3rd party bad faith and malpractice insurance co

[alicewonderland]

What is the name of your state? california
if a patient goes to a dentist and the dentist refuses to finish dental work pre paid for and refuses to return her money..then dentist refers her to his liability insurer. she files a claim with them. they say they will investigate for malpractice. they do and conclude there was no malpractice. they say that the issue is breach of contract and that the dentist's policy does not cover breach of contract only malpractice. They say they will not even investigate breach of contract claims. so patient files a breach of contract lawsuit in limited civil court. the minute it is filed the dentist's attorneys are hired by the same insurance company to defend him in breach of contract. they respond with affirmative defense saying that the lawsuit is a malpractice suit and the patient is calling it breach of contract because she missed the statute of limitations for malpractice and therefore the lawsuit should be dismissed for not meeting statute of linit (it was on time for breach of contract). She asked the insurance company what is going on and now they will not respond to her.
This seems like it would be illegal..not to mention a rotten and deceptive thing to do. can the patient sue the insurance company for bad faith or do anything? thanks