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This is the case of Spina v. Metropolitan Life Insurance Company, in the U. S. District Court District of New Jersey where the court has allowed the plaintiff’s bad faith claim against MetLife to proceed to trial.

Plaintiffs Dante C. Spina Sr. and Lyndajean K. Spina allege that MetLife denied long-term health benefits, based on its investigation that allegedly revealed facts that indicated the plaintiffs were not as incapacitated as they claimed.

As a result, the insurer contacted the district attorney and pursued insurance fraud claims against the plaintiffs. The D.A. presented its claims to the grand jury, but the charges were dismissed the same day.

The plaintiffs filed suit against the insurer seeking coverage, damages for bad faith conduct, and violation of the Consumer Fraud Act (CFA).

In response, the insurer moved to dismiss all counts.

However, the court found that the plaintiffs properly pleaded their claim for a breach of contract; the court then addressed the plaintiff's bad faith claim and also allowed those claims to proceed to trial.

The Plaintiffs had successfully argued two bases for the bad faith claim:

(1) The insurer’s coverage denial after an improper investigation was knowingly reckless; and

(2) The insurer acted in bad faith in reporting the insured to the county prosecutor for an alleged violation of the New Jersey Insurance Fraud Prevention Act.

The court found that the carrier relied on two facts when it denied coverage, but according to the court, these two factors did not create a debatable reason for denying coverage.

The court also made it clear that even though the county prosecutor decided to bring the case to a grand jury, this alone did not create a fairly debatable basis to deny coverage; particularly when the grand jury discarded those charges on the same day they were presented.

As to the plaintiff's claims related to the Consumer Fraud Act (CFA) based upon the denial of insurance coverage, the court did dismiss this count, as beyond the CFA’s scope.  However, the court did permit the CFA claim to move forward based on the insurer’s making an insurance fraud claim to the county prosecutors.