Italo Pedicini v. Life Ins. Co. of Alabama

RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206
File Name: 12a0191p.06

UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
_________________

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Plaintiff-Appellant/Cross-Appellee, -
ITALO PEDICINI,
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Nos. 10-6270/6301
v.
,
>
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Defendant-Appellee/Cross-Appellant. -
LIFE INSURANCE COMPANY OF ALABAMA,
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Appeal from the United States District Court
for the Western District of Kentucky at Bowling Green.
No. 1:08-cv-62—Joseph H. McKinley, Jr., Chief District Judge.
Decided and Filed: June 21, 2012
Before: MERRITT and MOORE, Circuit Judges, and MAYS, District Judge.*

_________________

COUNSEL
ON BRIEF: Thomas W. Davis, Glasgow, Kentucky, for Appellant/Cross-Appellee.
Thomas N. Kerrick, KERRICK, STIVERS, COYLE & VAN ZANT, P.L.C., Bowling
Green, Kentucky, Charles A. Dauphin, BAXLEY, DILLARD, DAUPHIN, McKNIGHT
& JAMES, Birmingham, Alabama, for Appellee/Cross-Appellant.
_________________

OPINION
_________________

KAREN NELSON MOORE, Circuit Judge. This appeal and cross-appeal arise
from a dispute regarding the meaning of the term “actual charges” in the context of a
supplemental cancer-insurance policy. The policyholder, Italo Pedicini (“Pedicini”),
contends that “actual charges” refers to the amount billed by a medical provider, while
the insurer, Life Insurance Company of Alabama (“LICOA”), argues that it refers to the

*
The Honorable Samuel H. Mays, Jr., United States District Judge for the Western District of
Tennessee, sitting by designation.

1
Nos. 10-6270/6301 Pedicini v. Life Ins. Co. of Ala. Page 2

amount actually accepted by a medical provider as full payment. Pedicini sued LICOA
for breach of contract and bad faith after LICOA refused to pay Pedicini benefits due
under his policy pursuant to Pedicini’s interpretation of “actual charges.” The district
court granted summary judgment in Pedicini’s favor on the breach-of-contract claim and
in LICOA’s favor on the bad-faith claims. Both parties appeal their respective adverse
rulings. In addition, Pedicini argues that the district court abused its discretion in
denying Pedicini leave to file a second amended complaint and additional discovery.
Because the district court correctly granted summary judgment for Pedicini as to the
breach-of-contract claim, but incorrectly granted summary judgment for LICOA as to
the bad-faith claims, we AFFIRM the district court’s judgment in part and REVERSE
in part. We also hold that the district court did not abuse its discretion with respect to
Pedicini’s motion to amend, and we remand for consideration by the district court as to
whether further discovery is necessary or justified.

I. BACKGROUND AND PROCEDURAL HISTORY

A. Background

A supplemental cancer-insurance policy is a “valued policy” that ties cash
benefits to charges for qualifying cancer treatments received. R. 43-3 (Christensen Aff.
at 2). The cash benefits are paid directly to the insured, and the insured is at liberty to
use them as he or she wishes. Id. Thus, while a policyholder can use these benefits to
offset the cost of medical treatment, a policyholder with health insurance otherwise
covering those medical costs can utilize the benefits to offset extraneous costs associated
with illness or for any purpose whatsoever. Id.

In 1990, Pedicini purchased a supplemental cancer-insurance policy from
LICOA. R. 17-4 (1990 Policy at 2). The policy provided for unlimited cash benefits
equal to the “usual and customary charges made for” radiation or chemotherapy received
as treatment for cancer. Id. at 4. The policy defined “usual and customary charges” as
“[t]he usual charge made by a person or entity furnishing the services, treatment or
material.” Id. at 10. Because Pedicini’s policy provided unlimited benefits for
Nos. 10-6270/6301 Pedicini v. Life Ins. Co. of Ala. Page 3

chemotherapy and radiation treatments, his premiums increased dramatically over time.
R. 31 (Pedicini Dep. at 12:6-13). As a result, in 2001, Pedicini contemplated terminating
his policy and solicited the advice and assistance of the insurance agent from whom he
purchased car and homeowners insurance, Jerry Hardison (“Hardison”). Id. at 12:18-20,
13:7-9. Hardison contacted LICOA and negotiated a virtually identical policy that
capped Pedicini’s benefits for chemotherapy and radiation treatments at twenty-five
thousand dollars per year, thereby significantly lowering the requisite premium
payments. Id. at 12:22-13:6. The new policy tied the radiation and chemotherapy
benefits to “actual charges” for those treatments and defined “actual charges” as “actual
charges made by a person or entity furnishing the services treatment or material.” R. 17-
4 (2001 Policy at 10, 16). The new policy became effective on October 1, 2001. Id. at
3.

Unbeknownst to Pedicini, approximately eight months earlier in February
2001, LICOA changed its benefit-payment practices. R. 32 (Casey Dep. at 25:11-14).
For approximately twenty years prior to February 2001, LICOA paid benefits tied to
“actual charges” according to the amount billed by medical providers regardless of the
amount medical providers accepted as full payment. See id. at 26:1-5. However, in
February 2001, LICOA abandoned this policy and began paying benefits equal to the
amount accepted as full payment by medical providers. Id. at 123:13-17; 153:11-17. In
many instances, this resulted in lower benefit payments because of discounted rates
required by Medicare and/or previously negotiated by private health-insurance providers.
See id. at 87:1-89:12. LICOA contends that it enacted this change upon learning that
new medical-billing practices were resulting in overcharges and a surplus in benefit
distributions. Id. at 25:11-19. LICOA did not provide notice to policyholders of the
change, although it did provide notice to its servicing agents. Id. at 31:22-33:10. Many
policyholders became aware of the change only upon receiving a reduced benefit
payment. See id.

In February 2007, Pedicini was diagnosed with cancer. R. 68-3 (Pedicini Aff.
at 2). After Pedicini began receiving treatments qualifying for the chemotherapy and
Nos. 10-6270/6301 Pedicini v. Life Ins. Co. of Ala. Page 4

radiation benefit under his policy, he submitted claims to LICOA. See R. 31 (Pedicini
Dep. at 21:5-12). Upon receiving his first benefit payment, Pedicini realized that
LICOA was not providing him benefits equal to the amount billed by his medical
provider, but rather only equal to the discounted amount accepted by his medical
provider in light of his status as a Medicare recipient. Id. at 21:15-22:20.1 When
Pedicini called LICOA to inquire about the discrepancy, LICOA informed him that
LICOA would only pay benefits equal to the amount accepted by the medical provider
as full payment in light of Medicare discounts. Id. at 21:21-22:20. LICOA also
instructed Pedicini to include documentation of the amount actually accepted by his
medical provider as full payment, i.e., evidence of payments made by Medicare and any
other health insurance provider, when submitting future claims. Id. at 22:8-20. To date,
LICOA has paid Pedicini benefits under the policy only according to LICOA’s
interpretation of “actual charges.”

B. Procedural History

Pedicini filed a complaint against LICOA in Kentucky state court and asserted
claims for breach of contract, breach of good faith and fair dealing, bad faith, violations
of the Kentucky Unfair Claims Settlement Practices Act, and punitive damages. R. 1-3
(First Amended Compl.). LICOA removed the action to federal district court on the
basis of diversity jurisdiction. R. 1 (Notice of Removal). The district court bifurcated
the breach-of-contract claim from the bad-faith claims, R. 25 (Dist. Ct. Order), and both
parties moved for summary judgment as to the breach-of-contract claim, R. 42 (Plaintiff
Summary Judgment Mot.); R. 44 (Defendant Summary Judgment Mot.). The district
court granted summary judgment in Pedicini’s favor, finding that because the term
“actual charges” was ambiguous, it must be construed in Pedicini’s favor under
Kentucky law. R. 60 (Dist. Ct. Op. at 11).

1
Pedicini also holds a Medicare supplemental policy with Anthem Blue Cross and Blue Shield,
which offsets the cost of treatments not covered by Medicare. R. 31 (Pedicini Dep. at 22:21-23:10). As
a result, Pedicini has paid no out-of-pocket expenses for his cancer treatments. Id. at 23:11-13.
Nos. 10-6270/6301 Pedicini v. Life Ins. Co. of Ala. Page 5

Thereafter, LICOA moved for summary judgment on the remaining bad-faith
claims. R. 66 (Defendant Summary Judgment Mot.). In addition to responding to
LICOA’s summary judgment motion, Pedicini entered a number of deposition notices,
see R. 68 (Response to Summary Judgment Mot.); R. 69-75 (Dep. Notices), and moved
to file a second amended complaint, R. 78 (Amended Compl. Mot.). The district court
granted LICOA’s motion for summary judgment finding “that because the interpretation
of the term ‘actual charges’ under the supplemental cancer insurance policy is fairly
debatable, Plaintiff’s common law and statutory bad faith claims may not be
maintained.” R. 82 (Dist. Ct. Op. at 4). The district court also denied Pedicini’s motion
to file an amended complaint as untimely and declined to grant further discovery. Id. at
6. The district court entered judgment as to all claims on September 20, 2010. R. 83
(Judgment). Pedicini and LICOA timely appealed and cross-appealed, respectively.
R. 84 (Notice of Appeal); R. 85 (Notice of Cross-Appeal).

II. ANALYSIS

A. Breach-of-Contract Claim

LICOA challenges the district court’s conclusion that Pedicini is entitled to
summary judgment on the breach-of-contract claim because the term “actual charges”
is ambiguous as a matter of Kentucky law. We review a grant of summary judgment on
a breach-of-contract claim de novo. See Jones v. Union Cnty., 296 F.3d 417, 423 (6th
Cir. 2002).

“As a federal court sitting in diversity, we apply the choice-of-law provisions of
the forum state.” NILAC Int’l Mktg. Grp. v. Ameritech Servs., Inc., 362 F.3d 354, 358
(6th Cir. 2004) (citing Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941)).
Under Kentucky law, the law of the state with “the most significant relationship to the
transaction and the parties” governs the dispute. State Farm Mut. Auto. Ins. Co. v.
Marley, 151 S.W.3d 33, 42 (Ky. 2004) (quoting RESTATEMENT (SECOND) OF CONFLICT
OF LAWS § 188 (1971)) (internal quotation marks omitted). The parties do not dispute
that Kentucky law applies.
Nos. 10-6270/6301 Pedicini v. Life Ins. Co. of Ala. Page 6

Under Kentucky law, “the construction and legal effect of an insurance contract
is a matter of law for the court.” Bituminous Cas. Corp. v. Kenway Contracting, Inc.,
240 S.W.3d 633, 638 (Ky. 2008). Kentucky law requires that an ambiguous term in an
insurance policy “be liberally construed so as to resolve all doubts in favor of the
insured.” Id. “A contract is ambiguous if a reasonable person would find it susceptible
to different or inconsistent interpretations.” Cantrell Supply, Inc. v. Liberty Mut. Ins.
Co., 94 S.W.3d 381, 385 (Ky. Ct. App. 2002). No Kentucky court has decided whether
the contractual term “actual charges” is ambiguous under Kentucky law, and the Sixth
Circuit has only alluded tangentially to a similar issue. See Gooch v. Life Investors Ins.
Co. of Am. (In re Life Investors Ins. Co. of Am.), 589 F.3d 319, 326 (6th Cir. 2009)
(expressly acknowledging that court need not consider merits in the context of the claim
presented).

The district court concluded that the policy term “actual charges” is ambiguous
and, therefore, must be construed in Pedicini’s favor. LICOA argues that “actual
charges” is not ambiguous and plainly refers to the amount accepted by a medical
provider as full payment for the service or treatment. In support, LICOA cites an
opinion from the Middle District of Alabama, which concluded that “actual charges” was
unambiguous and emphasized dictionary definitions of “‘actual’ [as] ‘real,’ ‘existing,’
not ‘potential’ or ‘possible.’” Claybrook v. Cent. United Life Ins. Co., 387 F. Supp. 2d
1199, 1204 (M.D. Ala. 2005) (quoting THE AMERICAN HERITAGE DICTIONARY (4th ed.
2000)).2 The weight of authority is against LICOA’s position.

2
LICOA also cites Jarreau v. Cent. United Life Ins. Co., No. Civ. A. 05-83-FJP-SCR, 2006 WL
2086011 (M.D. La. May 16, 2006) (unpublished opinion), and Ward v. Dixie Nat’l Life Ins. Co., No. 3:03-
3239-JFA, 2006 WL 1529398 (D.S.C. May 10, 2006), vacated, 257 F. App’x 620 (4th Cir. 2007)
(unpublished opinion). However, Jarreau merely summarily adopts the decisions in Ward and Claybrook.
Moreover, the District Court of South Carolina’s decision in Ward was eventually overturned. The District
Court of South Carolina had granted summary judgment in favor of the insurer on the breach-of-contract
claims after certifying a statewide class of policyholders. Ward, 257 F. App’x at 622. The Fourth Circuit
initially affirmed class certification, but concluded that summary judgment on the contract claims was
improper and, thus, remanded for further proceedings. Id. Both parties petitioned the Fourth Circuit for
rehearing and the insurer petitioned for rehearing en banc. Id. “Because no member of the court called
for a vote on [the insurer’s] petition for rehearing en banc, the petition was denied.” Id. at 622 n.2 (citing
Fourth Circuit Local Rule 35(b)). However, the Fourth Circuit panel did grant Ward’s petition for
rehearing and, concluding that the policy term “actual charges” was “patently ambiguous,” ordered that
summary judgment be entered in Ward’s favor on the breach-of-contract claim. Id. at 627. In the
aftermath of the decision, South Carolina enacted legislation defining “actual charges” as the amount
accepted by a medical provider as full payment, but the Fourth Circuit declined to apply the statute
retroactively and affirmed the district court’s judgment awarding substantial damages to the plaintiff class.
Nos. 10-6270/6301 Pedicini v. Life Ins. Co. of Ala. Page 7

The Fourth and Fifth Circuits, the only circuits to address the issue squarely,
have held that the term “actual charges” is ambiguous. Ward v. Dixie Nat. Life Ins. Co.,
257 F. App’x 620, 627 (4th Cir. 2007) (unpublished opinion), cert. denied, 555 U.S. 938
(2008); Guidry v. Am. Pub. Life Ins. Co., 512 F.3d 177, 184 (5th Cir. 2007). In Ward,
while the Fourth Circuit concluded that “actual charges” is a term of art, it nevertheless
found the term “patently” ambiguous after surveying definitions in the medical context.
257 F. App’x at 625-26; see also Ward v. Dixie Nat. Life Ins. Co., 595 F.3d 164, 170
(4th Cir. 2010) (affirming class action damages award based on “actual charges”
including full amount billed by medical providers). In Guidry, the Fifth Circuit
concluded that the Black’s Law Dictionary definition of “‘actual’ as ‘[r]real, substantial;
existing presently in fact’” just as reasonably suggested that “actual charges” means the
amount billed rather than the amount accepted as full payment. 512 F.3d at 182-83
(alteration in original) (quoting BLACK’S LAW DICTIONARY (6th ed. 1990)). The Fifth
Circuit also took issue with the insurer’s position that the term should be unambiguously
construed in its favor given that the insurer had previously paid benefits equal to the
amount billed by the medical provider. Id. at 184. The court classified the insurer’s
position as “suspect” and noted that it “seems very strange that a for-profit company
would continue to pay benefits for years based on the larger billed amount when it was
allegedly so clear that ‘actual charges’ meant the amount of the discounted bill.” Id.

The Eleventh Circuit addressed a related issue and held that the term “actual
charges incurred” unambiguously referred to the “amount the provider accepts from an
insurer as full satisfaction of the policyholder’s liability.” Phila. Am. Life Ins. Co. v.
Buckles, 350 F. App’x 376, 379 (11th Cir. 2009) (unpublished opinion) (emphasis
added) (internal quotation marks omitted). In so concluding, the Eleventh Circuit relied
on the meaning of the qualifying word “incurred,” expressly declining “to consider the
meaning of ‘actual charges’ standing alone.” Id. Though not conclusive, the Eleventh
Circuit’s decision lends support to the conclusion that “actual charges” is ambiguous.
Were the term “actual charges” as clear as LICOA suggests, it seems unlikely that two

Ward v. Dixie Nat’l Life Ins. Co., 595 F.3d 164, 170 (4th Cir. 2010).
Nos. 10-6270/6301 Pedicini v. Life Ins. Co. of Ala. Page 8

of our sister circuits would hold otherwise with a third taking pains to avoid deciding the
question entirely.

We hold that the term “actual charges” is ambiguous. As evidenced by the
decisions of our sister circuits, the thoughtful arguments presented by both parties, and
LICOA’s shift in its benefit-payment practices, it is clear that “a reasonable person
would find [the term “actual charges”] susceptible to different or inconsistent
interpretations” thus making it ambiguous under Kentucky law. See Cantrell Supply, 94
S.W.3d at 385. We agree with the Fifth Circuit that dictionary definitions are unhelpful,
as “real” and “existing” charges could just as reasonably refer to the billed amount as
well as to the amount accepted as full payment. Moreover, the fact that LICOA paid
benefits equal to the amount billed for approximately twenty years prior to February
2001 seriously undermines its position that the term “actual charges” unambiguously
means the amount accepted as full payment. While perhaps LICOA is uncannily
altruistic, it is more likely that the change in its benefit-payment practices reflects
LICOA’s own struggles with the ambiguous terms of its policies. Because the term is
ambiguous, it must be construed in favor of Pedicini as a matter of Kentucky law. See
Bituminous, 240 S.W.3d at 638. Accordingly, we affirm summary judgment in favor of
Pedicini on the breach-of-contract claim.

B. Bad-Faith Claims

Pedicini challenges the district court’s determination that he cannot sustain his
bad-faith claims under Kentucky law. We review the district court’s summary judgment
determination de novo. See Jones, 296 F.3d at 423.

Under Kentucky law, a plaintiff must establish three elements to succeed on a
bad-faith claim: “(1) the insurer must be obligated to pay the claim under the terms of
the policy; (2) the insurer must lack a reasonable basis in law or fact for denying the
claim; and (3) it must be shown that the insurer either knew there was no reasonable
basis for denying the claim or acted with reckless disregard for whether such a basis
existed.” Wittmer v. Jones, 864 S.W.2d 885, 890 (Ky. 1993) (internal quotation marks
Nos. 10-6270/6301 Pedicini v. Life Ins. Co. of Ala. Page 9

omitted).3 Based on the resolution of the breach-of-contract claim, it is clear that
LICOA had an obligation to pay Pedicini the full amount billed for the covered medical
services. Thus, the first element of the test is satisfied. However, the underlying merits
of an individual’s insurance claim are not dispositive with respect to a claim of bad faith.
See Cowan v. Paul Revere Life Ins Co., 30 F. App’x 384, 388 (6th Cir. 2002)
(unpublished opinion). Pedicini must also demonstrate the second and third elements
of the test.

The district court relied on Empire Fire & Marine Insurance Co. v. Simpsonville
Wrecker Service, Inc., 880 S.W.2d 886, 891 (Ky. 1994), to find that Pedicini failed to
establish the second element of the bad-faith test. In Empire Fire, the Kentucky
Supreme Court held “that where there is a legitimate first-impression coverage question
for purposes of Kentucky law and recognized authorities support the insurer’s position
in denying coverage, the insured’s claim is fairly debatable as a matter of law and will
not support a claim of bad faith.” Id. Pedicini argues that it is not Empire Fire, but
Farmland Mutual Insurance Co. v. Johnson, 36 S.W.3d 368 (Ky. 2001), that controls
the outcome in this case. In Johnson, the Kentucky Supreme Court held that an insurer
that had allegedly conspired with appraisers to avoid paying the full amount of
compensation due to an insured was not entitled to summary judgment on a bad-faith
claim. Id. at 371-72. We agree with Pedicini that summary judgment for LICOA on the
bad-faith claims is improper in this instance.

An objective assessment of the legal landscape evidences that LICOA lacked a
reasonable basis in law for disputing Pedicini’s claim to benefits according to his
interpretation of “actual charges.” Under clearly established Kentucky law, ambiguous
contractual terms are construed in favor of the insured. The term “actual charges” is
“patently ambiguous,” Ward, 257 F. App’x at 625-27; the use of the term in the
supplemental policy is hopelessly circular, as the term “actual charges” even appears
within its own definition in the policy. Moreover, for twenty years prior to February

3
These requirements apply whether the bad-faith claim is based in common law or statute.
Shepherd v. Unumprovident Corp., 381 F. Supp. 2d 608, 612 (E.D. Ky. 2005) (citing Curry v. Fireman’s
Fund Ins. Co., 784 S.W.2d 176, 178 (Ky. 1989)).
Nos. 10-6270/6301 Pedicini v. Life Ins. Co. of Ala. Page 10

2001, LICOA had paid benefits equal to the amount billed by medical providers,
inspiring expectations among its policyholders regarding the value of their benefits. In
light of these facts, LICOA should have realized that unilaterally altering its definition
of “actual charges” was likely to result in legal claims against it by its policyholders and
that, under Kentucky law, LICOA would lack a reasonable basis for denying those
policyholders relief. LICOA points to no legal authority contemporaneous with its
February 2001 policy change suggesting otherwise. The opinions that LICOA cites as
“recognized authorities” in support of its position all post-date February 2001 and thus
could not have informed LICOA’s determination of the reasonableness of its action at
that time. See Empire Fire, 880 S.W.2d at 889 (citing authority relied upon by the
insurer as being in existence “as of the date of appellee’s loss”); Phelps, 245 F. App’x
at 487 (same); Cowan, 30 F. App’x at 387 (same). As a result, it is difficult to see how
LICOA can maintain that the proper resolution of its dispute with Pedicini is “fairly
debatable as a matter of law.” Empire Fire, 880 S.W.2d at 889.

Moreover, based on the facts pleaded by Pedicini, a reasonable jury could
conclude that the third element of the bad-faith test is satisfied: that LICOA acted
knowingly or in reckless disregard of the lack of legal basis for its interpretation.
LICOA did not alter its benefit-payment practices in an open and transparent manner.
Those currently receiving benefits learned of the change only upon receiving a decreased
benefit payment after the change came into effect, and other policyholders not yet
qualifying for the receipt of benefits, like Pedicini, did not learn of the change until years
later when they became ill and eligible to receive benefits. As a result of the change,
LICOA was able to transform its profitability from a loss of over two million dollars in
calendar year 2000 to a profit of approximately one million and seven hundred thousand
dollars in calendar year 2001. From these facts a reasonable jury could conclude that
LICOA acted in bad faith by concealing changes in its benefit-payment practices to
avoid the loss of premium payments essential to its profitability in calender year 2001.
The Kentucky Supreme Court has found summary judgment on a bad-faith claim
improper amidst similar allegations of deceit in furtherance of pecuniary gain. See
Johnson, 36 S.W.3d at 372, 375 (denying summary judgment on bad-faith claim where
Nos. 10-6270/6301 Pedicini v. Life Ins. Co. of Ala. Page 11

insurer allegedly conspired with appraisers to undervalue policyholder’s claim); see also
Zilisch v. State Farm Mut. Auto. Ins. Co., 995 P.2d 276 (Ariz. 2000) (en banc) (denying
summary judgment in favor of insurer where insurer allegedly refused to negotiate a
reasonable settlement with insured, who ended up receiving an arbitration award more
than six times greater than that offered by the insurer).4

Based on the foregoing, we conclude that sufficient factual disputes surround the
bad-faith claims such that summary judgment for LICOA is improper. Accordingly, we
reverse the district court’s grant of summary judgment in favor of LICOA on these bad-
faith claims and remand for further proceedings.

C. Amended Complaint and Discovery Motions

Pedicini also challenges the denial of his motion for leave to file a second
amended complaint and the denial of his motion for additional discovery. We review
the district court’s decision in both regards for an abuse of discretion. Hamilton Cnty.
Bd. of Comm’rs v. Nat’l Football League, 491 F.3d 310, 320 (6th Cir. 2007); Yuhasz v.
Brush Wellman, Inc., 341 F.3d 559, 569 (6th Cir. 2003).

Pedicini argues that the district court abused its discretion in refusing leave to
amend the complaint in light of LICOA’s failure to disclose that the Kentucky
Department of Insurance found that LICOA’s change in the interpretation of “actual
charges” discriminated against policyholders and violated KRS 304.12-080. See R. 68-6
(Rate Filing Approval Order at 2). Pedicini requests that the complaint be amended to
reflect an additional cause of action for discrimination under Kentucky law as well as
additional evidence obtained during discovery in support of the bad-faith claims. The
district court did not abuse its discretion in determining that Pedicini’s request to add the
discrimination claim was untimely and should have been made prior to the resolution of
the breach-of-contract claim. Counsel’s questioning during the Casey deposition gave
clear indication that counsel was aware of possible claims of discrimination in relation

4
Although in a distinct factual context, this Court also recently reversed a grant of summary
judgment in favor of a defendant on a bad-faith claim under Kentucky law. See Phelps v. State Farm Mut.
Ins. Co., --- F.3d ---, 2012 WL 1889396, *6 (6th Cir. May 25, 2012).
Nos. 10-6270/6301 Pedicini v. Life Ins. Co. of Ala. Page 12

to LICOA’s new charging policy, and counsel did not need the Kentucky Department
of Insurance’s finding to plead this claim. See R. 32 (Casey Dep. at 140:4-141:1).
However, in light of our reversal of the district court’s grant of summary judgment in
favor of LICOA on the bad-faith claims, we remand for further consideration by the
district court as to whether leave to amend the complaint in support of the bad-faith
claims is proper.

Because we reverse the district court’s grant of summary judgment in favor of
LICOA on the bad-faith claims, Pedicini’s objections to a decision on summary
judgment prior to additional discovery are moot. In light of the remand, however, the
district judge may consider whether any further discovery is necessary or appropriate.

Accordingly, we affirm the district court’s rulings on both motions.

III. CONCLUSION

Based on the foregoing, we AFFIRM the judgment of the district court granting
summary judgment to Pedicini on the breach-of-contract claim and denying Pedicini’s
motion to file a second amended complaint and Pedicini’s motion for additional
discovery. We VACATE the district court’s grant of summary judgment in favor of
LICOA on the bad-faith claims and REMAND for proceedings consistent with this
opinion.