48 Trial Lawyer • Spring 2023 tract violation claims against insurers, as well as an insurer’s negligence for failing to meet an applicable “standard of care independent of the terms of the contract.”5, 6 Interestingly, many of the protections in Washington’s IFCA, including the quoted language above from WAC 284-30-330(7), are similar to those listed in Oregon’s ORS 746.230. Thus, Oregon seems to acknowledge insurance bad faith can exist. However, a key difference between Oregon and Washington is Oregon laws do not create a private right of action for such insurance misconduct. In 2022, the Oregon Court of Appeals made a groundbreaking decision in Moody v. Federal Insurance Co., holding a policyholder may recover emotional distress damages on negligence per se claims based on insurers violating Oregon Unfair Claims Settlement Practices Act (ORS 746.230). The Moody decision is currently pending review by the Oregon Supreme Court. If Moody is not overturned, the door has been opened for insured to seek extra-contractual damages when insurers fail to comply with basic standards of reasonable conduct. Where an insured faces a wrongful denial of PIP benefits in Oregon, litigation (if the insured is seeking $50,000 or less) begins as any other litigation would: with mandatory, nonbinding arbitration. Attorney fees are not available at panel arbitration, which creates a few inherent foundational issues: 1) Insureds have limited leverage. 2) Insurers can commit wrongful denials knowing their financial punishment is confined. 3) From a practical standpoint for attorneys, PIP litigation becomes a burdensome task for attorneys without financial compensation. As a result, some may choose to weigh the significance of PIP’s wrongdoing to determine if it is worthy of litigating or perhaps avoid PIP litigation altogether. This provides leverage to insurers when deciding whether to commit misconduct, knowing they will likely face no resistance. Fortunately, Oregon law allows attorney fees under certain circumstances. Under ORS 742.061(1), an insurer must pay reasonable attorney fees when an insured sues an insurer and wins a higher net judgment than the amount the insurer tendered within six months of a proof of loss. However, insurers can enter a “safe harbor” from having to pay attorney fees under certain circumstances (i.e., partial denials of particular claims7). Furthermore, the damages permitted in Oregon are limited to actual damages. (Not to mention, there is an ongoing debate regarding whether damages in PIP claims are the amount of the wrongfully denied bill, or the amount PIP would have had to pay under the workers’ compensation fee schedule.) Washington vs. Oregon Continued from p 47
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