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Clark v. State Farm Mutual Automobile Insurance Co.

Superior Court of Delaware, New Castle

March 30, 2015

REBECCA CLARK and JAMES SMITH, on behalf of themselves and all others similarly situated, Plaintiffs,
v.
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant.

Date Submitted: January 5, 2015

Upon Plaintiffs' Motion For Leave to Amend the Complaint Pursuant to Super. Ct. Civ. R. 15(a):

John S. Spadaro, Esquire, John Sheehan Spadaro, LLC, Attorney for Plaintiffs.

Colin M. Shalk, Esquire (argued), Casarino Christman Shalk Ransom & Doss, P.A., Cari K. Dawson, Esquire (pro hac vice) & Kyle G.A. Wallace, Esquire (pro hac vice), Attorneys for Defendant.

OPINION

Jan R. Jurden, President Judge

I. INTRODUCTION

Rebecca Clark and James Smith (and others similarly situated) (collectively, "Plaintiffs") seek to amend their Complaint pursuant to Delaware Superior Court Civil Rule 15(a) to add a claim for declaratory judgment. Plaintiffs allege that Defendant State Farm Mutual Automobile Insurance Company ("State Farm") has violated 21 Del. C. § 2118B by adopting an improper practice of delaying processing, payment, and denial of claims for Personal Injury Protection ("PIP"). Plaintiffs seek a declaratory judgment that this practice constitutes a repudiation of the contractual obligations owed by State Farm to its Delaware automobile policyholders.

In response, State Farm maintains that Plaintiffs lack standing to bring this lawsuit because they have failed to plead any injury in fact and, in the absence of any personalized harm, Plaintiffs' claim for declaratory relief does not present a live case or controversy that is ripe for adjudication.[1]

II. BACKGROUND

Plaintiffs are named insureds under automobile insurance policies issued by State Farm.[2] State Farm, an Illinois corporation engaged in the business of insurance, regularly sells automobile insurance within the State of Delaware.[3]

21 Del. C. § 2118B governs the processing and payment of PIP claims.[4]The purpose of § 2118B "is to ensure reasonably prompt processing and payment of sums owed by insurers to their policyholders and other persons covered by their policies . . . and to prevent the financial hardship and damage to personal credit ratings that can result from the unjustifiable delays of such payments."[5]

Section 2118B(c) requires insurers to pay or deny a claim for first-party benefits "no later than 30 days following the insurer's receipt of [a] written request for first-party insurance benefits and documentation that the treatment or expense is compensable . . . ."[6] If an insurer fails to comply with this requirement, the amount of unpaid benefits due from the insurer to the claimant is increased.[7]

Plaintiffs' proposed amendment alleges that "State Farm routinely fails to either pay or deny claims for [PIP] coverage within the statutorily-required 30-day period under [the statute]."[8] According to Plaintiffs, State Farm "consciously incurs statutory interest penalties for overdue PIP benefits as a mere cost of doing business, " and "[t]his conduct defeats the purpose of section 2118B."[9]

Plaintiffs seek a declaration that State Farm improperly exempts itself from the statutory 30-day period by routinely withholding coverage determinations ...


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