Benanav v. Healthy Paws Pet Ins.

STEVEN BENANAV, et al., on behalf of themselves and all others similarly situated, Plaintiffs, v. HEALTHY PAWS PET INSURANCE, LLC, Defendant.

No. C20-421-RSM

United States District Court, W.D. Washington, Seattle

September 23, 2021

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT HEALTHY PAWS' MOTION TO DISMISS AND DENYING DEFENDANT'S MOTION TO STRIKE

RICARDO S. MARTINEZ CHIEF UNITED STATES DISTRICT JUDGE

I. INTRODUCTION

This matter comes before the Court on Defendant Healthy Paws Pet Insurance, LLC (“Healthy Paws”)'s Motion to Dismiss Plaintiffs' Second Amended Class Action Complaint. Dkt. #49. Healthy Paws has separately moved to strike Plaintiffs' nationwide class allegations. Dkt #52. Plaintiffs oppose both motions. Dkts. #55, 56. Parties have requested oral argument on both motions, but the Court finds oral argument unnecessary to resolve the relevant issues. Having reviewed Defendant's Motions, Plaintiff's Responses, Defendant's Replies, and the remainder of the record, the Court ORDERS that Defendant Healthy Paws' Motion to Dismiss is GRANTED IN PART AND DENIED IN PART, and its Motion to Strike is DENIED.

II. BACKGROUND

A. Factual Background

A full background of this case is not necessary given the Court's previous orders in this matter. See Dkt. #42. Plaintiffs Steven Benanav, Bryan Gage, Monica Kowalski, Lindsay Purvey, Stephanie Caughlin and Katherine Thomas bring this class action complaint against Defendant Healthy Paws, a company that markets and administers pet insurance policies to consumers on behalf of insurance companies. Dkt. #45 at ¶¶ 1-2. The insurance companies underwriting the policies advertised and administered by Healthy Paws are Markel American Insurance Company (“Markel”), ACE American Insurance Company (“ACE”), Indemnity Insurance Company of North America (“Indemnity”), and Westchester Fire Insurance Company (“Westchester”), which are subsidiaries of parent company CHUBB Ltd. (“CHUBB”). Id. at ¶¶ 3-5. Pursuant to a General Agency Agreement dated October 1, 2012 between Healthy Paws and the insurance companies, Healthy Paws is responsible for selling and administering the policies through advertising, website development, policy quoting, issuance, servicing, and claims adjudication.

Between 2011 and 2017, Plaintiffs purchased pet insurance policies through Healthy Paws. Id. at ¶¶ 15-20. At the time Plaintiffs purchased their policies, they were not made aware that Healthy Paws increased the policy premiums each year due to their pets' age. Mr. Benanav claims that his premiums for his pet Mali increased by over 200% between 2013 and 2020, starting with a $33.85 monthly premium in January 2013 to his current payment of $104.50 in 2020. Id. at ¶¶ 89-93. Ms. Thomas purchased insurance in July 2014, and her monthly premiums increased from $40.61 in 2014 to $54.53 in 2020. Id. at ¶¶ 111-112. Ms. Kowalski purchased her policy in 2011 for her dogs Lola, Olive and Jenks. Id. at ¶¶ 121. Jenks passed away in 2015, but Ms. Kowalski's premiums for Lola and Olive increased from $25.41 and $31.44 per month in 2011 to $69.18 and $86.36 in 2020. Id. at ¶ 129. Mr. Gage purchased a policy in 2017 for his dog, Woodhouse, and the monthly premium increased by over 97% from 42.56 per month in 2017 to $84.13 in 2020. Id. at ¶¶ 140-141. Similarly, Ms. Purvey's monthly premiums for her dog, Toby, increased from $46.32 in 2013 to $143.11 in 2021, while Ms. Caughlin's premiums for her dog, Penny, increased from $40.56 in 2015 to $91 in 2020, at which point she cancelled her policy. Id. at ¶¶ 152-158; 165-167. Plaintiffs claim that had they known the monthly premiums would drastically increase as their pets aged, they never would have signed up for the policies.

Plaintiffs allege that Healthy Paws misrepresented the basis for changes to a policyowner's monthly premiums. This alleged misrepresentation is contained in (1) the insurance policy, (2) a sample policy document posted on Healthy Paws' website (“the Sample Policy”); and (3) a “Frequently Asked Questions” page on Healthy Paws' website (“the FAQ page”). Id. at ¶¶ 44-54. Each of Plaintiffs' policies contains the same language under paragraph I(5):

MONTHLY PREMIUM: Your monthly premium is set forth on your declarations page. Monthly premiums may change for all policyholders to reflect changes in the costs of veterinary medicine. We will notify you at least sixty (60) days in advance of such change.

Id. at ¶ 52 (emphasis added). Plaintiffs contend that these statements misled them to believe that their premium would only increase as the costs of veterinary medicine increased. Id. at ¶ 6. The Sample Policy repeats the same language stating that policy premiums may change “to reflect changes in the costs of veterinary medicine.” Id. at ¶ 50.

Furthermore, when Plaintiff Kowalski signed up for her policy in 2011, Healthy Paws stated the following on its FAQ Page:

Will my premiums increase over the life of my pet? Due to the increasing cost of new technology and advances in veterinary care, your rates will increase slightly each year. These slight increases provide you the opportunity to offer your pet the best medical and diagnostic options available today. Keep in mind your rates will never go up to due to making claims. And all pet insurance companies, no matter how they try to market their benefits, will raise rates to keep up with the rapidly rising cost of veterinary care.

Id. at ¶ 45 (emphases added). Healthy Paws posted a similar statement on its FAQ Page when Plaintiffs Benanav and Thomas purchased their policies in 2012 and 2014, respectively:

Will my premiums increase over the life of my pet? Due to the increasing cost of new technology and advances in veterinary care, your rates will increase slightly each year. Our plan has factored the expected increase in the cost of veterinary care into your rates so that the annual premium increases are manageable. These manageable annual increases provide you the opportunity to offer your pet the best medical and diagnostic options available today.

Rest assured, we will never penalize you with higher rates for making claims. It's not your fault your pet is unlucky! All pet insurance companies, no matter how they market their benefits, will raise rates periodically to keep up with the rapidly rising cost of veterinary care.

Id. at ¶ 46 (emphases added). As of the date Plaintiffs filed this Second Amended Complaint, the FAQ Page stated the following:

Will my premiums increase over the life of my pet?

Due to the increasing cost of new technology and advances in veterinary care, your rates will likely increase to align with the claim payouts of each state. These annual increases provide you the opportunity to offer your pet the best medical and diagnostic options available today. Premium increases are not based on claim submissions.

Additional Actions Affecting Premiums

. Change of address

. Adding or removing pet(s)

. Changing coverage options (reimbursement or deductible levels) . Transfer of account ownership (if applied to new address)

For additional information please click here to see policy specific provisions related to this FAQ.

Id. at ¶ 48 (emphases added).

Plaintiffs contend that notwithstanding Healthy Paws' representations to the contrary, their monthly pet insurance premiums have increased based on factors besides changes in the cost of veterinary medicine, such as the pet's age. Id. at ¶ 55. As evidence of Healthy Paws' misrepresentation, Plaintiffs cite to a correction at the bottom of a 2019 New York Times article which stated, “An earlier version of this article, using information supplied by Healthy Paws Pet Insurance, misstated how a pet's age affects premiums for the company's policies. The pet's age affects the premium at the time of enrollment and as the pet gets older, not just at enrollment.” Id. at ¶ 60 (emphasis added). Plaintiffs also cite to a statement from Healthy Paws' customer service team responding to a complaint posted on the Better Business Bureau website. In this statement, Healthy Paws confirmed that several factors besides the general rising cost of veterinary medicine affect the premium:

In accordance with the terms of the Pet Health Insurance Policy and the associated rating rules, monthly premiums may change for all policyholders. Premiums are determined based on the rates and rating rules filed and approved within each state's Department of Insurance, which reflect the cost of treatment advances in veterinary medicine, your individual pet's breed, gender, age, and other factors, in addition to the overall claims experience for the program within the region your pet resides.

Id. at ¶ 62 (emphasis added). Furthermore, Plaintiffs reference a report from the Nationwide Purdue Index stating that the costs of veterinary medicine only rose by 21.1% from the end of 2014 through the end of 2018. Id. at ¶¶ 94-95. In contrast, Plaintiff Benanav's premiums rose by 53% during this four-year period.

B. Procedural Background

Plaintiffs filed their first amended complaint on June 8, 2020 alleging violations of the Washington Consumer Protection Act, RCW § 19.86, et seq., the California Unfair Competition Law, Cal. Bus & Prof. Code § 17200 et seq. (“UCL”), the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ILCS 505/1, et seq. (“ICFA”), and the New Jersey Consumer Fraud Act, N.J.S.A. 56:8-1, et seq. (“CFA”). Dkt. #25. On October 15, 2020, this Court granted Healthy Paws' motion to dismiss. Dkt. #42. The Court concluded that Plaintiffs' claims failed to sufficiently plead fraud under Fed.R.Civ.P. 9(b) and were barred by the Washington, California and New Jersey filed rate doctrines. The Court dismissed Plaintiffs' claims without prejudice on the basis that it...