47 Trial Lawyer • Spring 2023 reminder of potential financial doom. Her panic increased accordingly. Then, the physical therapy office sent her to collections. Collections letters started, furthering her distress. Aside from the emotional toll, PIP’s medical payment denial had another serious consequence on their insured. Realizing she could also owe money for all further medical care, she no longer wanted to undergo treatment. At that time, she had not recovered from her collision-related injuries. Her medical providers recommended additional care. Despite being fueled by financial concerns, the decision to stop treatment can still have multiple serious ramifications, such as: 1) Harming her bodily injury claim and its claim value. 2) Medically speaking, she was potentially risking prolonged need for treatment or severity of treatment, permanency, and other medical complications. 3) She was risking being considered a claimant who failed to mitigate her damages. As you can see in the example of my Washington client above, PIP’s wrongful denial resulted in multiple harms — including emotional distress, interfering with my client’s treatment plan and harming her bodily injury claim. Unfortunately, improper PIP denials are not rare. Thus, what recourse exists when an insurance company fails to act in good faith, and how effective is it? Generally, laws are considered to be governing insurance bad faith when they: 1) Regulate an insurer to act within its implied duty of good faith or fair dealing. 2) Allow an insured to bring a commonlaw tort claim for breach of said good faith or fair dealing duties (as opposed to merely a contract claim against the insurer). 3) An insurer found to have acted in bad faith can be liable for damages in excess of the policy limits, such as for emotional distress, attorney fees, punitive damages or interest. Washington bad faith Washington has an act aimed specifically at targeting insurance bad faith, appropriately named the Insurance Fair Conduct Act (IFCA), enacted in 2007.2 IFCA allows first party insureds certain statutory bad faith actions against insurers who unreasonably deny first party coverage or payment of benefits.3 Since its enactment, Washington courts have continued to construe IFCA, furthering insurance misconduct enforcement. Perhaps one of the biggest forces within Washington bad faith laws is its damages. In addition to attorney fees and costs, insureds can also recover treble damages — that is, a recovery three times the actual proven damages.4 In PerezCrisantos v. State Farm Fire & Casualty Co., the Washington Supreme Court affirmed that a regulatory violation alone is not sufficient. In looking at IFCA’s legislative history, the court observes IFCA was not intended to merely create a cause of action for regulatory violations. Rather, IFCA allows private causes of action for insurance regulatory violations and expressly provides that trial courts may treble the proven actual damages, and award reasonable attorney fees and costs upon finding a violation of the insurance regulations identified in subsection five. See Perez. In fact, IFCA’s subsection six emphasizes that IFCA “does not limit a court’s existing ability to make any other determination regarding an action for an unfair or deceptive practice of an insurer or provide for any other remedy that is available at law.” RCW 48.30.015(6). The actual language within IFCA establishes certain powerful guidelines, such as considering it an unfair claims settlement practice when, “Compelling a first party claimant to initiate or submit to litigation, arbitration, or appraisal to recover amounts due under an insurance policy by offering substantially less than the amounts ultimately recovered in such actions or proceedings.” WAC 284-30330(7). As a result, some attorneys have argued the mere need of litigation inherently implies insurance bad faith, under certain circumstances, where an insured must resort to litigating underinsured/ uninsured motorist claims and PIP claims to recover reasonable benefits. With such laws, I was able to utilize them to the benefit of my Washington client who faced PIP denials of her physical therapy bills. Oregon bad faith Turning to Oregon, insureds have essentially been limited to bringing conSee Washington vs. Oregon p 48 ...the decision to stop treatment can still have multiple serious ramifications...
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