Washington Case Law Update: No Independent Cause of Action for Regulation Violation under IFCA

Attorney Profile Case Update Template -2016 Kyle

No Independent Cause of Action for Regulation Violation under IFCA

From the Desk of Kyle D. Riley: In 2007, the Washington legislature passed, and the voters ratified, the Insurance Fair Conduct Act (“IFCA”), giving insureds a new cause of action against insurers who unreasonably deny coverage or benefits.  IFCA also requires courts to award attorney fees and authorizes courts to award treble damages if the insurer acts unreasonably or violates certain insurance regulations related to unfair practices.  However, it has been unclear since IFCA’s adoption whether it also created a new and independent cause of action for violation of these regulations even without any unreasonable denial of coverage or benefits.

Claims Pointer: In this case arising out of the alleged denial of UIM benefits, the Washington Supreme Court held that IFCA did not create a separate cause of action for violation of insurance regulations.  The case clarifies an important Washington law governing insurance companies, putting to rest an argument plaintiffs have long raised that merely violating an insurance regulation exposes an insurer to liability under IFCA.

Perez-Crisantos v. State Farm Fire and Casualty Company, No. 92267-5, Washington Supreme Court (February 2, 2017)

Isidro Perez-Crisantos (“Perez-Crisantos”) was injured in a car accident in November 2010, and he incurred more than $50,000 in medical bills that he contended were the result of the accident.  He had personal injury protection (“PIP”) and underinsured motorist (“UIM”) coverage from State Farm Fire and Casualty Company (“State Farm”).  State Farm paid the PIP limits of $10,000 in medical expenses and $400 in lost wages.  Because the other driver had liability limits of only $25,000, Perez-Crisantos settled with him for his policy limits and made a UIM claim to State Farm for the remaining damages resulting from the accident.  State Farm did not pay benefits under the UIM policy.

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