Justia Insurance Law Opinion Summaries

Articles Posted in Washington Supreme Court

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At issue in this case was whether a first-party insurer, after obtaining a partial recovery in a subrogation action, had to reimburse its fault-free insureds for the full amount of their deductibles before any portion of the subrogation proceeds could be allocated to the insurer. Lazuri Daniels brought claims, and sought class action status, in a lawsuit against State Farm Mutual Automobile Insurance Company arguing that by failing to fully reimburse its insureds for their deductibles, State Farm violated both Washington law and the terms of its own insurance policy. The trial court dismissed the claims, and the Court of Appeals affirmed. In addressing conflicts between subrogated insurers and injured insureds, Washington law generally establishes priority for the interests of the insured through the "made whole doctrine." "Out of the recovery from the third party the insured is to be reimbursed first, for the loss not covered by insurance ,and the insurer is entitled to any remaining balance, up to a sum sufficient to reimburse the insurer fully, the insured being entitled to anything beyond that." If the insured still has uncompensated injuries, both the insurer and insured will generally be looking to recover from the same third party, and that party's own insurance and assets are not always sufficient to cover both claims. In such circumstances, there is a high potential for conflict between insureds who wish to be compensated for the full extent of the damages they have suffered, and first-party insurers who expect to be reimbursed for amounts they have advanced to the insured. Daniels argued that insureds' right to be fully compensated for their losses, including full reimbursement for deductibles, takes priority over an insurer's interest in recouping its payments through a direct subrogation action. The Washington Supreme Court concluded Daniels' complaint asserted valid claims for relief under the common law, under Washington insurance regulations, and under State Farm's own policy language. As such, dismissal was improper. The matter was remanded to the trial court for further proceedings. View "Daniels v. State Farm Mut. Auto. Ins. Co." on Justia Law

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On October 30, 2013, Consuelo Prieto Mariscal was driving her minivan in Pasco, Washington, with her daughter. There were vehicles, including an orange, pickup truck and a van, on the right side of the road. As Prieto passed the orange pickup truck, she heard a noise, felt her van jump a little, and saw a boy, Brayan, lying on the ground. Realizing Brayan was seriously hurt, her daughter called 911. Brayan was taken to a nearby hospital. Prieto and her daughter both told the police they did not see how the accident happened. There were no other eyewitnesses, and though the officer only spoke to Prieto and her daughter, he noted in his report the "bicyclist pulled into the roadway [and] was stuck on the left side and fell to the ground. The passenger side front tire drove over the child['s] right front leg." Brayan gave a number of statements, the most detailed of which related his right shoelace got stuck in the spokes of his bicycle and his right leg was run over when he leaned over to untangle the lace. Monica Diaz Barriga Figueroa, Brayan's mother, retained counsel, and signed a blank personal injury protection (PIP) application form. The English-speaking legal assistant completed the form for the Spanish-speaking Diaz, pulling language of the accident from the police report. The significant difference between the PIP form and Brayan's testimony became a central issue at trial. Prieto's counsel stressed the differences between Diaz's and Brayan's testimony and the PIP form; Diaz's counsel stress the PIP form was based on accounts from people who did not see the accident. At trial, and over Diaz's counsel's objection, Prieto's counsel referenced the PIP form as a statement against interest. Diaz's counsel moved to exclude the PIP form as privileged. The issue before the Washington Supreme Court was whether the form could be considered work product entitled to protection from disclosure. The Court determined that in this instance, where the insured gained the status of insured by statute, rather than contract, the form at issue was privileged. The Court affirmed the Court of Appeals and remanded this matter back to the trial court for a new trial. View "Figueroa v. Mariscal" on Justia Law

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Christopher Floeting alleged a Group Health Cooperative employee repeatedly sexually harassed him while he was seeking medical treatment. He sued Group Health for the unwelcome and offensive sexual conduct under the Washington Law Against Discrimination, which made it unlawful for any person or the person's agency or employee to commit an act of discrimination in any place of public accommodation. The trial court dismissed on summary judgment, pursuant to Group Health's argument the employment discrimination standard applied. The Court of Appeals reversed. Group Health argued the Washington Supreme Court should import workplace sexual harassment doctrines into the public accommodations context, thereby limiting its employer liability. Declining to do so, the Supreme Court affirmed the appellate court. View "Floeting v. Grp. Health Coop." on Justia Law

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At issue in this case was whether full faith and credit required Washington courts to enforce an Illinois class action judgment by dismissing subsequent local cases based on the same facts. An Illinois medical provider brought a nationwide consumer protection class action against Liberty Mutual Insurance Company in Illinois. The suit was settled and approved by an Illinois trial court. Chan Healthcare group, a Washington provider, received reasonable notice of the suit, but neither opted out of the class nor objected to the settlement. Chan sought to collaterally challenge the Illinois judgment in Washington courts, arguing the interests of Washington class members were not adequately represented in Illinois. The Washington Supreme Court concluded Chan failed to show its due process rights were violated, thus full faith and credit required Washington courts to enforce the Illinois judgment. View "Chan Healthcare Grp. v. Liberty Mut. Fire Ins. Co." on Justia Law

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The United States District Court for the Western District of Washington certified a question of Washington law to the Washington Supreme Court. This case concerned a class action insurance claim suit pending in federal court. Plaintiff Brett Durant was a State Farm Mutual Automobile Insurance Company insured, and carried a $35,000 personal injury protection (PIP) rider. In 2012, Durant was injured in a motor vehicle accident; he opened a PIP claim with State Farm. The "coverage letter" advised Durant that "Medical services must also be essential in achieving maximum medical improvement for the injury you sustained in the accident." Durant sought treatment with chiropractor Harold Rasmussen, DC, who diagnosed injuries including sprains to the neck, back, pelvis, and right shoulder. After a shoulder MRI showed a ligament sprain and "a possible small type I SLAP [(superior labral anteroposterior)] tear,"Durant was referred to an orthopedic surgeon who diagnosed"mild bursitis/tendinitis,"which was treated with physical therapy and cortisone injections. Durant's injuries were not resolved by a date set by his physicians; his providers billed his PIP claims, but State Farm denied them on grounds that Durant had "previously reached maximum medical improvement." The federal district court asked the Washington Supreme Court (1) whether an insurer violates WAC 284-30-395(1)(a) or (b) if that insurer denied or terminated an insured's medical benefits based on a finding of "maximum medical improvement;" and (2) whether the term "maximum medical improvement" was consistent with the definition of "reasonable" or "necessary" as those terms appeared in WAC 284-30-395(1). The Washington Court answered the first certified question "yes." With regard to the second question, the Court found that under the circumstances of this case, the term "maximum medical improvement" was not consistent with the terms "reasonable" or "necessary" as those terms appeared in WAC 284-30-395(1). View "Durant v. State Farm Mut. Auto. Ins. Co." on Justia Law

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The United States District Court for the Western District of Washington certified a question of Washington law to the Washington Supreme Court. The underlying case involved an insurance coverage dispute between two authorized foreign insurers, Ohio Security Insurance Company and AXIS Insurance Company. Ohio Security tried to serve AXIS at its office in Chicago, Illinois, rather than through the Washington State Office of the Insurance Commissioner. The United States District Court asked whether Washington law established service through the Washington State Insurance Commissioner (Insurance Commissioner) as the exclusive means of service for authorized foreign insurers in Washington. The answer to the certified question was yes: RCW 4.28.080(7)(a) provided the exclusive means of service on authorized foreign insurers. View "Ohio Sec. Ins. Co. v. AXIS Ins. Co." on Justia Law

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The United States District Court for the Western District of Washington certified a question of Washington law to the Washington Supreme Court. The underlying case involved an insurance coverage dispute between two authorized foreign insurers, Ohio Security Insurance Company and AXIS Insurance Company. Ohio Security tried to serve AXIS at its office in Chicago, Illinois, rather than through the Washington State Office of the Insurance Commissioner. The United States District Court asked whether Washington law established service through the Washington State Insurance Commissioner (Insurance Commissioner) as the exclusive means of service for authorized foreign insurers in Washington. The answer to the certified question was yes: RCW 4.28.080(7)(a) provided the exclusive means of service on authorized foreign insurers. View "Ohio Sec. Ins. Co. v. AXIS Ins. Co." on Justia Law

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This case presented for the Washington Supreme Court's review claims of breaches of fiduciary duty and legal malpractice against lawyers hired to defend insureds in a civil action where the insurance company provided the defense. The insureds claimed the lawyers failed to disclose potential conflicts of interest based on long-standing relationships the law firm had with the insurance company in not only accepting cases representing insureds in other civil cases, but also representing the insurance company itself in coverage disputes. The insureds also claimed the attorneys failed to advise them of settlement negotiations, and by taking settlement directions from the insurer. The trial court granted summary judgment in favor of the lawyers, finding the insureds failed to establish an actionable breach. The Court of Appeals affirmed. While the Supreme Court disagreed with portions of the appellate court's analysis, it affirmed the result. View "Arden v. Forsberg & Umlauf, PS" on Justia Law

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This case presented for the Washington Supreme Court's review an award of attorney fees against five surety companies following a jury trial for breach of contract in a public works project. The parties litigated the issue of whether three construction firms had defaulted on a contract, thus triggering coverage under a performance bond issued by the surety companies. At issue was whether the existence of a statutory fee provision barred equitable remedies available at common law for coverage disputes and whether the trial court correctly determined that segregation between covered and uncovered fees was impossible. The Court of Appeals affirmed the award of Olympic Steamship fees and held that the trial court did not abuse its discretion in determining that the fees could not be segregated. Finding no reversible error in that judgment, the Washington Supreme Court affirmed. View "King County v. Vinci Constr. Grands Projets" on Justia Law

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At issue in this case was the applicability of a broad, absolute insurance pollution exclusion clause to a claim based on negligent installation of a hot water heater that led to the release of toxic levels of carbon monoxide in a residential home. Zhaoyun "Julia" Xia purchased a new home constructed by Issaquah Highlands 48 LLC. Issaquah Highlands carried a policy of commercial general liability insurance through ProBuilders. Soon after moving into her home, Xia began to feel ill. A service technician from Puget Sound Energy investigated Xia's home and discovered that an exhaust vent attached to the hot water heater had not been installed correctly and was discharging carbon monoxide directly into the confines of the basement room. The claims administrator for ProBuilders, NationsBuilders Insurance Services Inc. (NBIS), mailed a letter to Xia indicating that coverage was not available under the Issaquah Highlands policy. As a basis for its declination of coverage, NBIS rested on two exclusions under the policy: a pollution exclusion and a townhouse exclusion. NBIS refused to either defend or indemnify Issaquah Highlands for Xia's loss. When a nonpolluting event that was a covered occurrence causes toxic pollution to be released, resulting in damages, the Washington Supreme Court believed the only principled way for determining whether the damages are covered or not was to undertake an efficient proximate cause analysis. Under the facts presented here, the Court found ProBuilders Specialty Insurance Co. correctly identified the existence of an excluded polluting occurrence under the unambiguous language of its policy. However, it ignored the existence of a covered occurrence negligent installation-that was the efficient proximate cause of the claimed loss. Accordingly, coverage for this loss existed under the policy, and ProBuilders's refusal to defend its insured was in bad faith. View "Xia v. Probuilders Specialty Ins. Co." on Justia Law