Justia Insurance Law Opinion SummariesArticles Posted in Washington Supreme Court
Alpert v. Nationstar Mortg., LLC
The U.S. Appeals Court for the Ninth Circuit certified several questions of law to the Washington Supreme Court. When the homeowner failed to insure his property, the mortgage servicer purchased insurance to cover the property pursuant to the mortgage agreement - known as “force placed insurance” or “lender placed insurance.” The policy was underwritten by the insurers and passed through a broker to the mortgage servicer. The homeowner claimed that these parties participated in an unlawful kickback scheme that artificially inflated the premiums. In Washington, insurers must generally file their rates and receive approval from the Office of the Insurance Commissioner (OIC) before selling insurance. Once the rates are filed and approved by the governing agency, the rates were “per se reasonable” and claims that run squarely against these rates had to be dismissed (known as the "filed rate doctrine”). While the filed rate doctrine historically applied to shield entities that file rates, the Washington Court was asked whether the filed rate doctrine also applied to bar suit against intermediaries who did not file rates: the mortgage servicer (Nationstar Mortgage LLC) and broker (Harwood Service Company) who participated in the procurement of the policy from the insurers. If the filed rate doctrine applied to these intermediaries, the Supreme Court was then asked to determine whether damages would be barred under Washington's only case applying the doctrine, McCarthy Fin., Inc. v. Premera, 1347 P.3d 872 (2015). The Washington Supreme Court held that the filed rate doctrine had to also apply to bar suit against intermediaries where awarding damages or other relief would squarely attack the filed rate. In light of this holding, the Court returned the second question pertaining to damages to the Ninth Circuit to first revisit and apply McCarthy to the specific allegations of the appellant-homeonwer's outstanding claims. View "Alpert v. Nationstar Mortg., LLC" on Justia Law
Wood v. Milionis Constr., Inc.
The issue central to this appeal centered on a “covenant judgment” arrangement: an insured defendant, facing suit by a plaintiff, settles claims without the insurer’s consent in exchange for a release from liability and assignment of potential bad faith claims against the insurer to the plaintiff. If the trial court deems the settlement reasonable, that settlement amount becomes the presumptive measure of damages in the later bad faith action brought by the plaintiff against the insurer. Insurer Cincinnati Specialty Underwriters (Cincinnati), challenged the trial court’s order approving as reasonable a $1.7 million settlement between plaintiffs, Anna and Jeffrey Wood (Woods), and Cincinnati’s insureds, Milionis Construction Inc. (MCI) and Stephen Milionis. A divided Court of Appeals held the trial court abused its discretion because the reasonableness finding credited a defense expert’s evaluation of contract damages at $1.2 million despite other evidence in the record suggesting the defense’s evaluation of damages never rose above $399,000. The Washington Supreme Court reversed and reinstated the trial court’s order. The Supreme Court found the trial court properly conducted the reasonableness hearing and evaluated the varied and conflicting evidence of contract damages. In addition, the court appropriately considered damages for plaintiffs’ extracontractual claims as well as allowable attorney fees. "In finding an abuse of discretion, the Court of Appeals majority misapprehended parts of the record and substituted its assessment of the competing damages evaluations for the trial court’s assessment." View "Wood v. Milionis Constr., Inc." on Justia Law
McLaughlin v. Travelers Commercial Ins. Co.
Todd McLaughlin was riding his bicycle on a Seattle street when the door of a parked vehicle opened right into him. McLaughlin fell, suffered injuries, and sought insurance coverage for various losses, including his medical expenses. McLaughlin’s insurance policy covered those expenses if McLaughlin was a “pedestrian” at the time of the accident. McLaughlin argued a bicyclist was a pedestrian, relying on the definition of “pedestrian” found in the Washington laws governing casualty insurance. The trial court held a bicyclist was not a pedestrian, reasoning that the plain meaning of "pedestrian" excluded bicyclists. The Court of Appeals affirmed, relying largely on its view that the Washington statute defined pedestrian for purposes of casualty insurance, excluded bicyclists. The Washington Supreme Court reversed. The Washington legislature defined “pedestrian” for purposes of casualty insurance in Washington broadly in RCW 48.22.005(11). The Supreme Court found that definition included bicyclists and applied to the insurance contract at issue here. "Even if we were to hold otherwise, at the very least, the undefined term 'pedestrian' in the insurance contract at issue must be considered ambiguous in light of the various definitions of 'pedestrian' discussed in this opinion. Being ambiguous, we must construe the insurance term favorably to the insured. Accordingly, we reverse the Court of Appeals and remand for further proceedings." View "McLaughlin v. Travelers Commercial Ins. Co." on Justia Law
Plein v. USAA Cas. Ins. Co.
Richard and Debra Plein sued USAA Casualty Insurance Company, alleging insurance bad faith. The Pleins hired three attorneys, two of whom were members of the Keller Rohrback LLP lawfirm (Keller), to represent them. But Keller had previously defended USAA in bad faith litigation for over 10 years. Under the Rules of Professional Conduct, Keller would have been barred from representing the Pleins if the prior representation was in a matter "substantially related" to the Plein matter. Interpreting the "substantially related" language in the Rules of Professional Conduct was one of first impression for the Washington Supreme Court. The Court held that under RPC 1.9(a), USAA failed to show a "substantial risk" that Keller obtained 'confidential factual information" that would 'materially advance" the Pleins’ case. Accordingly, Keller did not represent former client USAA on any matter "substantially related" to the instant case. The Court therefore reversed the Court of Appeals decision that disqualification was required, and reinstated the trial court’s order that disqualification was not required. View "Plein v. USAA Cas. Ins. Co." on Justia Law
Robbins v. Mason County Title Ins. Co.
In 1854, the Washington Territory and nine Native American tribes, including the Squaxin Island Tribe (the Tribe), entered into the 1854 Treaty of Medicine Creek (the Treaty), under which the Tribe relinquished their rights to land but retained “the right of taking fish at all usual and accustomed grounds and stations . . . , in common with all citizens of the Territory.” The District Court for the Western District of Washington has interpreted “fish” under the Treaty to include shellfish. In 1978, Leslie and Harlene Robbins (Robbins) purchased property in Mason County, Washington that included tidelands with manila clam beds. In connection with the purchase of the property, Robbins obtained a standard policy of title insurance from Mason County Title Insurance Company (MCTI) which provided MCTI would insure Robbins “against loss or damage sustained by reason of: . . . [a]ny defect in, or lien or encumbrance on, said title existing at the date hereof.” For years Robbins had contracted with commercial shellfish harvesters to enter Robbins’s property to harvest shellfish from the tidelands. The issue this case presented for the Washington Supreme Court's review was whether MCTI had a duty to defend Robbins when the Tribe announced it planned to assert its treaty right to harvest shellfish from the property. The Court affirmed the Court of Appeals and remanded to the superior court for further proceedings. The Supreme Court held that because the insurance policy conceivably covered the treaty right and no exceptions to coverage applied, MCTI owed the property owners a duty to defend and, in failing to do so, breached the duty. Because this breach was unreasonable given the uncertainty in the law, MCTI acted in bad faith. Further, because the property owners did not seek summary judgment on MCTI’s affirmative defenses, the Supreme Court remanded to the superior court for consideration of the defenses. View "Robbins v. Mason County Title Ins. Co." on Justia Law
Peoples v. United Servs. Auto. Ass’n
Krista Peoples and Joel Stedman filed Washington Consumer Protection Act ("CPA") suits against their insurance carriers for violating Washington claims-handling regulations and wrongfully denying them personal injury protection (PIP) benefits. The federal district court for the Western District of Washington certified a question of law relating to whether Peoples and Stedman alleged an injury to "business or property" to invoke their respective policies' PIP benefits. Peoples alleged her insurance carrier refused, without any individualized assessment, to pay medical provider bills whenever a computerized review process determined the bill exceeded a predetermined limit, and that the insurance company's failure to investigate or make individualized determinations violated WAC 284-30-330(4) and WAC 284-30-395(1). Due to this practice of algorithmic review, the insurance carrier failed to pay all reasonable medical expenses arising from a covered event, in violation or RCW 48.22.005(7). Stedman alleged his carrier terminate PIP benefits whenever an insured reached "Maximum Medical Improvement," which he alleged violated WAC 284-30-395(1). The Washington Supreme Court held an insurance carrier's wrongful withholding of PIP benefits injures the insured in their "business or property." An insured in these circumstances may recover actual damages, if proved, including out-of-pocket medical expenses that should have been covered, and could seek injunctive relief, such as compelling payment of the benefits to medical providers. Other business or property injuries, apart from wrongful denial of benefits, that are caused by an insurer's mishandling of PIP claims are also cognizable under the CPA. View "Peoples v. United Servs. Auto. Ass'n" on Justia Law
T-Mobile USA, Inc. v. Selective Ins. Co. of Am.
The United States District Court for the Ninth Circuit certified a question of law to the Washington Supreme Court. Specifically, the federal appellate court asked whether an insurance company was bound by its agent’s written representation (made in a certificate of insurance) that a particular corporation was an additional insured under a given policy. This question arose in a case where: (1) the Ninth Circuit already ruled that the agent acted with apparent authority; but (2) the agent’s representation turned out to be inconsistent with the policy; and (3) the certificate included additional text broadly disclaiming the certificate’s ability to “amend, extend or alter the coverage afforded by” the policy. The Washington Supreme Court responded yes: an insurance company is bound by the representation of its agent in the circumstances presented by the federal court. “Otherwise, an insurance company’s representations would be meaningless and it could mislead without consequence.” View "T-Mobile USA, Inc. v. Selective Ins. Co. of Am." on Justia Law
Strauss v. Premera Blue Cross
John and Michelle Strauss challenged the Court of Appeals decision affirming summary dismissal of their action against Premera Blue Cross, which arose out of the denial of coverage for proton beam therapy (PBT) to treat John's prostate cancer. At issue was whether the Strausses established the existence of a genuine issue of material fact regarding PBT's superiority to intensity-modulated radiation therapy (IMRT), thereby demonstrating that proton beam therapy was "medically necessary" within the meaning of their insurance contract. The Washington Supreme Court determined they did, and therefore reversed the Court of Appeals' decision, and remanded for a jury trial on the disputed facts. View "Strauss v. Premera Blue Cross" on Justia Law
Keodalah v. Allstate Ins. Co.
While driving his truck, Moun Keodalah and an uninsured motorcyclist collided. After Keodalah stopped at a stop sign and began to cross the street, the motorcyclist struck Keodalah's truck. The collision killed the motorcyclist and injured Keodalah. Keodalah's insurance policy with Allstate Insurance Company included underinsured motorist (UIM) coverage. Keodalah requested Allstate pay him his UIM policy limit of $25,000. Allstate refused, offering $1,600 based on its assessment Keodalah was 70% at fault for the accident. After Keodalah asked Allstate to explain its evaluation, Allstate increased its offer to $5,000. Keodalah sued Allstate asserting a UIM claim. The ultimate issue before the Washington Supreme Court in this case was whether RCW 48.01.030 provided a basis for an insured's bad faith and Consumer Protection Act claims against an insurance company's claims adjuster. The Supreme Court held that such claims were not available, and reversed the Court of Appeals. View "Keodalah v. Allstate Ins. Co." on Justia Law
Grp. Health Coop. v. Coon
Group Health Cooperative (GHO) provided health insurance benefits to Nathaniel (Joel) Coon, who suffered a serious fungal infection and amputation following knee surgery at the Everett Clinic (TEC). The Coon family later settled potential negligence claims against TEC, and GHO initiated this lawsuit seeking reimbursement of its payments from the settlement proceeds. At issue before the Washington Supreme Court was whether genuine issues of material fact remained to preclude summary judgment in favor of GHO regarding whether the settlement constituted full compensation to Coon, and whether GHO suffered prejudice from the Coons’ failure to provide notice prior to finalizing the settlement. The Supreme Court concurred with the Court of Appeals’ conclusion that genuine issues of fact still remained, making summary judgment inappropriate. The matter was remanded for further proceedings. View "Grp. Health Coop. v. Coon" on Justia Law