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Sims v. State Farm Mutual Automobile Insurance Co.

United States Court of Appeals, Eighth Circuit

July 3, 2018

Alexandra Sims Plaintiff- Appellant
State Farm Mutual Automobile Insurance Company Defendant-Appellee United Policyholders Amicus on Behalf of Appellant(s)

          Submitted: January 9, 2018

          Appeal from United States District Court for the Eastern District of Arkansas - Little Rock

          Before LOKEN, BEAM, and KELLY, Circuit Judges.

          KELLY, Circuit Judge.

         Alexandra Sims sued her insurance carrier, State Farm Mutual Automobile Insurance Company (State Farm), for the tort of bad faith, violation of the Arkansas Deceptive Trade Practices Act (ADTPA), and for damages on an underinsured motorist coverage claim. She appeals the district court's[1] grant of summary judgment to State Farm on the bad faith claim, and an evidentiary ruling on the underinsured motorist coverage claim.


         In 2008, while a senior in high school, Sims was involved in a two-vehicle crash. Her car was rear-ended by an underinsured 16-year-old who was texting while driving. Sims suffered numerous soft-tissue injuries as a result of the crash. Sims sued the underinsured driver and he settled for $50, 000, which was the limit of his insurance coverage. Sims filed a claim for her remaining damages under her own underinsured motorist policy, provided by State Farm, seeking the policy limit of $100, 000. She submitted past medical expenses of about $21, 000, and expert reports that predicted future medical costs and economic losses that well exceeded the policy maximum. She also attached medical records documenting her injuries.

         State Farm assigned the claim to claims adjuster Dean Ripley. Ripley sought the assistance of a State Farm medical professional to help assess the medical records Sims had provided. This review indicated that Sims had received treatment for "soft tissue" injuries for longer than the typical six-week period. Ripley, in consultation with claims supervisor Oscar Rodriguez, sought clarification from Sims's treating chiropractor. The chiropractor explained that Sims suffered from torn ligaments, an injury that could not be expected to heal in six weeks, could not be repaired by surgery, and was likely permanent. After receiving this information, Ripley suggested that State Farm might want to ask for an independent evaluation of Sims's injuries, but Rodriguez asked Ripley to prepare an offer of settlement based on the information he already had.

         Ripley estimated that, after deducting the $50, 000 Sims had already received from the underinsured driver, Sims's damages were between $66, 297.12 and $101, 297.12. He provided his calculations to Rodriguez and asked for authority to settle Sims's claim for up to $99, 786.72. Rodriguez replied that most of Sims's medical expenses were from 2008 and it was unclear from the records whether she was still receiving treatment. In his view, "a sympathetic jury would value this claim at [$]100, 000 at most," and he authorized Ripley to settle for a maximum of $50, 000 (the estimated value of the claim minus the $50, 000 from the underinsured driver).

         Ripley first offered Sims $25, 000, which she swiftly rejected. Ripley told Sims that the offer was based on available information and suggested that she provide any additional information she had to support her claim. Sims did so, and Ripley increased the offer to $35, 000. Sims rejected the revised offer, reiterating her claim for the policy maximum of $100, 000. When that sum was not forthcoming, Sims filed this lawsuit. State Farm paid Sims $25, 000 for undisputed medical expenses after the suit was filed.

         State Farm sought summary judgment on Sims's bad faith and ADTPA claims, which the district court granted. As to the bad faith claim, the court found that Sims "has not shown that State Farm has committed any affirmative act of dishonesty, oppression, or malice" as required by Arkansas law. Sims does not contest the district court's ADTPA ruling on appeal.

         The case proceeded to trial on the underinsured motorist claim. Although pled as a breach of contract, the district court submitted Sims's claim to the jury as a claim for underinsured motorist coverage.[2] At trial, Sims sought to introduce evidence that State Farm's corporate policies incentivized claims adjusters (like Ripley) and claims supervisors (like Rodriguez) to deny claims regardless of their merit. The district court excluded this evidence as irrelevant and likely to confuse the issues.

         After trial, the jury returned a $75, 000 verdict for Sims. Because Sims had already recovered that sum from the underinsured driver ($50, 000) and State Farm ($25, 000), ...

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