Rancosky, M. v. Washington National

J-A19039-15
2015 PA Super 264MATTHEW RANCOSKY, ADMINISTRATOR IN THE SUPERIOR COURT OF
DBN OF THE ESTATE OF LEANN PENNSYLVANIA
RANCOSKY, AND MATTHEW RANCOSKY,
EXECUTOR OF THE ESTATE OF MARTIN
L. RANCOSKY,
Appellants
v.
WASHINGTON NATIONAL INSURANCE
COMPANY, AS SUCCESSOR BY
MERGER TO CONSECO HEALTH
INSURANCE COMPANY, FORMERLY
KNOWN AS CAPITAL AMERICAN LIFE
INSURANCE COMPANY,
Appellee No. 1282 WDA 2014
Appeal from the Judgment Entered August 1, 2014
In the Court of Common Pleas of Washington County
Civil Division at No(s): 2008-11797
BEFORE: BENDER, P.J.E., JENKINS, J., and MUSMANNO, J.
CONCURRING AND DISSENTING OPINION BY JENKINS, J.:
FILED: December 16, 2015
I concur with the majority’s decision to affirm the entry of summary
judgment in favor of Conseco1 on Martin’s claims. I respectfully dissent from
the majority’s decision to vacate the judgment on LeAnn’s claims and
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1
I use the same shorthand references to the parties as in the majority
opinion.
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remand for a new trial on LeAnn’s claim for bad faith under 42 Pa.C.S. §
8371. In my view, LeAnn’s bad faith claim is time-barred under
Pennsylvania’s two-year statute of limitations for bad faith, 42 Pa.C.S. §
5524.
The majority contends in footnote 30 of its opinion that Conseco
waived the statute of limitations issue by failing to raise it in post-verdict
motions. I am constrained to disagree.
At the close of evidence during trial, Conseco moved for a directed
verdict on LeAnn’s bad faith claim based on the statute of limitations. N.T.,
6/27/14, at 168-72. The trial court took the motion for directed verdict
under advisement. Id. at 172. Subsequent to trial, the trial court entered a
decision in favor of Conseco on the merits, finding that LeAnn failed to
present clear and convincing evidence of bad faith. Verdict, 7/3/14, at 1-2.
The trial court did not address the statute of limitations issue.
As the verdict winner, Conseco could not file post-verdict motions
objecting to the trial court’s failure to decide the statute of limitations issue.
DeFazio v. Labe, 507 A.2d 410, 414 (Pa.Super.1986) (“[because]
judgment n.o.v. is the directing of a verdict in favor of the losing party,
despite a verdict to the contrary … we must therefore agree with the lower
court that appellees, as verdict winners, lack standing to move for a
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judgment n.o.v.”) (emphasis in original).2 Because Conseco lacked
standing, as the verdict winner, to file post-verdict motions in the trial court
seeking judgment n.o.v. on the statute of limitations, Conseco did not waive
its statute of limitations argument in this Court.
In addition, the evidence demonstrates, as a matter of law, that
LeAnn’s claim is time-barred. This Court has the authority to affirm the trial
court on the basis of the statute of limitations, even though the trial court
decided the case on another ground. “[W]e are not bound by the rationale
of the trial court and may affirm on any basis.” Richmond v. McHale, 35
A.3d 779, 786 n. 2 (Pa.Super.2012).
Under Pennsylvania law, a bad faith action under 42 Pa.C.S. § 8371 is
subject to a two-year statute of limitations. Ash v. Continental Ins. Co.,
932 A.2d 877, 885 (Pa.2007). In general, a claim accrues when the plaintiff
is harmed. Adamski v. Allstate Ins. Co., 738 A.2d 1033, 1042-43
(Pa.Super.1999). In other words, “a statute of limitations begins to run as
soon as the right to institute suit arises. This is true regardless of whether
the full extent of harm is known when the action arises.” Id. “Whether a
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2
The Supreme Court granted allocatur in DeFazio but split 3-3 concerning
whether verdict winners lack standing to move for judgment n.o.v. DeFazio
v. Labe, 543 A.2d 540, 541-45 (Pa.1988). Thus, the Superior Court’s
decision in DeFazio was affirmed on this issue, Id., and it remains good law
today. See Marks v. Nationwide Ins. Co., 762 A.2d 1098, 1101
(Pa.Super.2000) (decision of Superior Court remains precedential until it has
been overturned by Supreme Court).
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complaint is timely filed within the limitations period is a matter of law for
the court to determine.” Crouse v. Cyclops Indus., 745 A.2d 606, 611
(Pa.2000). “Once a cause of action has accrued and the prescribed
statutory period has run, an injured party is barred from bringing his cause
of action.” Fine v. Checcio, 870 A.2d 850, 857 (Pa.2005).
Pennsylvania courts have held that a bad faith claim under 42 Pa.C.S.
§ 8371 is deemed to have accrued at the point the claim for insurance
benefits is first denied. See, e.g., Ash v. Continental Ins. Co., 861 A.2d
979, 984 (Pa.Super.2004) (two-year limitation period began running at
initial denial of coverage for damage to insured’s property under first-party
fire policy), aff’d, 932 A.2d 877 (Pa.2007); Adamski, 738 A.2d at 1040
(limitation period under section 8371 began to run upon first occurrence of
refusal to pay). Thus, the statute of limitations begins running when the
insurer sends a letter denying a claim, even where the insurer later agrees
to re-evaluate a decision to deny benefits at the request of the insured.
See, e.g., Jones v. Harleysville Mut. Ins. Co., 900 A.2d 855, 858-59 (Pa.
Super.2006) (statute of limitations began running when insurer first issued
letter denying claim for property damage under fire policy; rejecting
argument that statute of limitations did not begin running until after insurer
conducted additional investigation and sent another letter reaffirming
previous decision to deny coverage); see also Cozzone v. AX4 Equitable
Life Ins. Soc., 858 F.Supp.2d 452, 459 (M.D.Pa.2012) (“an insurance
company’s willingness to reconsider its denial does not toll the statute of
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limitations, as the limitations period runs from the time when Plaintiff’s claim
was first denied”).3 The bad faith statute also begins running when the
insurer sends a letter terminating the policy for failure to make timely
premium payments. See Bariski v. Reassure America Life Ins. Co., 834
F.Supp.2d 233, 237 (M.D. Pa. 2011). Nor can the plaintiff extend the
limitations period by arguing that the insurer’s bad faith conduct was
continuing, because the plaintiff is not entitled to “separate initial and
continuing refusals to provide coverage into distinct acts of bad faith.”
Adamski, 738 A.2d at 1042; see also CRS Auto Parts, Inc. v. Nat’l
Grange Mut. Ins. Co., 645 F.Supp.2d 354, 365 (E.D.Pa. 2009) (“where an
insurer clearly and unequivocally puts an insured on notice that he or she
will not be covered under a particular policy for a particular occurrence, the
statute of limitations begins to run and the insured cannot avoid the
limitations period by asserting that a continuing refusal to cover was a
separate act of bad faith”).
In this case, on March 9, 2005, Conseco sent a letter to LeAnn
advising that her policy lapsed. Exhibit D-17. Despite this lapse, on March
27, 2006, LeAnn sent Conseco a claim form seeking payment of additional
benefits. Exhibit D-34. In a letter dated April 12, 2006, Conseco denied this
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3
Although decisions of federal district courts are not binding on
Pennsylvania courts, we may still consider them persuasive authority. See
Dietz v. Chase Home Finance, LLC, 41 A.3d 882, 886 n.3
(Pa.Super.2012).
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claim and advised LeAnn that “Your CANCER insurance coverage ended on
5-24-03. Therefore, we cannot pay any benefits to you for the claims you
submitted.” Exhibit D-39. The April 12, 2006 letter was the only denial of a
claim for payment of benefits that Conseco sent to LeAnn.
On September 8, 2006, Conseco received a WOP Claim Form from
LeAnn which Dr. Krivak signed and dated on August 28, 2006 and which
identified the starting disability date due to cancer as “3-27-2006-New
Chemo Regimen.” Exhibit D-43-2. In a letter dated September 21, 2006,
Conseco denied this request for WOP benefits and again advised LeAnn that
“Your CANCER insurance coverage ended on 5-24-03. Therefore, we cannot
pay any benefits to you for the claims you submitted.” Exhibit D-45.
To the extent LeAnn could commence an action against Conseco for
bad faith for refusal to pay her claim for monetary benefits, this right
accrued on April 12, 2006, when Conseco denied LeAnn’s claim for payment.
To the extent Leann could commence an action against Conseco for bad faith
in lapsing her Policy, that right accrued either on March 9, 2005, when
Conseco first advised LeAnn that her policy had lapsed, or on September 21,
2006, when Conseco denied LeAnn’s request for WOP and advised that her
coverage ended on May 24, 2003. There were no benefit denials under the
Policy either for a claim payment or WOP after September 21, 2006.
Therefore, at the latest, the two-year bad faith statute of limitations began
running on September 21, 2006. LeAnn instituted this action via writ of
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summons on December 22, 2008, more than two years after September 21,
2006. Docket Entries, at 5. Therefore, her bad faith claim is time-barred.
I disagree with LeAnn’s claim that the statute of limitations
commenced when Conseco sent a letter to LeAnn dated January 5, 2007 in
response to her November 30, 2006 letter. Exhibit D-50. This letter did not
make any denials of claims or benefits but merely summarized the history
with respect to LeAnn’s claims, explained why the policy previously lapsed,
explained that several claims were paid in error but that Conseco did not
plan to seek reimbursement for those funds, and enclosed a duplicate copy
of the Policy for LeAnn’s review. Id. As the authorities cited above
demonstrate, Conseco’s letter explaining its prior denial of benefits and WOP
did not toll the statute. See Jones, Cozzone, supra.
For these reasons, I respectfully dissent from the majority’s decision
on LeAnn’s bad faith claim on the ground that the trial court properly
entered a verdict in favor of Conseco on LeAnn’s bad faith claim.
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