Egan v. Mutual of Omaha Insurance Company

Brief Fact Summary.

Egan filed suit for breach of the implied covenant of good faith and fair dealing when Mutual of Omaha Insurance Company deemed a claim for disability insurance reimbursement fraudulent.

Synopsis of Rule of Law.

An insurance company can be held liable for breach of the implied covenant of good faith and fair dealing if the insurance company acts in bad faith in denying an insurance claim.

Facts.

Egan filed suit for breach of the implied covenant of good faith and fair dealing when Mutual of Omaha Insurance Company (Mutual) deemed a claim for disability insurance reimbursement fraudulent. Testimony showed that Egan was no longer able to work despite good faith efforts, and Egan offered to undergo a medical evaluation but Mutual refused. The trial court granted judgment to Egan.

Issue.

Whether an insurance company can be held liable for breach of the implied covenant of good faith and fair dealing if the insurance company acts in bad faith in denying an insurance claim?

Held.

Yes. The judgment of the trial court is affirmed. Mutual immediately identified Egan’s claim as fraudulent, rather than seeking a medical evaluation or further investigating the claim.

Discussion.

An insurance company can be held liable for breach of the implied covenant of good faith and fair dealing if the insurance company acts in bad faith in denying an insurance claim.