Shumpert v. Time Insurance Co.

496 S.E.2d 653 (1998)

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Nature of the Case

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Facts

Richard Shumpert (P) purchased a health insurance policy from D, in 1976. In July of 1991, he was seriously injured in an automobile wreck caused by another driver. D paid P a total of $ 18,818.76 for medical bills incurred due to the accident. Ps initiated a civil action against the at-fault driver. D advised Ps that it had a right of subrogation. A legal assistant from the firm representing P responded to D on December 8, 1992, that 'we will honor your right of subrogation on the above-referenced insured.' In February of 1993, Ps' attorney asked for documentation supporting D's claim for subrogation. D stated it was basing its 'equitable right of subrogation on South Carolina law.' D continued periodically to send letters to the Ps' attorney asserting its subrogation lien. The attorney stated that once he took control of the case, he never responded to any of these letters. On February 16, 1996, Ps' attorney informed D the at-fault driver had agreed to a settlement. The attorney advised D that he did not believe equitable subrogation applied in a health insurance context, and if D did not inform him within one week that it would not assert a subrogation lien, he would 'take all steps necessary to have this matter judicially resolved.' Ps' case against the driver was settled for $75,000. Ps brought an action against D seeking a declaration that D had no subrogation interest in the settlement proceeds because there was no provision in the contract for subrogation. Ps alleged a claim for bad faith. D claimed it had an equitable subrogation interest and alleged a claim for bad faith based on Richard Shumpert's (P) 'assuring D that he would honor D's subrogation claim. Both parties filed filed motions for summary judgment. The court granted D's motion for summary judgment and determined D was entitled to $18,818.76. Ps' attorney informed the court that the order made no mention of the bad faith claims. The court denied both parties' claims of bad faith. Ps appealed.