Browne v. State Farm Mut. Auto. Ins. Co.

258 Md.App. 452

298 A.3d 975

Tami BROWNE

v.STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY

No. 1825, Sept. Term, 2021

Appellate Court of Maryland. *

July 27, 2023

Argued by: Matthew W. Tievsky (Chaikin Sherman Cammarata & Siegel, PC, on the brief), Washington, District of Columbia, for Appellant

Argued by: Laura Basem Jacobs (Budow and Noble, PC, on the brief), Rockville, Maryland, for Appellee

Panel: Berger, Friedman, Sally D. Adkins (Senior Judge, Specially Assigned), JJ.

Adkins, J.

This appeal requires us to review two interconnected statutes: Md. Code (1995, 2017 Repl. Vol.) § 27-1001 of the Insurance Article ("IN") and Md. Code (1974, 2020 Repl. Vol.) § 3-1701 of the Courts and Judicial Proceedings Article ("CJP"). In 2007, the General Assembly enacted the complementary statutes to "creat[e] administrative and judicial remedies for a first-party insured against a[n] ... insurer who fails to act in good faith in denying coverage or declining payment for a covered loss."

Thompson v. State Farm Mut. Auto. Ins. Co. , 196 Md. App. 235, 238, 9 A.3d 112 (2010). The crux of this appeal involves the procedures required for an insured to avail herself of the lack of good faith claim available against her insurer.

CJP § 3-1701 allows an insured to file a civil action alleging lack of good faith against the insurer but "not ... before the date of a final decision under § 27-1001 of the Insurance Article." CJP § 3-1701(c). IN § 27-1001 first requires the insured to file a complaint with the Maryland Insurance Administration ("MIA"), after which the MIA must issue a decision. IN § 27-1001(d)(1), (e)(1). It then provides two ways for that decision to become "final." First, the MIA's decision becomes final if the party that receives an adverse decision does not request an administrative hearing within 30 days of the MIA's decision. IN § 27-1001(f)(3). Second, if an administrative hearing is requested, that hearing results in a final decision from the Office of Administrative Hearings ("OAH"). IN § 27-1001(f)(1)–(2). The statute also allows a party that receives an adverse decision from either the MIA or the OAH to petition for judicial review of the decision. IN §§ 27-1001(g) ; 2-215(d).

The Appellant—Tami Browne—suffered injuries from an automobile accident where the at-fault driver fled the scene. She filed a claim with her insurer—the Appellee—State Farm Mutual Automobile Insurance Company ("State Farm"). When the parties were unable to settle the claim, Browne filed a breach of contract action against State Farm in the Circuit Court for Montgomery County.

While the breach of contract action was pending, she also filed an administrative complaint against State Farm for failure to act in good faith under IN § 27-1001 and CJP § 3-1701. The MIA determined (1) the amount that State Farm owed Browne, which was under the policy limit, and (2) that State Farm had not failed to act in good faith. Browne appealed the decision to the OAH, which affirmed the MIA's decision.

Browne then amended her original breach of contract action in the circuit court to include the statutory lack of good faith claim under CJP § 3-1701. Following dispositive motions made by the parties, the circuit court granted summary judgment in favor of State Farm, ruling that the OAH decision collaterally estopped Browne from litigating the civil action involving the same issues that were decided in the OAH decision. According to the circuit court, once Browne received the adverse MIA decision, she had a choice to request a hearing with the OAH or to file the lack of good faith claim in circuit court. By choosing to proceed to the OAH, collateral estoppel prohibited her from relitigating her claims in the CJP § 3-1701 action. Her only choice, said the court, was to petition for judicial review of the OAH decision. The court then denied Browne's motion for summary judgment as moot.

Browne asks us¹ to resolve the following questions, which we have revised for clarity:

1. Whether the circuit court erred in granting State Farm's motion for summary judgment on the basis that the OAH decision collaterally estopped Browne from litigating her breach of contract and lack of good faith claims;

2. Whether the circuit court erred in denying Browne's motion for summary judgment because State Farm was liable for any negligent medical treatment she received; and 3. Whether a lack of good faith claim may be sustained where an insurer tenders partial payment on a claim.

We conclude that the circuit court erred in ruling that the OAH decision collaterally estopped Browne from litigating her breach of contract and lack of good faith claims. We therefore reverse the judgment of the circuit court. We also vacate the circuit court's denial of Browne's motion for summary judgment because of its flawed reasoning that the motion was moot and offer additional guidance on the issue of an original tortfeasor's liability for subsequent negligent medical treatment. We do not offer guidance on the third issue as this was not addressed by the circuit court. Thus, we remand the case for renewed consideration of Browne's motion for summary judgment and for further proceedings consistent with this opinion.

FACTS & PROCEDURAL HISTORY

Browne's Accident & Injuries

On May 17, 2018, Browne suffered injuries in an automobile accident as she rode in the front passenger seat of a vehicle owned and driven by her husband. At the time of the accident, the vehicle was stopped at a red traffic signal when an unidentified driver rear-ended the vehicle. The unidentified driver remained on the scene when paramedics arrived but had fled by the time police responded.

Browne went to the emergency room at Holy Cross Hospital complaining of lower back and right-side neck pain. She was discharged with pain medication and instructed to follow up with her primary care physician. She saw her primary care physician on May 24, 2018, and reported low back, hip, and neck pain. The physician prescribed some medication and referred Browne to physical therapy. Browne underwent three months of non-surgical treatment but continued to complain of lower back, neck, and hip pain, as well as other symptoms.

In July 2018, her doctor ordered an MRI which revealed a Tarlov cyst along the sacral nerve roots, as well as a protruding disc at L4–L5. Browne returned to her primary care physician and complained of continued hip pain and leg weakness. She was referred to a neurosurgeon. She sought treatment from Dr. Robert Rosenbaum, who performed surgery to remove her Tarlov cyst.

Browne initially reported that some of her symptoms had improved, but she later experienced worsening pain, ongoing numbness, tingling, and weakness in her legs. After the surgery, she resumed non-surgical treatments for her pain.

At the time of the accident, State Farm insured the vehicle in which Browne was a passenger. The policy provided uninsured/underinsured motorist coverage of $50,000 per person. The policy language read,

We will pay compensatory damages for bodily injury and property damage an insured is legally entitled to recover from the owner or driver of an uninsured motor vehicle . The bodily injury must be sustained by an insured. The bodily injury and property damage must be caused by an accident arising out of the ownership, maintenance, or use of an uninsured motor vehicle as a motor vehicle.

On April 3, 2019, Browne sent a demand letter to State Farm for its policy limit amount based on $53,566.54 of medical bills associated with the accident. In July, State Farm initially offered Browne $5,500 to settle her claim and noted that the demand included no documentation that connected the Tarlov cyst surgery to the accident. Browne reiterated the original demand for medical expenses and demanded a "reasonable offer" from State Farm. To connect the Tarlov cyst surgery to the accident, she relied on the absence of complaints about the Tarlov cyst in her medical records before the accident but did not otherwise provide documentation connecting the surgery to the accident.

Initiation of Circuit Court Proceedings

On November 5, 2019, Browne filed suit in the Circuit Court for Montgomery County for breach of contract, seeking uninsured motorist benefits of $50,000. In her deposition, Browne said that Dr. Rosenbaum would testify that the accident aggravated her Tarlov cyst. Rosenbaum confirmed his opinion in his deposition that the trauma from Browne's car accident aggravated her Tarlov cyst and necessitated the surgery he performed.

In preparation for trial, State Farm requested that a neurosurgeon—Dr. Matthew Ammerman—examine Browne. Based on his examination of Browne and her medical documents, Dr. Ammerman issued a report on August 25, 2020, which concluded that the nonoperative treatment for Browne's injuries—such as physical therapy, lumbar injections, and acupuncture—were medically necessary and causally related to the accident. But he concluded that the Tarlov cyst surgery was "in no way related to the accident" and "was not medically necessary or causally related to the ... accident." On October 21, 2020, State Farm increased its settlement offer to $20,885.30. Ammerman later opined in his deposition that the Tarlov cyst removal had caused additional symptoms apart from those related to the accident.

Administrative Proceedings

On March 2, 2021, Browne submitted her administrative lack of good faith complaint under IN § 27-1001 with the MIA.² She again sought the $50,000 policy limit, plus expenses and litigation costs, and submitted medical bills totaling $88,537.09. She further asserted that State Farm had no reasonable basis to offer less than the $50,000 policy limit to settle the claim. State Farm responded that Browne's Tarlov cyst surgery and her subsequent treatment were not related to the accident and that it had made a reasonable offer.

The MIA found that Browne was entitled to $27,442.71 for pre-surgery medical expenses, lost wages, and non-economic...