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Holt v. Standard Insurance Co.

United States District Court, E.D. Tennessee, Greeneville Division

April 8, 2015

JOCOB HOLT, M.D., Plaintiff,
v.
STANDARD INSURANCE CO., Defendant.

MEMORANDUM OPINION

THOMAS W. PHILLIPS, Senior District Judge.

Defendant Standard Insurance Company ("Standard") has filed a motion to dismiss the plaintiff's claim for statutory bad faith [Doc. 18] on the grounds that the claim is time-barred. Standard has filed a brief in support of the motion [Doc. 19], plaintiff has responded in opposition [Docs. 24, 25], and Standard has filed a reply [Doc. 26]. The matter is now ripe for determination.

For the reasons set forth herein, the defendant's motion [Doc. 18] will be DENIED.

I. Relevant Facts[1]

Plaintiff Jacob Holt, M.D. was employed by Inpatient Consultants of Tennessee as a nocturnist from approximately June 2007 to September 2010 [Doc. 17 at ¶ 8]. Dr. Holt applied for and was issued two individual disability insurance policies from Standard, one in 2001 and one in 2005 [ Id . at ¶¶ 9-10].

In September 2010, Dr. Holt was diagnosed with depression, advised not to return to work, and was deemed to be disabled by his physician [ Id . at ¶ 12]. Dr. Holt made a disability claim under his disability insurance policies on or around October 2010, and he began receiving payments from Standard for his disability on December 8, 2010 [ Id . at ¶ 13]. While receiving disability insurance payments, Dr. Holt received treatment from three doctors who confirmed his depression [ Id . at ¶ 14].

On May 1, 2012, Dr. Holt was notified by Standard that his disability payments were to be suspended indefinitely based on the opinion of a Physician Consultant that Dr. Holt was no longer disabled [ Id . at ¶ 15]. Dr. Holt appealed this decision twice, in August 2012 and in September 2013, and both appeals were denied by Standard [ Id . at ¶ 17]. Dr. Holt claims that he exhausted all administrative remedies, requested payment on multiple occasions, and waited over 60 days after Standard's denial before filing suit [ Id . at ¶ 18].

Dr. Holt filed suit on August 18, 2014 [Doc. 1]. As set forth in the amended complaint, Dr. Holt claims that Standard has breached its contracts of disability insurance by refusing to continue his disability benefits and that Standard has acted in bad faith in violation of Tenn. Code Ann. § 56-7-105 [Doc. 17 at ¶¶ 23-29]. Plaintiff's claim of bad faith is the subject of Standard's motion to dismiss.

II. Standard of Review

Federal Rule of Civil Procedure 8(a)(2) sets out a liberal pleading standard, Smith v. City of Salem, 378 F.3d 566, 576 n.1 (6th Cir. 2004), requiring only "a short and plain statement of the claim showing that the pleader is entitled to relief, ' in order to give the [opposing party] fair notice of what the... claim is and the grounds upon which it rests, '" Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). Detailed factual allegations are not required, but a party's "obligation to provide the grounds' of his entitle[ment] to relief' requires more than labels and conclusions." Twombly, 550 U.S. at 555. "[A] formulaic recitation of the elements of a cause of action will not do, " nor will "an unadorned, the-defendant-unlawfully-harmed-me accusation." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

In deciding a Rule 12(b)(6) motion to dismiss, a court must construe the complaint in the light most favorable to the plaintiff, accept all factual allegations as true, draw all reasonable inferences in favor of the plaintiff, and determine whether the complaint contains "enough facts to state a claim to relief that is plausible on its face." Twombly, 550 U.S. at 570; Directv, Inc. v. Treesh, 487 F.3d 471, 476 (6th Cir. 2007) (citation omitted). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678. "Determining whether a complaint states a plausible claim for relief will [ultimately]... be a context-specific task that requires th[is Court] to draw on its judicial experience and common sense." Id. at 679.

III. Analysis

Tennessee's insurance bad faith statute provides for a penalty, not to exceed 25% of the liability for the loss, when an insurer's refusal to pay the loss was not in good faith. Tenn. Code Ann. § 56-7-105(a). In order to state a bad faith claim, a plaintiff must show: (1) the policy of insurance must, by its terms, have become due and payable; (2) a formal demand for payment must have been made; (3) the insured must have waited 60 days after making demand before filing suit (unless there was a refusal to pay prior to the expiration of the 60 days); and (4) the refusal to pay must not have been in good faith. Montesi v. Nationwide Mut. Ins. Co., 970 F.Supp.2d 784, 791 (W.D. Tenn. 2013). The parties do not dispute that statutory bad faith claims are subject to the one-year statute of limitations of Tenn. Code Ann. § 28-3-104(a)(4), which requires "actions for statutory penalties" to be "commenced within one year after the cause of action accrued." Id . The question for resolution by the Court is when Dr. Holt's claim accrued.

Standard contends that Dr. Holt's bad faith claim accrued and the one-year limitations period commenced when his claim was denied on May 1, 2012. Thus, Standard argues that Dr. Holt had until May 1, 2013 in which to file suit. Because his suit was not filed until August 18, 2014, over 15 months from the time his claim was denied, Standard contends that Dr. ...


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