Lorraine Bates v. Bankers Life and Casualty Co
2017 U.S. App. LEXIS 3371
| 9th Cir. | 2017Background
- Plaintiffs are elderly Oregon residents (or successors) who purchased long‑term care insurance from Bankers Life (and parent CNO). These policies pay benefits for in‑home care, assisted living, and nursing homes.
- Plaintiffs allege Bankers developed practices to delay, deny, or underpay claims (e.g., lost documents, unreturned calls, improper denials) while continuing to collect premiums.
- Plaintiffs sued in federal district court asserting breach of contract, fraud, intentional misconduct, and a claim under Oregon’s financial abuse statute (Or. Rev. Stat. §§ 124.100–124.140).
- The district court dismissed the financial abuse claim under Rule 12(b)(6), holding the statute applies only to bailment/trust scenarios expressly referenced in the statutory language.
- The Ninth Circuit found no controlling Oregon appellate precedent on whether § 124.110(1)(b) covers insurer withholding of benefits and certified the question to the Oregon Supreme Court.
- Proceedings in the Ninth Circuit are stayed pending the Oregon Supreme Court’s answer; the Ninth Circuit will follow the state court’s authoritative interpretation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether ORS § 124.110(1)(b) provides a cause of action when an insurer in bad faith delays/denies policy benefits | § 124.110(1)(b) is broad enough to reach contractual benefit withholding; statute penalizes continuing to hold or failing to make available money/property and requires bad faith or knowledge | Statute requires the money/property to have been "acquired in whole or in part...from the vulnerable person"—aimed at bailment/trust or direct taking, not routine sales/services such as insurance benefits | Ninth Circuit certified the question to the Oregon Supreme Court because state law is unsettled and the answer will determine the appeal |
Key Cases Cited
- Hoffart v. Wiggins, 204 P.3d 173 (Or. Ct. App. 2009) (discusses elements and scope of an Oregon financial abuse claim)
- Wyers v. Am. Med. Response Nw., Inc., 377 P.3d 570 (Or. 2016) (consulted for legislative/history context in interpreting state statutory provisions)
- Patton v. Target Corp., 580 F.3d 942 (9th Cir. 2009) (explains procedure and rationale for certifying state‑law questions to state supreme courts)
- Bates v. Bankers Life & Cas. Co., 993 F. Supp. 2d 1318 (D. Or. 2014) (district court opinion dismissing the § 124.110 claim and framing the issue on appeal)