Silberg v. California Life Insurance Company
Supreme Court of California
11 Cal.3d 452 (1974)
After being injured at a laundromat, Silberg (plaintiff) filed claims with his insurer CLIC (defendant), which excluded losses payable under workers' compensation; while awaiting the Workers' Compensation Appeals Board's determination of Silberg's employment status, CLIC withheld payment on his medical bills, forcing Silberg to seek treatment at different hospitals each time, and his workers' compensation claim was ultimately denied (finding he wasn't an employee) and later settled without a formal employment-status determination. The trial court found the policy ambiguous and ordered CLIC to pay Silberg's medical costs.
Whether the covenant of good faith and fair dealing implied in every insurance contract requires an insurer to accept a reasonable settlement to absolve the insured of liability to a third party, such as a medical provider.