In answer to two certified questions, the Supreme Court of Washington has unanimously given us enough material to fill books. This will be the first of two posted articles addressing these answers. The second article will be posted here later.
In Peoples v. Utd. Serv's Auto. Ass'n, ___ Wash. 2d ___, ___ P.3d ___, No. 96931-1, 2019 WL 6336407 (Wash. Nov. 27, 2019), the Supreme Court of Washington was confronted with two questions. Both were certified by a U.S. District Court for answers under Washington State law.
The two questions arose out of the claims of two of the plaintiffs in the District Court, one Krista Peoples and one Joel Stedman. Both of them were physically injured in a motor vehicle accident. Both claimed Personal Injury Protection or PIP benefits to pay for the bills of their medical providers. Both of them were denied PIP benefits.
Besides this common core of facts, their claims presented the same broad question of whether the plaintiffs were injured in their business or property so that they could claim standing to sue under Washington State's Consumer Protection Act.
That is where the questions posed by their separate claims diverged.
Krista Peoples presented the first question. She alleged that USAA routinely denied PIP claims based on a "practice of algorithmic review[.]" Peoples, 2019 WL 6336407, at *1, ¶ 3:
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[.]
Peoples's claim was alleged as a class action. But that was not important to the outcome of her question. She and the class prayed for "actual damages, including unpaid medical bills and expenses incurred to investigate USAA's wrongful conduct." Peoples, 2019 WL 6336407, at *1, ¶ 3.
But Peoples and the class emphatically did not sue for their personal injuries incurred in the accident. Nor did they sue simply because the benefits for which they contracted related to payment of treatment for their personal injuries.
Rather, they sued because they were deprived of contract benefits, the benefits of statutorily required PIP coverage. That was their alleged injury to property or business, and that is what conferred standing upon them to sue under the Washington State Consumer Protection Act.
Stripped to its simplest elements, their question was whether "the wrongful denial of PIP benefits is an injury to 'business or property' under" the CPA. It bears repeating that "they seek to hold their insurance companies liable for benefits owed under contract. We conclude that the deprivation of contracted-for insurance benefits is an injury to 'business or property'” and that the type of contracted-for insurance benefits does not matter. Peoples, 2019 WL 6336407, at *3, ¶ 9.
Beyond contracted-for insurance benefits, the Court answered that policyholders also have "a related right to insurance dealings free from bad faith," that this "protected property interest" is invaded by "[c]laims handling and wrongful denial of benefits, ... regardless of the type of event that triggers coverage." Peoples, 2019 WL 6336407, at *4, ¶ 12.
In other words, the "algorithmic review" challenged by Krista Peoples and her class may have been the alleged cause of contract benefits being denied here, but it was the wrongful denial of benefits that was important to the outcome. What was important to the Supreme Court in this decision was the result and not the cause.
For all these reasons, the Washington Supreme Court's answer to the Krista Peoples's certified question was in the affirmative:
Therefore, to the extent proved, the plaintiffs may recover actual damages, including out-of-pocket medical expenses that should have been covered, and can seek injunctive relief to compel the payment of benefits to medical providers.
Peoples, 2019 WL 6336407, at *4, ¶ 13.
To summarize, the key to alleged 'injury to business or property' in the Peoples' class claims was "the deprivation of contracted-for insurance benefits." That was their injury. That conferred their standing to sue.
In the next article arising from the Peoples case, the second certified question will be addressed along with the question of whether "injuries to business or property" can ever include "investigative costs or time lost."
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