From the Desk of Kyle Riley: In this case, the United States District Court for the District of Washington held that a plaintiff seeking damages under the Washington Insurance Fair Conduct Act may recover policy benefits as actual damages.
Claims Pointer: Insurers should be aware that a plaintiff who files a claim to recover unpaid policy benefits, under IFCA, may be awarded those unpaid policy benefits as actual damages. Under IFCA, a jury or judge may award compensatory damages up to three times the amount of actual damages, so exposure can increase rapidly. In order to avoid exposure, insurers should continue to evaluate PIP and UIM payments carefully, keeping in mind that denying those benefits can have substantial consequences. acate.
Dees v. Allstate Ins. Co., in the United States District Court, W.D. Wash., No. C12-0483JLR (March 21, 2013).
Denise Dees was injured by an uninsured driver in 2006. Dees sued her insurer, Allstate, to recover what she argued were unpaid PIP and UIM benefits. Specifically, Dees brought claims for breach of contract; breach of duty of good faith; violations of the Washington Consumer Protection Act (“CPA”); and violations of the Washington Insurance Fair Conduct Act (“IFCA”).
The District Court for the Western District of Washington made two important rulings, in regard to Dees’ IFCA claims. First, the Court held that Dees’ ability to recover PIP benefits under IFCA was time barred, because the date on which Allstate denied Dees’ petition for additional PIP benefits, March 28, 2007, was before the date on which IFCA went into effect, December 7, 2007. IFCA is not retroactive, so Dees’ claim for reimbursement of PIP benefits, at least under IFCA, must fail.
Second, and more importantly, the Court found that damages owed to Dees under IFCA included the actual policy benefits themselves. Allstate attempted to argue that, if it was liable for an IFCA violation, it was only responsible for the damages that were caused by that violation, and not for any personal injuries that resulted from Dees’ accident. The Court rejected that argument, relying on its previous holding in Tavakoli v. Allstate, in the United States District Court, W.D. Wash., No. C11-1587RAJ (Dec. 21, 2012). In that case, the Court held that an insured can sue under IFCA to recover benefits that were “unreasonably denied” by the insurer. Unlike a plaintiff with a bad faith claim,” the Court noted, “an IFCA claimant can recover policy benefits, subject only to the policy’s limit.” The court held that “actual damages” included the benefits denied.
These rulings are important, because damages awarded under IFCA can be trebled. Dees and Tavakoli demonstrate that Federal courts in Washington are willing to treat unpaid policy benefits as actual damages. In doing so, the courts have created a situation of increased exposure on the part of insurers.
Case updates are intended to inform our clients and others about legal matters of current interest. It is not intended as legal advice Readers should not act upon the information contained in this email without seeking professional counsel.