Washington’s Insurance Fair Conduct Act Did Not Permit Insureds to Sue Their Insurers for Regulatory Violations Alone, State’s Highest Court Says
March 23, 2017 |The Supreme Court of Washington has ruled that the state’s Insurance Fair Conduct Act (“IFCA”) did not permit insureds to sue their own insurers for violation of regulations adopted under the IFCA in the absence of an unreasonable denial of coverage or benefits.
The Case
A driver injured in an accident sued his insurer under the IFCA, alleging that it had violated several of the IFCA’s implementing regulations relating to unfair settlement practices.
The insurer moved for summary judgment, arguing that there was no genuine dispute that it had acted reasonably and in good faith throughout the claims process, that the driver had not alleged a cognizable claim, and that the parties merely had a reasonable disagreement about the value of the claim.
The trial court ruled in favor of the insurer, and the dispute reached the Washington Supreme Court.
The Washington Supreme Court’s Decision
The court affirmed, holding that first party insureds could not sue their insurance companies under the IFCA for regulatory violations in the absence of an unreasonable denial of coverage or benefits.
In its decision, the court explained that the IFCA explicitly created a cause of action for first party insureds who were “unreasonably denied a claim for coverage or payment of benefits.” The court added that the statute, however, did not state that it created a cause of action for first party insureds “whose claims were processed in violation of the insurance regulations” issued under the IFCA.
The court noted that the pattern jury committee had concluded that the IFCA created a cause of action if an insurer “violated a statute or regulation governing the business of insurance claims handling.” Jury instructions, the court declared, were “not the law.”
It then concluded that an IFCA claim could not be predicated on a regulatory violation alone.
The case is Perez-Crisantos v. State Farm Fire and Cas. Co., No. 92267-5 (Wash. Feb. 2, 2017).
