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Ninth Circuit: No “bad faith” when claimant fails to provide insurer with requested medical bills and records 

5/8/25

By: Sander Alvarez and Cody M. McNearney

The U.S. Court of Appeals for the 9th Circuit recently affirmed summary judgment that, as a matter of law, auto insurer GEICO Indemnity Company could not have breached the duty of good faith and fair dealing to its insured when it neither accepted nor rejected a claimant’s time-limited settlement offer, “[b]ecause the insurer was entitled to see medical bills and records before making a settlement, and the [claimant], despite repeated requests, declined to provide the medical bills and records.” McGranahan v. GEICO Indem. Co., 2025 WL 869306, at *2 (9th Cir., March 20, 2025).  

The demand was made before the California Code of Civil Procedure (C.C.P.) § 999.1 became effective on January 1, 2023. Under § 999.1, a policy limits demand must contain “[r]easonable proof, which may include, if applicable, medical records or bills, sufficient to support the claim.” 

In June 2014, a driver insured by Geico had an accident with a motorcycle. Geico’s insured reported the accident to Geico but did not provide information about the motorcyclist’s injuries. Geico was able to obtain a heavily redacted police report that noted the cyclist was found “incapacitated and unresponsive.” In September 2014, Geico asked the motorcyclist for “supporting documentation regarding [his] injuries, treatment and incurred & paid expenses” and for signed authorizations to obtain medical bills and records from health care providers. Geico received no response. About three weeks later, Geico reached the motorcyclist’s girlfriend, who advised that he had suffered serious injuries and was hospitalized for several weeks; Geico asked her for medical bills, but she did not provide them. Geico made repeated requests to the motorcyclist for 10 months; he never responded.  

In July 2015, Geico received a demand for the policy limit from the motorcyclist, but again, without any corroborating documents. Geico responded promptly, and more than once, again asking for medical bills and records as well as an authorization for Geico to obtain them directly from the providers. Again, the motorcyclist did not respond. The motorcyclist took the position that the deadline for the offer to settle was Aug. 17, 2015, by which time Geico had requested the medical bills and records more than 10 times. On Aug. 17, 2015, Geico told the motorcyclist it did not have enough information to accept or reject the offer and asked, again, for supporting documentation. And again, there was no response. 

The motorcyclist sued Geico’s insured driver and, for the first time during discovery, started producing medical records and bills. Once Geico received these documents, it offered the policy limit to settle the case. The case settled under terms that allowed the motorcyclist to sue Geico directly for amounts in excess of the policy limit. 

In that subsequent lawsuit, Geico moved for summary judgment on the claim for breach of the implied covenant of good faith and fair dealing, raising two separate and independent grounds: (1) the demand was unreasonable as a matter of law; and, (2) Geico’s response was not unreasonable as a matter of law. The district court found triable fact issues on the first ground, but granted summary judgment for Geico on the second ground. It was undisputed that the motorcyclist never responded to Geico’s requests or that Geico lacked access to the requested records. “Without any such corroborating evidence, no reasonable juror could conclude [Geico] acted in bad faith in rejecting [McGranahan’s] demand.” McGranahan v. GEICO Indem. Co., 714 F.Supp.3d 1187, 1196 (C.D. Cal. 2024).  

A divided 9th Circuit affirmed Geico’s summary judgment. The dissent would have allowed a jury to decide the bad faith issue, arguing that “a jury could reasonably find that, even without reviewing McGranahan’s medical records, Geico knew or should have known that there was a substantial likelihood that McGranahan’s recovery would exceed his policy limit of $100,000.” Id. at *3. But, as the majority explained, “[t]he reasonableness of an insurer’s conduct is a question of law [for the court to decide] where ‘evidence is undisputed and only one reasonable inference can be drawn from the evidence.’… Whether an insurer’s decision was reasonable is necessarily dependent on the amount of information at the insurer’s disposal at the time of the settlement decision, when considering the totality of the circumstances.” Id. at *1.   

Examining the facts of the particular case, the court held that “Geico did not act unreasonably when neither accepting nor rejecting the time-limited settlement offer” given that Geico attempted nine times to obtain the medical records and bills before receiving the policy limit demand, and continued to request the records even after receipt of the demand—without success. Id. The court rejected the motorcyclist’s argument that Geico could have taken other investigatory steps to determine whether the claimed injuries were likely to exceed limits of coverage, such as sending a field agent to interview him at his home or the hospital. “While taking these steps could have added additional context for Geico in making its decision, these steps would not have helped Geico to quantify the costs of McGranahan’s injury… An insurance company is entitled to receive medical records and bills to aid it in evaluating a settlement offer.” Id. at 2.  “By asking for corroborating medical records and bills or medical authorization forms ten times before the settlement offer deadline, Geico conducted an adequate investigation and ‘acted reasonably as a matter of law by seeking to obtain the necessary and missing information without delay.’” Id. 

For any questions or further clarification, please contact Cody M. McNearney at cody.mcnearney@fmglaw.com, Sander Alvarez at sander.alvarez@fmglaw.com, or your local FMG attorney. 

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