Strawn v. Farmers Ins. Co. of Oregon, 258 P.3d 1199

PIP benefits under Farmers policies were allegedly reduced via an eightieth-percentile threshold and later increased, affecting thousands of claims between 1998 and 1999.
Plaintiff class alleged breach of contract, breach of the implied covenant, declaratory judgment, and fraud based on Farmers' use of an automated cost-containment system (MMO/Medata) and RC40/B2 reductions.
Jury awarded compensatory damages, prejudgment interest, and an $8 million punitive damages award for fraud; trial court entered judgment accordingly.
Court of Appeals affirmed most liability rulings but held punitive damages excessive under federal due process limits; remanded for remittitur or new trial on punitive damages.
Supreme Court granted review to address liability issues, and whether the punitive damages review was procedurally proper; majority reversed the Court of Appeals on liability and dismissed the punitive-damages challenge as improperly before the court, affirming the trial court.
Ivanov v. Farmers Ins. Co. (and subsequent Oregon cases) governed whether class-wide presumptions or individualized proof applied to reasonableness of medical expenses and the admissibility of evidence regarding Farmers' investigation.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Preclusion of individualized evidence	Strawn: presumption of reasonableness shifts burden to Farmers to rebut with investigation	Farmers: trial court prevented rebuttal with individualized evidence of reasonableness	Trial court did not preclude; presumption rebuttable, evidence of investigation admissible
Classwide reliance proof in fraud claim	Reliance can be inferred on a classwide basis from uniform misrepresentation in PIP context	Reliance must be proven for each class member or via direct evidence	Court allowed inference of classwide reliance from common misrepresentation in a motor-vehicle PIP contract context
Raising and preserving punitive damages challenge	Court of Appeals should reach the merits regardless of preservation issues	Trial court properly waived and alternative grounds exist; appellate review limited	The punitive damages issue was not properly preserved; Court of Appeals should have affirmed on waiver grounds; overall punitive-damages challenge rejected
Constitutional excessiveness of punitive damages	Eight million in punitive damages within permissible range	Damage level exceeds due process standards under Campbell and Gore	Not reached on proper procedural grounds; affirmed on waiver/alternative bases without addressing merits

Ivanov v. Farmers Ins. Co., 344 Or. 421 (Or. 2008) (foundation for presumptions about reasonableness in PIP disputes)
Newman v. Tualatin Development Co., Inc., 287 Or. 47 (Or. 1979) (class action reliance and common evidence considerations)
Klay v. Humana, Inc., 382 F.3d 1241 (11th Cir. 2004) (classwide reliance in fraud; common misrepresentation analysis)
Strawn v. Farmers Ins. Co., 228 Or.App. 454 (Or. App. 2009) (reliance inference and punitive damages review context)
Utah Home Fire Ins. Co. v. Colonial Ins., 300 Or. 564 (Or. 1986) (PIP coverage and statutory requirements framework)
State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408 (S. Ct. 2003) (constitutional limits on punitive damages jury awards)
BMW of N. Am., Inc. v. Gore, 517 U.S. 559 (S. Ct. 1996) (review of punitive damages under due process)
Basic Inc. v. Levinson, 485 U.S. 224 (S. Ct. 1988) (fraud, reliance, and market-impact concepts in securities)