such a fee should remain a dispute between the carrier and
the provider.” Del. Dep’t of Ins. Auto Bull. No. 10, Personal Injury Protection
(“PIP”) (1998).
8 P],’s Resp. Def.’s Mot. Dismiss J 5—6.
° Pl.’s Resp. Def.’s Mot. Dismiss 4] 3-4.
between an insured and an insurer as further proof of Plaintiff's standing to bring a
breach of contract claim against his insurer.'®
Standard of Review
When deciding a Rule 12(b)(6) motion to dismiss for failure to state a claim
upon which relief can be granted, the Court must accept all well-pled allegations in
the complaint as true and draw all reasonable inferences in the light most favorable
to the non-moving party.!! The Court will dismiss a complaint if it is meritless as a
matter of fact or law.'* If a plaintiff can recover under any conceivable set of
circumstances susceptible to proof under the complaint, the Court will deny the
motion to dismiss.!?
Discussion
Delaware courts consistently recognize and uphold the principle of “freedom
of contract.” This Court is one of many tn the state that permits contracting parties
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to bring claims to enforce contractual obligations.'" “It is a fundamental principle
of contract law that the parties to a contract are bound by its terms, and have a
10 P].’s Resp. Def.’s Mot. Dismiss { 7.
l ¥y y. GSM Nation, LLC, 2018 WL 2272708, at *4 (Del. Super. Apr. 24, 2018).
12 Diehl-Guerrero v. Hardy Boys Construction, LLC, 2017 WL 886786, at *2 (Del.
Super. Feb. 28, 2017) (citing Diamond State Tel. Co. v. Univ. of Delaware, 269
A.2d 52, 58 (Del. 1970)).
3 Id, (citing Ramunno v. Cawley, 705 A.2d 1029, 1034 (Del. 1998)).
\4 See NAF Holdings, LLC v. Li & Fung (Trading) Ltd., 118 A.3d 175, 180 (Del.
2015) (“[T]hat is inconsistent with Delaware law, which seeks to ensure freedom
of contract and allow parties to enforce their bargains.”).
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corresponding right to enforce them.”' Plaintiff contracted with Defendant for
automobile insurance coverage. In exchange for a certain level of PIP coverage,
Plaintiff paid Defendant monthly premiums.'® Accordingly, Plaintiff has a right to
enforce its contract with Defendant in a court of law.
Plaintiff has standing to bring a claim for breach of contract against
Defendant. To have standing, an individual must: 1) have suffered an injury-in-fact,
which is a concrete, particularized, and actual invasion of a legally protected interest;
2) show a causal connection between the injury and the conduct complained of; and
3) show that the court can redress the injury.'’ First, Plaintiff has a legal right to
enforce the terms of his automobile insurance policy. In addition to a general
contractual right, Plaintiff also has a statutory right to recover payment of medical
expenses from Defendant.'* Second, Defendant caused Plaintiffs injury: Defendant
has not paid Plaintiff for his accident-related medical expenses and has not provided
Plaintiff with an explanation for its actions.’? Third, this Court can redress Plaintiff's
injury by ordering Defendant to pay damages.
'S Id. at 180-81.
'6 PI.’s Resp. Def.’s Mot. Dismiss § 6.
17 Dover Historical Soc. v. City of Dover Planning Com’n, 838 A.2d 1103, 1110—
11 (Del. Dec. 2, 2003) (clarifying that the Delaware standing requirements are
generally the same as the federal standing requirements laid out in Lujan v.
Defenders of Wildlife).
18.91 Del. C. § 2118B¢d).
'9 Compl. 4§ 7-9; see 21 Del. C. § 2118B(c) (“[T]he insurer shall promptly process
the claim and shall... make payment of the amount of claimed benefits that are
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Bulletin 10 does not shift the right to bring a breach of contract claim from
the insured to the medical provider. Instead, Bulletin 10 reflects the Delaware
Department of Insurance’s preference for litigation about the “reasonableness” of
medical expenses to occur between medical providers and insurance carriers only.”°
The preferences outlined in Bulletin 10 do not usurp an insured’s statutory right to
recover the cost of all “reasonable and necessary” medical expenses from his or her
insurance carrier.”
Conclusion
Plaintiff has standing to bring his claim. Accordingly, Defendant’s Motion to
_
The Honorabfe Calvin L. Scott, Jr.
Dismiss in Lieu of Answer is DENIED.
IT IS SO ORDERED.
due to the claimant or, if said claim is wholly or partially denied, provide the
claimant with a written explanations for the reasons of such denial.”).
20 Bulletin 10 states that a dispute over the reasonableness of fees “should” remain
a dispute between the medical provider and the insurance carrier. Del. Dep’t of
Ins. Auto Bull. No. 10, Personal Injury Protection (“PIP”) (1998). Simply because
the Delaware Department of Insurance has stated a preference for medical
providers and insurance carriers to fight out the “reasonableness” of medical
expenses in court, does not mean that the Department may destroy an insured’s
contractual and statutory right to seek indemnity from his or her insurance carrier.
2191 Del. C. 8§ 2118(a)(2)(a), 2118(a)(2)(i)(2), 211 8B(c){d).
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