Seattle, Wash. (December 4, 2019) - In order to prevail in an action against an insurer for violation of the Washington Consumer Protection Act (CPA), a plaintiff must prove an unfair or deceptive act which "causes injury to the plaintiff's business or property." On November 27, 2019, the Washington Supreme Court expanded the scope of CPA claims that can be made against an insurer by releasing a decision holding that a "wrongful withholding of PIP benefits injures the insured in their 'business or property.'"
That case, Peoples v. USAA, No. 96931-1, involved a certified question from the lower court regarding whether insureds "who were physically injured in a motor vehicle collision and whose Personal Injury Protection (PIP) benefits were terminated or limited in violation of WAC 284-30-330, may bring a CPA claim against the insurer to recover out-of-pocket medical expenses and/or to compel payments to medical providers?"
In answering that question in the affirmative, the Washington Supreme Court departed from a line of federal court decisions, such as Dees v. Allstate, 993 F.Supp.2d 1299 (2013), which held that an insured cannot prove a CPA injury to his or business or property by alleging that the insurer should have paid the insured's medical bills because those injuries are derivative of the insured's personal injuries. In taking this position, the federal courts relied on the 2009 Washington Supreme Court decision in Ambach v. French, 167 Wn.2d 167 (2009), where the court found that traditional personal injury claims are not within the scope of the CPA, holding "[w]here plaintiffs are both physically and economically injured by one act, courts generally refuse to find injury to 'business or property' as used in the consumer protection laws." These cases had provided insurers with an avenue to seek dismissal of CPA claims brought in regards to denials of uninsured motorist (UIM) and PIP benefits.
However, the new Peoples decision substantially blocks that avenue by departing from the logic of Ambach and holding that the insureds in Peoples did not seek to hold their insurance companies liable for their underlying personal injuries, but instead sought to hold their insurers liable for benefits owed under contract.
In the wake of Peoples, plaintiffs will be able to assert CPA claims against their insurers in cases arising from allegedly improper denial of PIP benefits. Further, while the Peoples decision does not address whether a CPA claim can be brought for allegedly improper denial of UIM benefits, attorneys for insureds can be expected to seize on language like "Claims mishandling and wrongful denial of benefits invade this property interest, regardless of the type of event that triggers coverage" to argue that CPA claims may also be brought in regard to denial of UIM benefits.
Ambach's core holding that traditional personal injury claims are not within the scope of the CPA may still, however, provide a defense against CPA claims brought in regard to UIM denials because in UIM cases insurers "step into the shoes" of the tortfeasor such that claims for UIM benefits are closer to traditional personal claims than are claims for PIP benefits.
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