Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—E.D. Wash.: Insurance claims may form basis of Washington consumer protection claims, (Oct 10, 2013)

By Jody Coultas, J.D.

An independent contract courier stated, in part, Washington Consumer Protection Act (CPA) claims against National Union Fire Insurance Company for allegedly misrepresenting its insurance policy, the federal district court in Spokane has held (Emery v. National Union Fire Insurance Company of Pittsburgh, PA, October 8, 2013, Rice, T.).

The courier enrolled in a group disability insurance policy issued by National Union. Policy benefits were contingent upon the insured becoming “temporarily totally disabled” within 90 days of the date on which he or she was injured. After sustaining an injury, the courier contacted National Union about the availability of Temporary Total Disability (TTD) benefits. National Union alleged that the courier was advised that TTD benefits were not available because his claimed disability had not commenced within 90 days following the date of his injury. The courier, however, stated that National Union told him that TTD benefits were not available because he had not filed a claim for such benefits within 90 days of his injury. The claim was ultimately denied on the ground that the courier was not “temporarily totally disabled.”

To state a CPA claim, the courier was required to show (1) an unfair or deceptive act or practice; (2) in trade or commerce; (3) that impacts the public interest; (4) which causes injury to the party in his business or property; and (5) which injury is causally linked to the unfair or deceptive act. Certain enumerated acts and practices are treated as per se violations of the CPA.

Because the courier failed to show an actual injury stemming from National Union’s alleged deceptive acts, the court dismissed the claims. The courier alleged that National Union violated the Washington Insurance Fair Conduct Act (IFCA), and that the violations were per se violations of the CPA. Specifically, the courier alleged that one of National Union’s employees misrepresented how to file a disability claim during a telephone conversation with the courier. Even if the misrepresentation took place, the courier failed to show that he was injured by the misrepresentation. The claim was not denied on the ground that it was untimely submitted and there was no evidence that National Union failed to promptly provide a reasonable explanation for its decision to deny the claim.

The court dismissed the courier’s claims based on allegations that National Union did not file or submit to the OIC the required trust documents and did not obtain a signed disclosure statement from its insured because the statutes did not apply to National Union. The provisions of the IFCA only applied to insurers who “market” group insurance coverage in the Washington. National Union did not “market” the type of coverage afforded by the policy at issue directly to Washington residents.

Neither party was entitled to summary judgment of the courier’s claim that National Union violated the IFCA prohibiting an insurer from engaging in an insurance transaction relating to disability coverage issued to a Washington resident under an out-of-state group policy unless the policy or a certificate of coverage is delivered to the insured. National Union did not dispute that it failed to provide the courier with a copy of the policy or certificate explaining the terms and conditions of coverage prior to processing his claims.

The court dismissed the courier’s claim that National Union violated the IFCA section prohibiting insurance companies from soliciting Washington citizens to buy or apply for life insurance, annuities, or disability insurance coverage when the coverage is provided under the terms of a group policy. The courier alleged that National Union failed to obtain a completed disclosure statement from him. However, this regulation did not apply to National Union because it applied only to insurers who permit a licensed insurance producer to solicit an individual in the State of Washington to buy or apply for disability insurance coverage.

The statutes not enumerated as per se violations of the CPA did not proscribe conduct inherently unfair or deceptive by a legislative body. None of the statutes were listed in the ICFA as dealing with unfair practices and frauds in the business of insurance. Therefore, violations of the statutes were not actionable under the IFCA as per se violations of the CPA. The courier did not allege any non-pre se CPA claims. Thus, the claims under the statutes were dismissed.

The case is No. 12-CV-0215-TOR.

Attorneys: Michael J. Delay (Michael Delay Law Office) for Stephen L. Emery and Jean Ann Emery. Curt H. Feig (Nicoll Black & Feig PLLC) for National Union Fire Insurance Company of Pittsburgh PA.

Companies: National Union Fire Insurance Company

Cases: StateUnfairTradePractices WashingtonNews