Certification from the U.S. Dist. Court for the W. Dist. of Wash. in Krista Peoples v. United Servs. Auto. Ass'n

452 P.3d 1218

Certification From the United States District Court for the Western District of Washington in Krista PEOPLES, Plaintiff,

v.UNITED SERVICES AUTOMOBILE ASSOCIATION and USAA Casualty Insurance Company, Defendants.

Joel Stedman and Karen Joyce, Plaintiffs,

v.Progressive Direct Insurance Company, Defendant.

No. 96931-1

Supreme Court of Washington.

Argued September 19, 2019

Filed November 27, 2019

Brendan Wesley Donckers, David Elliot Breskin, Breskin Johnson & Townsend, PLLC, 1000 Second Avenue, Suite 3670, Seattle, WA, 98104, Young-Ji Ham, Washington Injury Lawyers, PLLC, 1001 4th Ave. Ste. 3200, Seattle, WA, 98154-1003, Duncan Calvert Turner, Daniel Andrew Rogers, Badgley Mullins Turner, PLLC, 19929 Ballinger Way Ne Ste. 200, Shoreline, WA, 98155-8208, Randall C. Johnson Jr., Law Office of Randall C. Johnson, Po Box 15881, Seattle, WA, 98115-0881, Daniel R. Whitmore, Law Offices of Daniel R. Whitmore, PS, 6840 Fort Dent Way Ste. 210, Tukwila, WA, 98188-2555, for Plaintiffs.

Jay Williams, David C. Scott, Schiff Hardin LLP, 233 South Wacker Driver, Suite 7100, Chicago, IL, 60606, Michael A. Moore, Victoria Elizabeth Ainsworth, Corr Cronin LLP, 1001 4th Ave. Ste. 3900, Seattle, WA, 98154-1051, Casie Collignon, Justin Winquist, Paul G. Karlsgodt, Baker Hostetler LLP, 1800 California Street, Suite 4400, Denver, CO, 80202-2662, James Raymond Morrison, Baker Hostetler, 999 3rd Ave. Ste. 3600, Seattle, WA, 98104-4040, Philip Albert Talmadge, Talmadge/Fitzpatrick, 2775 Harbor Ave. Sw, Third Floor Ste. C, Seattle, WA, 98126-2138, for Defendants.

Linda Blohm Clapham, Michael Barr King, Carney Badley Spellman, P.S., 701 5th Ave. Ste. 3600, Seattle, WA, 98104-7010, for Amicus Curiae on behalf of American Property Casualty Insurance Association.

Valerie Davis McOmie, Attorney at Law, 4549 Nw Aspen St., Camas, WA, 98607-8302, Daniel Edward Huntington, Richter-Wimberley PS, 422 W Riverside Ave. Ste. 1300, Spokane, WA, 99201-0305, for Amicus Curiae on behalf of Washington State Association for Justice Foundation.

González, J. ¶1 The Consumer Protection Act (CPA), ch. 19.86 RCW, prohibits unfair and deceptive trade practices and can be enforced by private citizens. Any person who is "injured in [their] business or property" by a violation of the CPA may bring a civil suit for injunctive relief, damages, attorney costs and fees, and treble damages. RCW 19.86.090. Krista Peoples and Joel Stedman filed CPA suits against their insurance carriers for violating Washington claims-handling regulations and wrongfully denying them personal injury protection (PIP) benefits. We are asked by the United States District Court for the Western District of Washington whether Peoples and Stedman allege an injury to "business or property." We hold they do.

FACTS

¶2 Washington law requires insurers to offer PIP coverage to all automobile liability policyholders. RCW 48.22.085(1). "PIP insurance is designed to provide the insured with an immediate source of payment for out-of-pocket expenses resulting from [a car] accident," regardless of fault. Barriga Figueroa v. Prieto Mariscal, 193 Wash.2d 404, 411, 441 P.3d 818 (2019). Under the PIP statute, insurers are required to pay "all reasonable and necessary" medical expenses for treating an insured’s injuries arising from a covered event. RCW 48.22.085, .005(7). Under Washington insurance regulations, it is an unfair practice for an insurer to deny payment of a claim without first conducting a reasonable investigation. WAC 284-30-330(4). These regulations also make it an unfair practice to deny, limit, or terminate PIP benefits for any reason other than that the medical bills "(a) [a]re not reasonable; (b) [a]re not necessary; (c) [a]re not related to the accident; or (d) [a]re not incurred within three years of the automobile accident." WAC 284-30-395(1).

¶3 Peoples and Stedman purchased PIP coverage. After they were injured in car accidents, they made claims for PIP benefits. After their PIP benefits were terminated or denied, they filed class action suits against their respective insurance carriers under several causes of action, including the CPA, claiming their insurers violated Washington insurance regulations. Specifically, Peoples alleges that USAA refuses, without any individualized assessment, to pay medical provider bills whenever a computerized review process determines that the bill exceeds a predetermined limit. According to Peoples, USAA’s failure to investigate or make an individualized determination regarding the reasonableness or necessity of a provider’s charges before denying payment violates WAC 284-30-330(4) and WAC 284-30-395(1). She alleges that due to this practice of algorithmic review, USAA routinely fails to pay all reasonable medical expenses for treating an insured’s injuries arising from a covered event, in violation of RCW 48.22.005(7). She and class members seek actual damages, including unpaid medical bills and expenses incurred to investigate USAA’s wrongful conduct.

¶4 Stedman alleges Progressive terminates PIP benefits whenever an insured reaches "Maximum Medical Improvement" and this practice violates WAC 284-30-395(1), which lists the only permissible reasons to terminate PIP benefits. He alleges that by terminating benefits on the basis of "Maximum Medical Improvement," Progressive routinely fails to pay all reasonable medical expenses for treating an insured’s injuries arising from a covered event, in violation of RCW 48.22.005(7). He and class members seek to enjoin Progressive from using "Maximum Medical Improvement" to limit PIP claims and seek actual damages, including unpaid medical bills.

¶5 USAA and Progressive moved to dismiss the CPA claims on the grounds the insured was not "injured in [their] business or property." The federal district court consolidated the cases solely for the purpose of asking this court whether the plaintiffs allege cognizable CPA injuries. See Order Consolidating Cases & Certifying Question to Wash. Supreme Ct., No. C18-1254RSL at 8 (Order). The certified questions are as follows:

With regards to the injury to "business or property" element of a CPA claim, can insureds in Ms. Peoples’ and/or Mr. Stedman’s circumstances, who were physically injured in a motor vehicle collision and whose Personal Injury Protection ("PIP") benefits were terminated or limited in violation of WAC 284-30-330, bring a CPA claim against the insurer to recover out-of-pocket medical expenses and/or to compel payments to medical providers?

With regards to the "injury to business or property" element of a CPA claim, can insureds in Ms. Peoples’ and/or Mr. Stedman’s circumstances, who were physically injured in a motor vehicle collision and whose Personal Injury Protection ("PIP") benefits were terminated or limited in violation of WAC 284-30-330, bring a CPA claim against the insurer to recover excess premiums paid for the PIP coverage, the costs of investigating the unfair acts, and/or the time lost complying with the insurer’s unauthorized demands?

Id.

ANALYSIS

¶6 Certified questions are matters of law we review de novo. Parents Involved in Cmty. Sch. v. Seattle Sch. Dist. No. 1, 149 Wash.2d 660, 670, 72 P.3d 151 (2003) (citing Rivett v. City of Tacoma, 123 Wash.2d 573, 578, 870 P.2d 299 (1994) overruled in part on other grounds by Chong Yim v. City of Seattle, No. 96817-9, ––– Wash.2d ––––, 451 P.3d 694, 2019 WL 5997021 (Wash. Nov. 14, 2019) ). We consider the legal issues presented based on the certified record provided by the federal court. Bradburn v. N. Cent. Reg’l Library Dist., 168 Wash.2d 789, 799, 231 P.3d 166 (2010) (citing RCW 2.60.030(2) ). The certified questions in this case turn on the meaning of injury to "business or property" in the CPA. RCW 19.86.090. Our fundamental objective in interpreting a statute is to "ascertain and carry out the Legislature’s intent," which we discern "from all that the Legislature has said in the statute and related statutes which disclose legislative intent about the provision in question." Dep’t of Ecology v. Campbell & Gwinn, LLC, 146 Wash.2d 1, 9, 11, 43 P.3d 4 (2002).

¶7 The CPA prohibits unfair or deceptive practices in trade or commerce. RCW 19.86.020. Originally, only the attorney general could enforce the act. See Hangman Ridge Training Stables, Inc. v. Safeco Title Ins. Co., 105 Wash.2d 778, 784, 719 P.2d 531 (1986). In 1970, in response to "the escalating need for additional enforcement capabilities," the legislature "amended the CPA to provide for a private right of action whereby individual citizens would be encouraged to bring suit to enforce the [act]." Id. Today, a civil action for injunctive relief, damages, attorney costs and fees, and treble damages may be brought by any person who is "injured in [their] business or property" by a violation of the CPA. RCW 19.86.090. To prevail in a CPA action, a private plaintiff must prove (1) an unfair or deceptive act or practice (2) in trade or commerce (3) which affects the public interest (4) and causes injury to the plaintiff’s business or property, and (5) a causal link between the act and the injury. Hangman Ridge, 105 Wash.2d at 784-85, 719 P.2d 531.

¶8 It is well established that insureds may bring private CPA actions against their insurers for breach of the duty of good faith or for violations of Washington insurance regulations. See, e.g., Coventry Assocs. v. Am. States Ins. Co., 136 Wash.2d 269, 281-83, 961 P.2d 933 (1998) ; Indus. Indem. Co. of Nw. v. Kallevig, 114 Wash.2d 907, 923, 792 P.2d 520 (1990) ; Salois v. Mut. of Omaha Ins. Co., 90 Wash.2d 355, 581 P.2d 1349 (1978) ; Levy v. N. Am. Co. for Life & Health Ins., 90 Wash.2d 846, 586 P.2d 845 (1978).

The legislature has expressly declared that the insurance business is one "affected by the public interest" and has prohibited insurers from engaging in unfair or deceptive acts as defined by the legislature or the insurance commissioner. See RCW 48.01.030 ; RCW 48.30.010(1) - (2). The...