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Court of Appeals Reiterates Insurer’s Obligation to Protect Policyholder From Lawsuit

Posted Thursday, August 16, 2018 by McKean J. Evans

When a driver crashes into another vehicle and is sued for damages, the driver’s insurer typically has an obligation to defend the lawsuit and act in good faith to protect its insured’s interests. When the insurer fails to do so, the driver likely has legal recourse under Washington law.

Washington’s Court of Appeals recently reiterated this principle in Singh v. Zurich American Insurance Company. In Singh, the Court of Appeals ruled Singh’s insurer, Zurich American, was liable for failing to settle and defend claims against Singh in good faith.

On July 20, 2011, one of Singh’s employees, driving Singh’s semitruck, allegedly caused a 16-vehicle crash by failing to slow down for congested traffic. Persons injured in the crash, and the families of those killed in the crash, sued Sing for damages. Because of the dramatic injuries and deaths allegedly caused by Sing’s employee, the plaintiffs quickly advised Singh that they saw their damages recoverable from Singh as exceeding the limits of Sing’s insurance policy. In other words, Singh knew that, if he lost the court case, he would have to pay significantly more money than his Zurich American insurance policy would cover.

Singh’s insurance policy with Zurich American obligated Zurich American to defend Singh in the lawsuit. Zurich hired a lawyer to defend Singh. Zurich’s lawyer recognized it was in Singh’s best interests to pay the entire insurance policy limit to settle the large monetary demands of the persons injured and killed in the crash. But the attorney also recognized that disbursing the entire policy limit to the first plaintiffs to sue Singh would leave Singh without insurance coverage should later claimants seek damages from Singh.

Accordingly, Zurich’s lawyer proposed to reserve some of Singh’s policy limits to protect Singh from future claims arising from the crash. However, Zurich ignored its lawyer’s advice and ordered the lawyer to settle the existing claims with the full policy limits. Zurich’s lawyer did so.

Later, another person sued Sing claiming injuries in the crash. Zurich refused to defend the lawsuit because Singh’s policy limits were exhausted from the prior settlement. Singh paid for his own counsel and ultimately paid $250,000.00 to settle the new claims.

Singh then filed suit against Zurich alleging Zurich acted in bad faith and violated Washington’s Insurance Fair Conduct Act (“IFCA”) and Consumer Protection Act (“CPA”). The jury found in Singh’s favor, agreeing Zurich breached Singh’s insurance policy and acted in bad faith.

The Court of Appeals upheld the jury’s verdict. The court observed the insurer’s duty to defend the insured “is one of the main benefits of the insurance contract.” Thus, the court determined Zurich could not permissibly exhaust the policy limits then use its exhaustion of the policy limits as an excuse to continue defending Singh. Doing so put Zurich’s interests over Singh’s in violation of the insurance policy and Washington law. Notably, Zurich ignored its own lawyer’s suggestion it keep some policy limits in reserve to protect Singh from future claims.

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Washington Updates “Mandatory” Arbitration Statute

Posted Wednesday, July 18, 2018 by Christopher L. Thayer

In Washington, civil cases involving claims less than $50,000, which are filed in Superior Court, are referred into the court-sponsored “mandatory” arbitration program. Under this process, an attorney with at least five years of experience is appointed as the arbitrator to decide the issues in the case. There are relaxed rules of evidence and the parties may submit sworn statements or reports in lieu of live testimony for witnesses. It is generally a much less expensive way to resolved modest claims, as the hearings typically only take one day. Either party has an automatic right of an appeal if they are not happy with the result.

The Washington legislature has adopted new provisions expanding the monetary jurisdictional limitation on claims and modifying the procedures. The changes go into effect on September 1, 2018. A summary of the changes to the laws are as follows:

• Removes all references to the word “mandatory” throughout the arbitration laws, replaced with “civil” in some instances.

• Increases the maximum arbitration limit from $50,000 to $100,000 - if approved by the superior court of a county by two thirds or greater of judges.

• Adopts procedural rules for the timing of an arbitration hearing and permissible discovery, including authorizing medical examinations of parties – where appropriate.

• Sets qualifications for a person serving as an arbitrator. Requires a notice of appeal from arbitration to be signed by the appealing party (and not just their attorney).

• Increases the arbitration filing fee from $220 to $250, and the appeal filing fee from $250 to $400.

The increase from $50,000 to $100,000 for the jurisdictional limits will open up a much larger range of cases to the arbitration program, and presumably take some of the burden off the overloaded court system. As court-sponsored arbitration is generally far less expensive (and quicker) than a trial, this change will, in general, benefit litigants.

The requirement that a party must actually sign the appeal notice will be interesting to watch. This was added in the context of personal injury cases, where attorneys for defendants are being paid for by defendants’ insurance company. Anecdotally, insurance companies were instructing their attorneys to file appeals of arbitrations without consulting with their insured. As most people are not interested in having their lives tied up in litigation, it is likely many people would not consent to an appeal – so long as their insurance company is paying for the claim. It also seems likely insurers will start adding provisions to Washington insurance policies – requiring their insured to consent to any appeals where recommended by the insurer to address this situation.

If you have any questions about Washington’s “Mandatory” Arbitration process, please feel free to contact managing member Chris Thayer at (206) 805-1494 or at CThayer@PivotalLawGroup.com.

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Health Insurer Fined For Violating Independent Review Rules

Posted Wednesday, July 11, 2018 by McKean J. Evans

Washington’s insurance commissioner recently announced a $100,000 fine in response to a consumer complaint that Kaiser Foundation Health Plan, an HMO, ignored consumers’ rights in the health claims appeal process. The commissioner found that Kaiser failed to follow several rules related to appeals of health insurance claims to an Independent Review Organization (“IRO”).

At issue are rules contained in Washington’s statutes and administrative codes protecting insurance policyholders. Among other things, Washington law required Kaiser to provide the IRO with any records, documents, or information relevant to the claim within three business days; ensure that expedited reviews are adjudicated within 72 hours of the policyholder’s request; and provide the policyholder the IRO’s name and contact information within one business day.

In Kaiser’s case, the insured had the right to provide evidence supporting the insured’s claims to the IRO within five days. However, Kaiser failed to notify most consumers they had the right to do this. The commissioner also found Kaiser dragged its feet in the IRO process. Kaiser was found to have failed to timely send claims files to the IRO; failed to process expedited claims on time; and failed to timely give consumers the IRO’s name and contact information.

The commissioner found these violations occurred during the period from January 2016 through March 2017.

Kaiser signed a Consent Order regarding the above violations, pursuant to which Kaiser acknowledged its duty to comply with the law and consented to imposition of the fine.

Pivotal Law Group attorney McKean J. Evans represents insurance policyholders and has obtained favorable outcomes in disputes with health insurance carriers. If you have questions regarding a health claim dispute, contact McKean for a free consultation.

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Case law update: The “self-service” exception for a Slip and Fall injury at a Grocery Store

Posted Friday, July 6, 2018 by Christopher L. Thayer

In a December 2017 decision, the Washington State Court of Appeals, Division III, addressed a slip and fall personal injury claim where claimant fell in the shampoo aisle of a Walmart in Sunnyside. In McPherson v. Wal-Mart Stores, Inc., No. 34696-0-III (12/14/17), in an unpublished decision, the Court of Appeals affirmed the trial court’s dismissal of Ms. McPherson’s claim.

McPherson was injured after she slipped and fell in the shampoo aisle of a Walmart store in Sunnyside, Washington. The fall took place just after 5:00 p.m. After the incident, a store manager noted a shampoo bottle that had been knocked over on one of the shelves, resulting in some clear shampoo spilling down onto the floor. The spilled shampoo was deemed to be the cause of McPherson’s fall. The store manager reviewed video surveillance of the aisle where McPherson fell. According to a declaration from the manager, the video showed a Walmart associate had checked the condition of the shampoo aisle between 4:04 p.m. to 4:06 p.m. Later, at 4:53 p.m., the manager observed two women handling bottles of shampoo in the area where McPherson’s fall occurred. One of these women placed a shampoo bottle on the shelf in the same spot where the manager later discovered the shampoo bottle that spilled onto the floor. The manager declared that no one had notified Walmart of any spills in the shampoo aisle prior to McPherson’s fall.

After the McPherson sued for negligence, Walmart moved for summary judgment. The trial court agreed with Walmart, ruling McPherson lacked evidence the store had actual or constructive notice of the shampoo spill and dismissed McPherson’s claim. McPherson appealed.

A patron of a retail establishment is considered a “business invitee” under Washington law. A property owner is only liable for a personal injury claim to a business invitee if the owner had “actual or constructive notice of an unsafe condition”. Ingersoll v. DeBartolo, Inc. ,123 Wn. 2d 649, 652 (1994). Courts have defined “constructive” notice:

Constructive notice arises where the condition ’has existed for such time as would have afforded [the proprietor] sufficient opportunity, in the exercise of ordinary care, to have made a proper inspection of the premises and to have removed the danger.’”

Ingersoll.

There is an exception, the so-called “self-service” exception which provides: a plaintiff need not prove actual or constructive notice “when the nature of the proprietor’s business and his methods of operation are such that the existence of unsafe conditions on the premises is reasonably foreseeable.” Pimental v. Roundup Co. 100 Wn. 2d 39, 49 (1983).

Pimentel’s self-service exception has not been applied to all self-service areas where customers retrieve items from store shelves. Ingersoll, at 653. Most stores operate under a self-service model. Yet not all store areas present the types of readily apparent hazards discussed in Pimentel. A plaintiff who has sustained injuries in a self-service section of a store is not automatically excused from proving actual or constructive notice. To avoid having to prove actual notice, plaintiff must establish the defendant’s particular self-service operation makes the existence of unsafe conditions reasonably foreseeable. Pimentel , at 49-50.

To meet Pimentel’s self-service exception, a plaintiff must show the unsafe condition giving rise to injury was “continuous or foreseeably inherent in the nature of the business or mode of operation.” Specific to the McPherson case, the Court held McPherson needed to provide evidence of: (1) the frequency of shampoo spills at the Sunnyside Walmart, (2) the number of store associates assigned to clean such spills, (3) the frequency of checks for spills by store associates, (4) the number of injuries caused by slip and fall incidents involving shampoo spills, and (5) whether Walmart encourages patrons to report spills, etc. The trial court found McPherson presented no evidence to support any of these elements, and the Court of Appeals agreed.

Although an unreported decision, meaning it has no precedential value, McPherson is nonetheless a good primer on this particular area of law: slip and fall injuries in retail stores. The body of law relating to actual or constructive notice has developed over the years and reflects the court systems efforts to balance the potential liability of a store owner vs. protecting the safety of its customers. Grocery stores in particular are susceptible to slippery liquids being spilled on the floor. Whether or not an establishment is liable for any injuries is going to be very fact-specific. Proving how long a particular spill was on the floor can be difficult if not impossible for a claimant.

If you have questions about premises liability for injuries, either as a property owner or potential claimant, please contact managing member Chris Thayer at (206) 805-1494 or CThayer@PivotalLawGroup.com.

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Pet Insurance: Read The Fine Print

Posted Thursday, June 28, 2018 by McKean J. Evans

Great Danes might be the best dogs - they’re calm, require relatively little exercise and space, and are super affectionate towards their human family. Unlike a lot of needier breeds who need constant activity, Danes reputedly just want to chill with you on the sofa.

The problem with Great Danes is they’re prone to significant, protracted health problems that get incredibly expensive - partly due to their large size and partly due to their susceptibility to congenital and hereditary disorders. Thus, in researching the pros and cons of owning a Dane, I was repeatedly advised “buy pet insurance!” That got me thinking whether pet insurance is actually a good deal or a scam preying on cost-conscious pet owners.

Apparently pet insurance, whatever its benefits, has caught the ire of Washington State’s Insurance Commissioner for some pretty significant problems. One company was found to have violated state law more than 600 times. Among other things, the pet insurer:

  • Illegally failed to give new policyholders copies of their policy contracts;

  • Misrepresented the policy coverage in its marketing and advertising materials;

  • Failed to cancel policies after pets died or the policyholder no longer owned the pet;

  • Sold policies under a fake name, preventing consumers from identifying the company when they had complaints;

  • Misled consumers about under what circumstances the company would refund premiums;

  • Ignored consumer complaints;

  • Sold insurance through unlicensed brokers; and

  • Failed to explain the reasons for refusing to renew coverage.

Pet insurance also tends to come with significant exclusions. Pre-existing condition exclusions are unsurprising. But some policies also exclude “wellness” care and expenses “not directly related to veterinary service” - super ambiguous terms with lots of room for fine print and interpretation that could give the company a basis to deny coverage.

Similarly, some insurance excludes hereditary or congenital disorders - a major drawback if your pet is of a breed (like Great Danes) that are notoriously subject to such diseases.

The upshot is to do your diligence and research the company and your coverage carefully before buying pet insurance, and to double check the policy fine print on your existing coverage to be sure you have the coverage you thought you bought.

Pivotal Law Group attorney McKean Evans has obtained favorable coverage decisions for insureds in disputes regarding coverage denials. If you have concerns regarding a pet insurance dispute, contact McKean at (206) 805-1493 or mevans@pivotallawgroup.com for a free consultation.

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