Liability insurers often receive policy limit demands from third-party claimants that allege serious injuries without corroborating medical records or bills. Since the enactment of California Civil Procedure Code section 999 et seq. in 2023, these demands are typically made by “unrepresented” claimants who are actually receiving guidance from attorneys behind the scenes.

When insurers ask the claimants for corroborating medical documentation – or medical authorizations and sufficient time to use them – their requests are often ignored. Nevertheless, after the demands expire, the insurers are confronted with accusations that they acted in “bad faith” by failing to accept the uncorroborated demands. 

In McGranahan v. GEICO Indemnity Company, GEICO was sued for bad faith based on these very circumstances. GEICO’s summary judgment victory in that case was recently affirmed by the Ninth Circuit, which held that GEICO acted reasonably – as a matter of law – when it declined to settle for its policy limit before receiving corroborating medical records and bills. McGranahan v. GEICO Indem. Co., 2025 WL 869306 (9th Cir. Mar. 20, 2025). 

In McGranahan, GEICO’s insured was involved in an accident with a motorcyclist (McGranahan). During its investigation, GEICO spoke with McGranahan’s girlfriend, who claimed that McGranahan had suffered serious injuries and had been hospitalized for several weeks. GEICO asked the girlfriend for medical bills or records so that it could evaluate McGranahan’s claim. GEICO also requested that McGranahan sign and return a medical authorization so that GEICO could order the necessary medical documentation. Despite multiple follow-up requests, neither McGranahan nor his girlfriend provided GEICO with any medical records or bills, or a signed medical authorization.

Instead, after consulting with an attorney, McGranahan sent GEICO a handwritten letter demanding that GEICO pay him its $100,000 policy limit. In his demand letter, McGranahan claimed, among other things, that he suffered “significant injuries” and had “over a million dollars” in medical bills. 

GEICO responded by again asking McGranahan to provide corroborating medical documentation, which GEICO explained was “essential” to evaluate the claim. GEICO also asked for an extension to respond to the demand. After McGranahan ignored those requests, GEICO advised him that it could neither accept nor reject his demand until it had adequate supporting documentation. GEICO also continued to send follow-up requests for medical documentation, which continued to go unanswered. 

It was not until after McGranahan filed suit against GEICO’s insured that GEICO was first able to obtain corroborating medical documentation via formal discovery in the lawsuit. GEICO then offered McGranahan the policy limit, which he rejected based on his contention that the policy was “open” because GEICO had acted in bad faith by not accepting his prior policy limit demand. 

After reaching an agreement to resolve that lawsuit for a stipulated judgment in the amount of $1.5 million, McGranahan obtained an assignment of the insured’s rights and sued GEICO for bad faith failure to settle. Judge Aenlle-Rocha of the Central District of California granted summary judgment in favor of GEICO finding, as a matter of law, that GEICO did not act in bad faith. McGranahan v. GEICO Indem. Co., 714 F. Supp. 3d 1187 (C.D. Cal. 2024). In particular, the court concluded that it was reasonable for GEICO to seek corroborating medical documentation before settling McGranahan’s claim, and that GEICO made reasonable efforts to obtain that information. Id. at 1196-97. 

On March 20, 2025, the Ninth Circuit affirmed. McGranahan v. GEICO Indem. Co., 2025 WL 869306 (9th Cir. Mar. 20, 2025). In doing so, the Court made several significant rulings, including:

• “An insurance company is entitled to receive medical records and bills to aid it in evaluating a settlement offer”; and
• GEICO’s multiple requests for McGranahan’s medical bills/records or a signed medical authorization constituted a reasonable and adequate investigation (rejecting McGranahan’s argument that GEICO was required to send someone to meet with him or his girlfriend in person). 

The Ninth Circuit’s ruling in McGranahan is consistent with its prior published decision in Du v. Allstate Ins. Co., 697 F.3d 753, 759 (9th Cir. 2012), where it also recognized that an insurer is not required to accept bodily injury claims that are uncorroborated by medical documentation. Both of these decisions affirm the common-sense principle that liability insurers are entitled to corroborating medical documentation when evaluating a third-party bodily injury claim before their settlement duties are triggered. 

Rulings like this will help liability insurers defend themselves in bad faith lawsuits arising out of claims involving purportedly “unrepresented” claimants who submit policy limit demands without supporting medical documentation – a scenario that has become more commonplace after the enactment of California Civil Procedure Code section 999, et seq.