Low, Ball & Lynch’s

WEEKLY LAW RESUME

February 9, 2026 Issue  By: Ray Coates

Bad Faith - Failure To Investigate - UM Claim

Reagan Wilson v. 21st Century Insurance Company

 (January 30, 2026)

Court of Appeal, Second District

The nature and extent of any investigation conducted of an uninsured motorist claim varies from case to case.  In this case, the Court intimated there may be a duty to contact an insured’s treating physician in order to assess the value of a case, and to use “Colussus” to assist in evaluating the claim.

Reagan Wilson injured her neck and spine in November, 2000, after a collision caused by a drunk driver.  The drunk driver had bodily injury insurance limits of $15,000.  21st Century Insurance Company provided underinsured motorist coverage limits to Ms. Wilson of $100,000.  After payment of the $15,000 by the drunk driver’s insurer, Ms. Wilson requested the remaining policy limits from 21^st Century.  Her attorney sent the police report, photographs, medical reports, and treating physician reports, including reports from Dr. Southern, Ms. Wilson’s orthopedist.  Ms. Wilson’s attorney valued the case between $500,000 and $1,500,000.  21^st Century rejected the policy limit demand, stating that Ms. Wilson had been fully compensated by payment of the drunk driver’s policy limits plus $5,000 received under Ms. Wilson’s medical payment coverage.

Two years ensued where treating doctors diagnosed Ms. Wilson with cervical disc changes, but disagreed as to the course of treatment.  Some recommended therapy while others recommended surgery.  In June, 2003, a neurosurgeon retained by 21st Century examined Ms. Wilson, and concluded that surgery was required.  At that point, 21st Century paid the remaining policy limits.  Ms. Wilson thereafter sued for breach of contract and for breach of the covenant of good faith and fair dealing arising from unreasonable delay in paying the policy limits.  An issue that arose in discovery was whether 21st Century used “Colossus” for purposes of evaluating the injury.  This is a software program which provides insurance companies help in assessing damages for personal injury claims.

21st Century moved for summary judgment.  The trial court granted the motion and entered judgment for 21st Century.  Ms. Wilson appealed.

The Court of Appeal reversed, finding triable issues of fact as to whether 21st Century breached its duty of care.  The Court held that 21st Century was under a duty to have the insured examined by a doctor of its choice or to consult with the insured’s treating physician within a reasonable period of time.  The Court stated that this raised an issue of fact as to whether 21st Century’s own in-house determination of the nature and extent of the injuries was reasonable.  21st Century could not rely solely on the insured to produce evidence of the injury.  It had an independent duty to seek information relevant to the claim, including consulting with the insured’s own physician.

The Court stated that Ms. Wilson had the burden of proof of showing that an initial thorough investigation would have resulted in a higher settlement offer.  The Court further felt that consultation with a personal injury attorney regarding the value of the case should have occurred initially.  While not imposing a per se rule that required this in every case, the Court felt that this was one factor for a jury to consider with respect to whether there was bad faith.

The Court further felt that 21st Century failed to objectively evaluate the information it did have.  The Court felt also that Ms. Wilson’s attorney should have been allowed to question the adjuster who handled the file about the use of the “Colussus” software program in 21st Century’s claims practices.  Citing law review articles and cases from other states, the Court stated that Ms. Wilson should have been entitled to explore whether good claims practices had indicated that the “Colussus” software program should have been used in evaluating the claim, even though 21^st Century claimed that it was not used in this case.

Finally, the Court found no bad faith in the offset taken for medical payments in the initial offer nor in any offset for sums received from the other driver in the final payment that was made.  The Court concluded that there were triable issues of fact that remained as to the issue of bad faith. 

The judgment was reversed, and remanded to the trial court with directions to permit Ms. Wilson to seek discovery regarding “Colussus”, and then thereafter to proceed with this case.

COMMENT
       
This case will likely spur discovery into a carrier’s use of “Colussus” in bad faith cases.  We assume that this battle will be vigorous, as most carriers take the position that such discovery is irrelevant.

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