WA Supreme Court Curtails Insurance Fair Conduct Act Claims
One of the most oft-litigated IFCA issues is what happens when the offer a plaintiff gets from their own insurance company vastly differs from what the claim is worth.
The Washington Supreme Court clarified this today in Perez-Crisantos. The parties had a legitimate dispute over whether certain injuries were causally related to the incident. In review of the claims file and incentive programs, there was no evidence found of anything other than a claims valuation difference.
In this case, Perez-Crisantos suggests that something more can be found in the fact PIP benefits were allowed based on the same evidence and his suspicion that the incentive program created bad incentives. But State Farm never disputed that some of Perez-Crisantos's injuries came from the accident; it is not necessarily inconsistent for an insurer to pay the one and balk at the other based on its valuation of the claim. The fact State Farm paid PIP benefits is not sufficient to create a material question of fact that State Farm violated insurance regulations by rejecting some of Perez-Crisantos's UIM claim
More importantly, the Court also took a hard look at the state of the law and the intent of IFCA and found that a violation of a an insurance regulation alone (such as the ten day response rule), does not in and of itself create a private cause of action. This means a causal link is required, and they can be evidence of violations under the CPA, which was lacking in this case.
There was an interesting discussion by Judge Stephens that this question was not justiciable, given that Plaintiff could not survive summary judgment based on whether there was even a WAC violation, let alone whether it created an independent cause of action. The Court limited IFCA actions to the language of the statute:
We respectfully disagree with the Langley opinion that legislative intent supports creating an implicit IFCA cause of action. IFCA explicitly creates a cause of action for first party insureds who were "unreasonably denied a claim for coverage or payment ofbenefits." RCW 48.30.015(1). IFCA does not state it creates a cause of action for first party insureds who were unreasonably denied a claim for coverage or payment of benefits or "whose claims were processed in violation of the insurance regulations listed in (5)," which strongly suggests that IFCA was not meant to create a cause of action for regulatory violations. . . .
Ainsworth notes that "[s]ubsection (1) describes two separate acts giving rise to an IFCA claim. The insured must show that the insurer unreasonably denied a claim for coverage or that the insurer unreasonably denied payment of benefits. If either or both acts are established, a claim exists under IFCA." Id. (citing RCW 48.30.015).
While I tend to agree with Justice Stephens' justiciability arguments, I will say this opinion goes a long way to resolving a split among the local federal courts. For that reason alone, it was probably worth addressing. However, it could have been stated a little clearer in the majority opinion.
For those looking to a primer on how Plaintiff Attorneys have litigated Insurance Fair Conduct Act Claims, I highly recommend Isaac Ruiz's book, Insurance Fair Conduct Act: Cases and Analysis, which provided a breakdown of the law and how its commonly litigated (which will likely go through a new revision breaking down this opinion).
If you have a question as to how the Insurance Fair Conduct Act affects your claims, please feel free to contact our Issaquah Attorneys. We are conveniently located on the Eastside, and we handle all business matters from formation through litigation, including coverage for Washington and Alaska. We're here to help.