                                                                                                                           Opinions of the United
2003 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


10-15-2003

Roche v. NJ Mfg Ins Co
Precedential or Non-Precedential: Non-Precedential

Docket No. 02-4353




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                                                        NOT PRECEDENTIAL

                UNITED STATES COURT OF APPEALS
                     FOR THE THIRD CIRCUIT


                              No. 02-4353




                          KATHRYN ROCHE,

                                         Appellant

                                    v.

        NEW JERSEY MANUFACTURERS INSURANCE COMPANY




ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE M IDDLE
                  DISTRICT OF PENNSYLVANIA

                       (Dist. Court No. 00-cv-02051)
                 District Court Judge: Hon. Malcolm Muir


               Submitted Under Third Circuit LAR 34.1(a)
                          September 11, 2003

           Before: ALITO, BARRY and AM BRO, Circuit Judges.

                    (Opinion Filed: October 15, 2003)




                       OPINION OF THE COURT
ALITO, Circuit Judge:

              After suffering extensive injuries in an automobile accident, Kathryn Roche

filed this action in the United States District Court for the Middle District of Pennsylvania

against New Jersey Manufacturers Insurance Company (“NJMIC”) claiming that NJMIC,

by failing to pay her insurance claim, had breached its contractual obligations under an

insurance contract and its duty of good faith. After a bench trial, the District Court found

that Roche was entitled to $24,910.44 plus interest from NJMIC, that NJMIC had not

breached its duty of good faith, and that Roche was not entitled to attorney’s fees. The

District Court concluded that the amount owed to Roche was limited by the cost

containment provisions of the Pennsylvania Motor Vehicle Financial Responsibility Act

(hereinafter “Act 6”), 75 Pa.C.S.A. § 1797.

                                              I.

       On appeal, Roche first argues that the cost containment provision of Act 6 does not

apply to her situation. We do not agree. Rather, we believe that the explanation in

Pittsburgh Neurosurgery Assocs., Inc. v. Danner, 733 A.2d 1279 (Pa. Super. 1999), of the

legislative intent behind Act 6 strongly supports the District Court’s interpretation. In

Pittsburgh Neurosurgery, the court observed that, “[i]n enacting § 1797 our legislature

sought to reduce insurance premiums by capping medical costs. Medical providers who

treat automobile accident victims and who will receive their payments from certain

delineated forms of insurance necessarily receive less compensation for their services to



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achieve the legislature’s goal. The legislature in enacting this legislature [sic] sought to

favor the general public’s interest in reducing automobile insurance premiums at the

expense of health care providers . . . .” Id. at 1285.

       Roche argues, however, that 31 Pa. Code § 69.22(f) allows full reimbursement of

her medical costs. According to Roche, this regulation is substantially similar to Sections

306(f.1)(3)(1) and 319 of the Workers’ Compensation Act (hereinafter “WCA”), 77 Pa.

C.S.A. §§ 531(3)(I) and 671, which the Pennsylvania courts have interpreted to require

full reimbursement of the amount paid by a health carrier. In making this argument,

Roche relies on Villanova University v. WCAB (Mantle), 783 A.2d 366 (Pa. Commw. Ct.

2001). However, we do not find the provisions of WCA to be substantially similar to 31

Pa. Code § 69.22(f) because, among other things, neither Section 69.22(f) nor any other

applicable regulation contains a subrogation provision like that found in the W CA. The

subrogation provision of Act 6 found at 75 Pa.C.S.A. § 1720 also does not support

Roche’s position.

                                            II.

      Roche contends that NJMIC failed to conform to Pennsylvania Insurance

Department Regulations and NJMIC’s own internal regulations by not providing a first-

party medical application form to Roche upon notification of the accident and injuries.

However, Roche has not identified any specific provision of the Pennsylvania Insurance

Department Regulations that NJMIC violated, and our own review of those regulations



                                              -3-
has not disclosed any such requirement. The testimony in the record to which Roche

points as indicating such an internal policy at NJMIC also does not support Roche’s

argument.

                                            III.

       Roche’s third argument is that the District Court placed the burden of determining

the cost containment amounts payable upon Roche herself rather than upon NJMIC.

However, this argument is without merit. The District Court did not require Roche to

make this determination. Rather, it merely found that Roche had not supplied NJMIC

with the requisite information upon which it could make a determination of the amount of

the medical bills that were payable.

                                            IV.

       Roche’s next argument is that the District Court did not properly enforce 75

Pa.C.S.A. § 1716, which provides in part that “[b]enefits are overdue if not paid within 30

days after the insurer receives reasonable proof of the amount of the benefits.” This

provision also states that 12% interest will accrue on overdue benefits. Id. The District

Court awarded interest from January 1, 2001. Roche believes the date from which

interest should have accrued to be earlier. The determination of when NJMIC received

reasonable proof of the amount of the benefits due is one of fact. Our examination of the

District Court’s determination shows no clear error on its part. Therefore, its

determination must stand.



                                            -4-
                                             V.

       Roche argues that the District Court erred in its application of Act 6 to her initial

hospitalization. 31 Pa. Code § 69.12 exempts certain treatments from the cost limitations.

These treatments include acute care and services for life-threatening or urgent injuries.

Even where the injuries are not urgent or life-threatening, the exemption can apply to the

initial assessment. See 31 Pa. Code § 69.12. Here, however, there is no evidence in the

record that such an initial assessment was made or that an assessment at this initial phase

indicated whether Roche’s injuries were or were not life-threatening and urgent.

Therefore, we conclude that the District Court did not err in applying Act 6 cost

containment provisions to the initial hospitalization.

                                             VI.

       Roche argues that the District Court erred in applying the law of the case. Roche

does not indicate what she believes the law of the case to have been or how it became the

law of the case. Nor does she cite any authority to support her argument. We therefore

reject this argument.

                                            VII.

       Roche’s next argument is that the District Court erred in awarding only the sum of

$21,151.04 and in failing to heed what Roche claims are admissions on the part of

NJMIC that the actual total was $42,672.56. But the record indicates that NJMIC did not

make such admissions. The document to which Roche points, NJMIC’s Supplemental



                                             -5-
Findings of Fact and Conclusions of Law, simply takes issue with Roche’s own exhibit

and states what the correct unpaid total would be under this exhibit. After stating this

corrected amount, NJMIC denies that it owes this amount. See Appellant’s Appendix

Vol. II at C-8. Therefore, we cannot find that the District Court erred.

                                            VIII.

       Roche’s final argument is that the District Court erred in refusing to award

exemplary damages. Act 6 provides that an insured may challenge an insurance

provider’s refusal to pay for medical care and that conduct that is considered “wanton

shall be subject to payment of treble damages to the injured party.” 75 Pa. C.S.A. §

1797(b)(4). Roche argues that NJMIC’s behavior was a clear example of bad faith and

therefore violated § 1797(b)(4).

       We have defined bad faith as a “frivolous or unfounded refusal to pay, lack of

investigation into the facts, or a failure to communicate with the insured.” Frog, Switch,

& Mfg. Co. v. Travelers Ins. Co., 193 F.3d 742, 751 n.9 (3d Cir. 1999). Here we cannot

conclude that such bad faith was present. NJMIC never denied Roche coverage but rather

requested more information to make the necessary cost containment calculations under

Act 6. It did not make frivolous refusals to pay but continued to request the proper

documents so that it could fulfill its obligations under its policy with Roche’s stepfather.

Accordingly, we find that the District Court did not err in denying Roche’s claim for

exemplary damages.



                                             -6-
                                         IX.

       We have reviewed all of Roche’s arguments and see no grounds for reversal. We

affirm the District Court in full.




                                         -7-
TO THE CLERK OF THE COURT:

    Kindly file the foregoing Opinion.




                                               /s/ Samuel A. Alito, Jr.
                                               Circuit Judge




                                         -8-
