452 P.3d 1218
Wash.2019Background
- Washington law requires insurers to offer Personal Injury Protection (PIP) and to pay all "reasonable and necessary" medical expenses arising from covered accidents; regulations require a reasonable investigation before denying benefits and limit permissible denial/termination reasons.
- Krista Peoples alleges USAA uses an automated algorithm to deny medical-provider bills without individualized investigation; Joel Stedman alleges Progressive terminates PIP upon "Maximum Medical Improvement."
- Both plaintiffs purchased PIP, had benefits denied/terminated, and filed class actions asserting violations of insurance regulations and the Consumer Protection Act (CPA), seeking unpaid medical bills, injunctive relief, investigation costs, and related relief.
- Defendants moved to dismiss CPA claims, arguing the plaintiffs were not "injured in [their] business or property." The federal district court certified questions to the Washington Supreme Court on that issue and related damages questions.
- The certified questions asked whether wrongful denial/termination of PIP benefits supports a CPA claim for out-of-pocket medical expenses and compelling payments to providers, and whether excess premiums, investigation costs, or time lost are CPA injuries.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether wrongful denial/termination of PIP benefits is an "injury to business or property" under the CPA | Deprivation of contracted-for PIP benefits is a property injury and actionable under the CPA | Ambach and precedent bar CPA recovery for claims tied to personal injuries; PIP denials are essentially personal-injury-related | Yes. Deprivation of contracted insurance benefits is injury to business or property; Ambach does not bar these claims |
| Whether plaintiffs can recover actual damages (e.g., unpaid medical bills) and injunctive relief to compel payments to providers | Plaintiffs may recover out-of-pocket medical expenses and seek injunctions compelling payment | Insurers contended CPA relief is unavailable for these PIP-related harms | Yes. Plaintiffs may recover actual damages (including out-of-pocket medical expenses) and seek injunctive relief to compel payment |
| Whether costs of investigating the insurer's conduct and time lost responding are CPA injuries | Investigation costs and lost time are recoverable as CPA damages | Defendants disputed that such expenses qualify as injury to business or property | Yes. Under ordinary CPA principles (e.g., Coventry), investigation costs and time lost can constitute cognizable CPA injuries |
| Whether "excess premiums" are recoverable as CPA damages | Plaintiffs alternatively characterize unpaid benefits as "excess premiums" | Defendants challenged this theory | Court declined to decide the excess-premiums question as unnecessary given the holding that deprivation of benefits is a property injury |
Key Cases Cited
- Hangman Ridge Training Stables, Inc. v. Safeco Title Ins. Co., 105 Wn.2d 778 (1986) (articulates CPA private-action elements and legislative intent)
- Wash. State Physicians Ins. Exch. & Ass'n v. Fisons Corp., 122 Wn.2d 299 (1993) (discusses limits on CPA recovery for traditional personal-injury claims)
- Ambach v. French, 167 Wn.2d 167 (2009) (reaffirms that CPA does not cover personal-injury claims tied to the injury itself)
- Coventry Assocs. v. Am. States Ins. Co., 136 Wn.2d 269 (1998) (holds insurer bad-faith handling can support CPA claim; investigation costs recoverable)
- Indus. Indem. Co. of Nw. v. Kallevig, 114 Wn.2d 907 (1990) (holds violation of an insurance regulation is a per se unfair practice)
- Levy v. N. Am. Co. for Life & Health Ins., 90 Wn.2d 846 (1978) (insured alleging wrongful denial of benefits stated a CPA claim even when triggering event was personal injury)
- Trujillo v. Nw. Tr. Servs., Inc., 183 Wn.2d 820 (2015) (recognizes expenses incurred to investigate a deceptive act can be recovered under the CPA)