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Heide v. State Farm Mutual Automobile Insurance Co.

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

May 26, 2017



          Thomas S. Zilly United States District Judge.

         THIS MATTER comes before the Court on defendant's motion for partial summary judgment, docket no. 15, to dismiss plaintiff's claims for insurance bad faith and violation of Washington's Insurance Fair Conduct Act (“IFCA”) and Consumer Protection Act (“CPA”). Having reviewed the motion and all relevant filings, the Court enters the following Order.


         On May 27, 2015, plaintiff Christopher Heide was driving his mother's 2006 Honda Accord eastbound on James Street in Seattle when uninsured motorist Heather Green struck the rear passenger side of his vehicle while changing lanes. In June of 2015, plaintiff tendered a claim for Underinsured Motorist (“UIM”) coverage to defendant State Farm Mutual Automobile Insurance Company (“State Farm”), his mother's insurer. Plaintiff reported to Claims Specialist Jen Miller that the accident had caused pain in his “lower back on the left side” and in his “upper left leg.” Decl. of Dan Kirkpatrick, docket no. 16, Ex. B at 22 (Claim File).

         Plaintiff spoke with Ms. Miller again on August 25, 2015, and reported that he had been hospitalized for internal bleeding, that he “believes it is in [his] GI tract, ” that his doctors believed “Ibuprofen contributed to the bleed, ” and that he was continuing to receive treatment for the bleeding. Id. at 18. In October 2015, plaintiff informed State Farm he had retained counsel who, in February of 2016, submitted a demand letter requesting the per-person policy limits of $50, 000. Id. at 31-41. In addition to alleging coverage of his back injury, plaintiff asserted that his gastro-intestinal bleeding was covered under the UIM policy because it was caused by his use of non-steroidal anti-inflammatory drugs (“NSAIDs”), which he used to treat pain caused by his back injury in lieu of opiates due to a history of narcotic abuse. Id. at 33. On February 19, 2016, Injury Claim Trainer, David Guanay conducted a review of plaintiff's medical records related to the gastro-intestinal bleeding and concluded that although the “etiology of [plaintiff's] bleeding is still unknown” his “GI bleeds are thought to be the result of the use of too much NSAID medication.” Id. at 18.

         On March 8, 2016, Ms. Miller extended an initial offer of $11, 900.00. Id. at 24. Ms. Miller also discussed the claim with plaintiff's attorney and explained that State Farm did not consider any of the treatment for plaintiff's gastro-intestinal bleeding as related to the accident. Id. at 16. On March 30, 2016, after receiving the 20-day IFCA violations notice required by RCW 48.30.015(8) from plaintiff's counsel, State farm increased its offer to $12, 840.00, payment of fees under Winters, [1] and waiver of $4, 970.90 in Personal Injury Protection (“PIP”) benefits. Plaintiff rejected State Farm's offer and filed this lawsuit on April 6, 2016. Summons and Complaint, docket no. 2.


         A. Legal Standard

         Summary judgment is appropriate if, viewing the evidence in the light most favorable to the party opposing the motion, there is no genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); L.A. Printex Industries, Inc. v. Aeropostale, Inc., 676 F.3d 841, 846 (9th Cir. 2012). The moving party bears the initial burden of demonstrating the absence of a genuine dispute as to any material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). A fact is material if it might affect the outcome of the suit under the governing law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Once the moving party has satisfied its burden, the party opposing the motion must set forth specific facts demonstrating that there is a genuine issue for trial. Hexcel Corp. v. Ineos Polymers, Inc., 681 F.3d 1055, 1059 (9th Cir. 2012). While “all justifiable inferences” are to be drawn in favor of the non-moving party, id. at 255, when the record, taken as a whole, could not lead a rational trier of fact to find for the non-moving party, summary judgment is warranted. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (citations omitted).

         B. Analysis

         a. IFCA

         State Farm argues that plaintiff's IFCA claim must be dismissed because State Farm did not unreasonably deny coverage or payment of benefits, but instead made an offer based on a reasonable dispute over the value of the claim. Plaintiff, on the other hand, contends that State Farm's offer violated IFCA because State Farm unreasonably determined that plaintiff's gastro-intestinal bleed was unrelated to the accident.[2]

         IFCA provides that any “first party claimant to a policy of insurance who is unreasonably denied a claim for coverage or payment of benefits by an insurer may bring an action . . . to recover the actual damages sustained.” RCW 48.30.015(1). Decisions in this district, including one from this Court, have concluded that the “payment of benefits” prong of IFCA covers scenarios where an insurer makes an unreasonably low offer. See, e.g., Kovarik v. State Farm Mutual Automobile Insurance Co., 2016 WL 4555465, at *3 (W.D. Wash. Aug. 31, 2016) (Zilly, J.); Morella v. Safeco Ins. Co. of Ill., 2013 WL 1562032, at *3 (W.D. Was. Apr. 12, 2013) (“Where an insurer pays or offers to pay a paltry amount that is not in line with the losses claimed, is not based on a reasoned evaluation of the facts . . . and would not compensate the insured for the loss at issue, the benefits promised in the policy are effectively denied.”).[3] A determination of whether an offer effectively denies an insured the benefits of the insurance policy should focus “primarily on what [the insurer] knew or should have known at the time the offer was made.” See Morella, 2013 WL 1562032, at *4.

         The reasonableness of State Farm's offer here turns on whether plaintiff's internal bleeding can be traced to plaintiff's use of NSAIDs he took to manage pain resulting from the car accident. If it was unreasonable for State Farm to determine that plaintiff's gastro-intestinal bleeding was unrelated to his use of NSAIDs, then its offer was unreasonable and in violation of IFCA because State Farm offered an amount it knew, in light of the medical evidence it received from plaintiff, was significantly less than the value of plaintiff's claim. See Morella, 2013 WL 1562032, at *4 (holding that, as a matter of law, an insurer's ...

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