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Washington Court of Appeals Emphasizes Insurers May Not Categorically Ignore Their Insureds’ Treating Physicians

Posted Tuesday, May 22, 2018 by McKean J. Evans

Shannon Leahy found herself in a common situation when dealing with her auto insurer following a car crash. Her insurer agreed she was not at fault, but refused to pay her claim, arguing her medical treatment was unrelated to the crash. Ms. Leahy’s doctors agreed her treatment was related to the crash, but State Farm ignored Ms. Leahy’s doctors in favor of the opinions of State Farm’s “independent” medical expert who (unsurprisingly) opined Ms. Leahy’s treatment was unrelated. Can they do that?

In Ms. Leahy’s case, the answer was “no.” On May 21, 2018, the Washington Court of Appeals clarified that insurers may not ignore the opinions of their insureds’ physicians when making coverage determinations in Leahy v. State Farm Mutual Automobile Insurance Company, No. 76272-9-I.

Ms. Leahy was injured when her vehicle was struck from behind. The other driver was at fault, but had insufficient insurance to cover Ms. Leahy’s injuries. Accordingly, Ms. Leahy made a claim with her auto insurance carrier State Farm, with whom she had coverage for Personal Injury Protection (“PIP”) and Underinsured Motorist coverage (“UIM”).

Ms. Leahy was still receiving treatment from her injuries about two years after the crash. State Farm asked her to undergo a medical exam with a third party doctor chosen by State Farm to determine whether her ongoing treatment was medically necessary. State Farm’s third party doctor, Dr. Lecovin, determined Leahy’s treatments were excessive. Thereafter, State Farm determined it would no longer cover Ms. Leahy’s treatment under her PIP coverage.

State Farm also disputed whether Ms. Leahy’ UM policy covered her injuries. State Farm’s adjuster concluded Ms. Leahy’s injuries were not caused by the collision. Ms. Leahy claimed the crash aggravated her pre-existing medical condition and thus that the aggravated injury was covered.

The dispute went to trial, at which the jury found in favor of Leahy. State Farm paid the policy limits. Ms. Leahy asserted new claims for bad faith premised on State Farm’s handling of her claim. The trial court dismissed Ms. Leahy’s claims and she appealed.

On appeal, the Court of Appeals reinstated Ms. Leahy’s claims. The court determined State Farm arguably violated the law by failing to consider the opinions of Ms. Leahy’s treating physicians that her injuries were aggravated by the crash. Ms. Leahy’s physicians were both board-certified rheumatologists and University of Washington faculty. The court determined there was a reasonable dispute whether State Farm could simply ignore their opinions. At minimum, Ms. Leahy was entitled to have a jury decide whether State Farm’s conduct was reasonable.

The court also determined State Farm’s low offer compared to Ms. Leahy’s recovery at trial could potentially show State Farm acted in bad faith. The court emphasized the proper analysis was what State Farm knew at the time it made the offer, not after trial. Given the evidence showed a legitimate conflict between State Farm’s position that Ms. Leahy’s injuries were mostly unrelated to the crash and the opinions of Ms. Heahy’s treating physicians, the court determined Ms. Leahy was entitled to a trial on this issue.

In sum, the Leahy decision is an important win for Washington policyholders because it emphasizes insurers may not categorically ignore the opinions of the insured’s treating physicians in order to deny coverage.

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Case Law Update: Recreational Use Immunity Act Clarified

Posted Wednesday, May 16, 2018 by Christopher L. Thayer

In Lockner v. Pierce County (No. 94643-4, April 19, 2018), the Washington Supreme Court recently revisited Washington’s Recreational Use Immunity Act and clarified its application. RCW 4.24.210 provides protection for owners of recreational property, specifically:

“Any public or private landowners, hydroelectric project owners, or others in lawful possession and control of any lands … who allow members of the public to use them for the purposes of outdoor recreation … without charging a fee of any kind therefor, shall not be liable for unintentional injuries to such users.”

In Lockner, Ms. Lockner and her niece went for a bicycle ride on the Foothills Trail in Pierce County. While Lockner rode behind her niece, both cyclists approached a riding lawn mower cutting grass and moving in the same direction beside the trail. As Lockner passed the lawn mower, it allegedly expelled a cloud of dust and debris. Lockner shielded her face and swerved clipping her niece’s bike. Lockner fell and severely injured her knee and elbow. The Foothills Trail is a nonmotorized asphalt trail alongside a soft shoulder path for equestrian use. Pierce County’s website for the trail describes it as a “popular commuter route and recreational destination for bicyclists.” In its regional plan, the County envisions that its trail system will become a network for recreation, provide “transportation routes,” and connect the County to other regional destinations.

Lockner filed suit seeking recovery for injuries against the County alleging negligence. The trial court dismissed her lawsuit, based on the recreational immunity statute (RCW 4.24.210). On appeal, the question was whether or not, for the recreational immunity statute to apply, did the trail have to be used “solely” for recreational purposes? Lockner argued because the trail was open for uses other than recreation (i.e., commuting), the statutory immunity did not apply.

The Supreme Court noted to qualify for immunity under RCW 4.24.210, the landowner must establish the land at issue was (1) open to members of the public (2) for recreational purposes and (3) no fee was charged. The Court held the language of the statute is clear and unambiguous. The provision mentions only outdoor recreation and it does not say that land must be open for “only” recreational purposes.

The Supreme Court held:

“We did not construe RCW 4.24.210 as requiring exclusive recreational use to confer immunity; indeed, as explained above, the plain language of the statute does not support such a reading. In light of this plain language, immunity is not extinguished when land is used for other public or private activities in addition to recreation.”

RCW 4.24.210 was enacted to encourage landowners (including cities, counties and the state) to open up their property for recreational use, without having to be concerned about potential liability in the event someone were injured. In a region where outdoor activities from cycling, to hiking, climbing and kayaking, play such a huge role, this statute makes it easier for such landowners to open the land up to the public. The Lockner decision makes it clear the Washington Supreme Court intends to construe this statute broadly. This could have broad implications for those who commute by bicycle, to the extent their commute is on trails, which are also used for recreation. Absent the statutory immunity, a governmental agency would be liable if the pathway were unsafe or dangerous as designed or maintained.

If you have questions about the recreational use immunity statute and its application, please contact managing member, Chris Thayer at (206) 805-1494 or CThayer@PivotalLawGroup.com.

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How Will Insurance Cover Self-Driving Cars?

Posted Wednesday, May 9, 2018 by McKean J. Evans

Self-driving vehicles are already on roads in several cities and are predicted to become normal in the next few decades. How will your insurance cover you if you’re the operator of a self-driving car? If someone else’s self-driving car injures you or damages your property, will the owner have coverage for your loss?

First, it may be a moot point because self-driving cars could reduce accidents to the point where the cost of insurance coverage becomes nominal or coverage becomes totally unnecessary. Preventable human error – texting, adjusting the radio, hasty lane changes, etc. – is estimated to cause 94% of all motor vehicle collisions. One industry forecast projected widespread adoption of autonomous vehicles would reduce premiums by 80% and lead to a $25 billion loss for insurers by 2035 as reduced accidents reduce the need for coverage.

On the other hand, while autonomous cars may reduce the need for liability and collision insurance, they may require new forms of insurance such as cyber security coverage. Even existing conventional cars can be hacked, and self-driving cars are likely to grow more and more vulnerable to electronic intrusion. Imagine if your car were susceptible to the same malware, ransomware or other abuse as your computer or phone. It may ultimately be necessary to procure cyber security coverage for your autonomous vehicle.

One possible answer is manufacturers may simply assume all liability associated with their autonomous vehicles. Google, Volvo, and Mercedes-Benz already assume liability any time one of their vehicle’s self-driving system is at fault for a collision. Tesla has its own insurance program for owners of Tesla self-driving vehicles.

Another suggestion is future drivers may not need insurance because they may not own their cars. Self-driving vehicles may lead to widespread reliance on car sharing services. Unlike Lyft or Uber which rely on human operators, self-driving ride-share vehicles could operate around the clock at a much lower cost, making it practical for urban drivers to rely entirely on ride-sharing for daily transportation. Future autonomous vehicle ride-sharing fleets would likely self-insure, as Google’s subsidiary Waymo intends to do when it launches its self-driving ride-share service in the coming months.

Whatever the result, self-driving cars will ultimately present some form of risk, and manufactures, drivers, municipalities and insurers will have to decide how to allocate that risk among themselves.

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Pivotal Attorney McKean Evans Published in King County Bar Association Bulletin

Posted Thursday, May 3, 2018 by Pivotal Law Group

The May edition of the King County Bar Association’s Bar Bulletin features an artile by Pivotal attorney McKean Evans. McKean discusses the Washington Court of Appeals’ recent decision expanding insurance bad faith claims against individual adjusters and reviews potential future implications of the ruling. Check out the article here.

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Washington Federal Court Rejects Insurer Efforts to Limit Policyholder Recovery to Bare Policy Benefit

Posted Wednesday, May 2, 2018 by McKean J. Evans

In its April 23, 2018 decision in Williams v. Foremost Insurance Co., 2:17-CV-1113-RSM, 2018 WL 1907523 (W.D. Wash. Apr. 23, 2018), the U.S. District Court for the Western District of Washington analyzed and rejected a frequent argument insurers make in defending bad faith lawsuits: that the insurer can escape a bad faith lawsuit by retroactively paying the benefits it denied in the first instance.

Williams brought a claim for vandalism damage under her insurance policy with Foremost. Foremost denied Williams’ claim for insurance benefits, arguing that the vandalism was caused by people who were Williams’ tenants at the time of the damage. Foremost ignored Williams’ argument the loss was covered because the vandals were former as opposed to current tenants.

Williams brought a lawsuit alleging claims for bad faith and violations of Washington’s Insurance Fair Conduct Act (“IFCA”) and Consumer Protection Act (“CPA”); those claims entitled Williams to damages beyond the amount of the disputed insurance benefit, such as attorney’s fees, court costs and treble damages.

The court promptly ruled that coverage existed and ordered Foremost to pay the disputed benefits. Following that ruling, Foremost paid Williams $187,001.43 in benefits owed.

Foremost then asked the court to dismiss Williams’ claims for bad faith and for CPA and IFCA violations. Foremost claimed that, since it paid the policy benefits Williams claimed, Williams had no right to assert any additional claims. The Court rejected Foremost’s arguments.

First, and most importantly, the court rejected Foremost’s argument that Williams’ remaining claims were barred because Foremost ultimately paid the insurance benefits, and that Williams could not bring further claims without producing “her complete financial records.” The court determined “Foremost’s insurance payment to Ms. Williams is irrelevant to the issue of bad faith” and that “Washington State law does not appear to provide that retroactive payment for an insurance claim extinguishes all the alleged harm to a plaintiff[.]”

Next, the Court rejected Foremost’s argument that its claim denial was reasonable in light of the evidence Foremost had at the time. The Court noted that Foremost’s evidence showed only that the vandalism was caused by former – not current – tenants, and that Foremost had no evidence that the vandals were Williams’ tenants at the time the vandalism occurred. Moreover, Williams explicitly advised Foremost the vandals were not tenants at the time of the damage.

Finally, the Court also emphasized that an insurer’s bad faith denial of coverage injures the insured beyond merely the dollar amount of the policy benefit. In this case, Williams suffered additional damages because Foremost’s wrongful denial delayed her ability to repair the vandalism damage to her building; Williams also had to hire an expert, take construction loans, and perform some repairs herself.

The Williams decision emphasizes an insured’s remedies for bad faith denial of insurance claims are comprehensive, and include losses and injuries beyond the bare policy coverage amount.

If you have questions regarding insurance claim denials or other insurance issues, contact Pivotal Law Group attorney McKean J. Evans today for a free consultation.

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