Appeal fro the Superior Court of the State of Alaska, Third Judicial District, Anchorage, Patrick J. McKay, Judge. Superior Court No. 3AN-09-07127 CI.
Jeffrey J. Jarvi, Anchorage, for Appellant.
David S. Carter, Hughes Gorski Seedorf Odsen & Tervooren, LLC, Anchorage, for Appellee.
Before: Fabe, Chief Justice, Winfree, Stowers, and Maassen, Justices. [Carpeneti, Justice, not participating.]
FABE, Chief Justice.
Jennifer Lockwood was injured in a car accident caused by an uninsured drunk driver. Lockwood had car insurance through Geico General Insurance Company. After exhausting her policy's medical payments coverage, Lockwood sought payment under her uninsured motorist coverage. Geico offered $750 to settle the uninsured motorist claim, and Lockwood declined. Geico questioned Lockwood's medical bills because they seemed " high" to the adjusters and refused to make additional medical payments outside of a total settlement of Lockwood's uninsured motorist claim. Geico pointed to the fact that Lockwood had received treatment for a prior back problem, but it took no action to resolve the alleged medical uncertainty, such as requesting an independent medical exam or voluntary arbitration, before refusing to pay for medical expenses. Lockwood paid out of pocket for some of her treatment costs and took out a loan for her remaining medical bills. She later ceased treatment due to its prohibitive cost and experienced ongoing pain.
The parties eventually settled Lockwood's uninsured motorist claim for $25,000. Lockwood brought a tort claim against Geico for alleged breach of the duty of good faith and fair dealing implied in her insurance contract, arguing that Geico unreasonably delayed payment of Lockwood's uninsured motorist claim. Lockwood sought to discover Geico's training and claims-handling manuals, but the superior court denied her request. The
superior court subsequently granted summary judgment in favor of Geico on the bad-faith tort claim and awarded attorney's fees.
We reverse the superior court's grant of summary judgment because there is a genuine issue of material fact regarding whether Geico lacked a reasonable basis for delaying payment on Lockwood's uninsured motorist claim. Because we reverse the grant of summary judgment, we vacate the award of attorney's fees and we remand for further proceedings. We also conclude that it was an abuse of discretion to deny discovery of Geico's manuals because they contain information that could be relevant to Lockwood's bad-faith claim.
II. FACTS AND PROCEEDINGS
A. Car Accident And Injuries
On May 21, 2007, a drunk driver in a large van rear-ended Lockwood while she was stopped at a red light in her Nissan Sentra. It was undisputed that the drunk driver was entirely responsible for the accident.
Lockwood sustained injuries in the accident. According to the emergency room report, Lockwood felt tenderness in her neck that night. The emergency room doctor diagnosed Lockwood with a cervical spine injury and strain of the muscles near the neck. An X-ray of her neck showed no spinal or " soft tissue abnormalit[ies]." Lockwood also filled out an injury form for the accident. In the form Lockwood reported that she experienced a headache, dizziness, and pain in her left wrist, neck, and back. Lockwood indicated in her affidavit that she continued to experience pain the day after the accident, particularly in her back, neck, and wrist. 
B. Geico Insurance Policy
The drunk driver was an uninsured motorist, but Lockwood had an automobile insurance policy with Geico General Insurance Company. Lockwood's policy provided two categories of coverage that are relevant here: (1) medical payments coverage and (2) uninsured motorist coverage. The medical payments coverage covered " all reasonable [medical] expenses actually incurred by an insured" due to " bodily injury caused by accident," with payments capped at $10,000. The uninsured motorist coverage would " pay damages for bodily injury, caused by an accident, which the insured is legally entitled to recover from the owner or operator of an uninsured motor vehicle," provided that this benefit would not pay out " until the limits of liability of all bodily injury . . . policies that apply have been used up."  The maximum benefit for uninsured motorist coverage was $50,000 per person. The insurance policy established several conditions for receipt of payment under the uninsured motorist coverage, including notice to Geico, " written proof of claim, under oath if required," and willingness to submit to a medical exam if required. The Geico policy explained that " [t]his [proof of claim] will include details of the nature and extent of injuries, treatment and other facts which may affect the amount payable."
C. Medical Treatment
The day after the accident, Lockwood went to a local chiropractor. He diagnosed Lockwood with neck and shoulder muscle strains. He ordered an MRI and performed x-rays of Lockwood's neck; both were normal. He informed Geico that his treatment plan for Lockwood consisted of daily chiropractic treatment for two weeks, tapering to three treatment sessions per week. But when Lockwood's back pain continued, she continued her treatment from her chiropractor beyond the initial treatment period.
In July 2007 Geico sent a letter to Lockwood's chiropractor ...