Changes in Washington Practice (#25) / Insurer bad faith damages

January 14, 2015

health-care-lawThis is installment #25 in a continuing series of Changes in Washington Practice Reports.

“Insurer bad faith” is addressed in Chapter 23 of Washington Insurance Law and Litigation by Matthew King, volume 35 of Washington Practice.

As noted, “Washington provides both common law and statutory remedies when insurers violate duties owed to insureds.”

The 2014-2015 edition of this volume has added a new section 23:18 to discuss damages under the Washington Insurance Fair Conduct Act (IFCA).

The IFCA “provides that any claimant ‘who is unreasonably denied a claim for coverage or payment of benefits’ by an insurer may bring an action in the superior court of this state to recover the actual damages sustained.”

“If upon finding that an insurer has acted unreasonably in denying a claim for coverage…then the court may increase the total award of damages to treble damages.”

The new section 23:18 specifically discusses how damages of three times actual damages are to be calculated.

Two 2014 cases are cited.

In Hazzard v. Union Bankers Ins. Co. (2014 WL 773533…), the court found that the correct procedure involved multiplying the contract value by three, not by adding treble damages to the claimed benefits.

This procedure was supported by Rain v. Ameriprise Auto and Home Ins. Co.  (2014 WL 1047222…).

It is clearly state policy under the ICFA and the Washington Consumer Protection Act (CPA) to encourage insurance companies to be careful not to demonstrate bad faith to their insureds.

For insurers, this means subjecting all claims to a test to make sure that the elements of bad faith are not present in decisions, and to thoroughly document the circumstances.

For insureds, this means that the denial of a claim should be supported by reasonable explanations and documentation.

If these seem incomplete or inadequate, consideration may then be given to possible legal action under the ICFA and CPA.

Whenever attorneys wish to locate specific resource materials, Methods of Practice (volumes 1 to 1C) of Washington Practice can also provide useful assistance. Washington Insurance Law and Litigation is summarized in volume 1C of Methods of Practice.

Excerpts from all of the volumes of Washington Practice are presented in an easily-searchable format, so that potential cites may be quickly located. The individual volumes of interest may then be examined for the needed details.