United States District Court, W.D. Washington, Seattle
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY and STATE FARM FIRE AND CASUALTY COMPANY, Plaintiffs,
PETER J. HANSON, P.C. D/B/A HANSON CHIROPRACTIC and PETER J. HANSON, Defendants.
ORDER DENYING DEFENDANTS' MOTION FOR LEAVE TO
S. Lasnik United States District Judge.
matter comes before the Court on defendants' motion for
leave to amend their counterclaims (Dkt. # 48), which the
Court previously dismissed without prejudice on the motion of
the plaintiffs (Dkt. # 36). Having reviewed the parties'
memoranda and attachments and the remainder of the record in
this case, the Court denies defendants' motion for the
reasons that follow.
2016, State Farm Mutual Automobile Insurance Company and
State Farm Fire and Casualty Company sued defendants in
federal court for submitting false, misleading, and/or
fraudulent insurance claims. Dkt. # 1 at 1-2, ¶ 1. In
essence, plaintiffs contend that defendants' care of
insured patients amounted to predetermined courses of
treatment without regard for the patients' actual needs.
Dkt. # 1 at 2-3, ¶¶ 2-4. Plaintiffs allege that
these practices resulted in $300, 000 in wrongful billings.
Dkt. # 1 at 3, ¶ 5.
their answer, defendants raised numerous counterclaims -
specifically, claims under Washington's Consumer
Protection Act, libel, interference with business expectancy,
infliction of emotional distress, and a request for
declaratory relief. Dkt. # 17 at 10-14. Upon plaintiffs'
motion, Dkt. # 18, the Court dismissed those counterclaims as
insufficiently pled, but gave defendants leave to file a
motion to amend, Dkt. # 36. This motion for leave to amend
“should freely give leave [to amend] when justice so
requires.” Fed.R.Civ.P. 15(a)(2). There is a
“strong policy in favor of allowing amendment”
after “considering four factors: bad faith, undue
delay, prejudice to the opposing party, and the futility of
amendment.” Kaplan v. Rose, 49 F.3d 1363, 1370
(9th Cir. 1994). The underlying purpose of Rule 15 is
“to facilitate decision on the merits, rather than on
the pleadings or technicalities.” Lopez v.
Smith, 203 F.3d 1122, 1127 (9th Cir. 2000). However, if
the proposed amendment would be futile (i.e., it
would be immediately subject to dismissal if challenged under
Rule 12(b)(6)), there is no reason to put defendants through
the unnecessary expense and delay of responding to the
amendment. Nordyke v. King, 644 F.3d 776, 787 n.12
(9th Cir. 2011).
proposed amended complaint substantially elaborates on the
factual allegations raised in defendants' answer and
limits its counterclaims to (1) libel/defamation; (2)
violation of the Washington Consumer Protection Act; and (3)
tortious interference with business expectancy. See
Dkt. # 48-1. The proposed complaint now runs to over twenty
pages of factual allegations about plaintiffs' business
practices, both generally and specifically as to defendants.
The heart of all three claims is the allegation that
plaintiffs have adopted a claims processing model that
arbitrarily flags as fraudulent all insurance claims from
chiropractors treating “Minor Impact, Soft
Tissue” (MIST) claims related to automobile accidents,
in order to avoid the substantial cost of covering those
claims. Dkt. # 48-1, ¶¶ 2-70. Defendants
specifically allege that plaintiffs falsely accused defendant
Peter Hanson, a chiropractor, of insurance fraud due to this
arbitrary claims processing model. Dkt. # 48-1, ¶¶
respond that, as licensed insurers, they are required to
report instances of suspected insurance fraud to the
Washington Insurance Commissioner or the National Insurance
Crime Bureau (NICB) by Washington's Insurance Fraud
Reporting Immunity Act, RCW 48.50.050. This law further
provides that insurers are immune from civil liability
arising from their reports to the NICB unless the claimant
demonstrates actual malice against the insured. RCW
48.50.070. “Actual malice” means that the
insurers either knew that their statements were false or
recklessly disregarded their falsity. See Bender v. City
of Seattle, 99 Wn.2d 582, 599 (1983). “Reckless
disregard” for falsity exists where there are
“obvious reasons to doubt the veracity” of the
information communicated, or where there is sufficient
evidence of “intent to avoid the truth.” Duc
Tan v. Le, 177 Wn.2d 649, 669 (2013) (quoting St.
Amant v. Thompson, 390 U.S. 727, 732 (1968)). Plaintiffs
argue that because defendants have failed to plead sufficient
facts to render allegations of actual malice plausible,
see Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009),
their motion for leave to amend their counterclaims should be
denied. Plaintiffs further argue that, statutory immunity
aside, defendants' factual allegations are insufficient
to render plausible any of the three proposed counterclaims.
Court agrees. While in this context all well-pleaded
allegations of material fact are accepted as true, see
Manzarek v. St. Paul Fire & Marine Ins. Co., 519
F.3d 1025, 1031 (9th Cir. 2008), the Court need not accept
“allegations that are merely conclusory, unwarranted
deductions of facts, or unreasonable inferences, ”
Sprewell v. Golden State Warriors, 266 F.3d 979, 988
(9th Cir. 2001). As plaintiffs point out, their actions as
alleged are consistent with a good-faith investigation of
suspected insurance fraud. And defendants' allegations
regarding the plaintiffs' wrongful motivation
for investigating Dr. Hanson - specifically, that the
insurers fabricated a pattern of insurance fraud solely to
avoid the expense of covering the significant number of
claims from Dr. Hanson's office - are entirely
conclusory. Cf. Gonzalez v. Planned Parenthood
of Los Angeles, 759 F.3d 1112, 1116 (9th Cir. 2014)
(affirming denial of leave to amend where plaintiff's
allegations were “merely possible rather than
plausible, ” and where plaintiff had failed to
“overcome the plausible and obvious explanation that
[the defendant] did not knowingly submit false
claims”); Abagninin v. AMVAC Chem. Corp., 545
F.3d 733, 740 (9th Cir. 2008) (affirming dismissal where
allegations supporting the required mental state were
defendants' own exhibits to their proposed amended
countercomplaint, see Dkt. # 48-1 at 29-49, reveal
that plaintiffs had grounds for investigating Dr. Hanson
beyond simply the number of claims submitted by his office. A
State Farm employee noticed a pattern of specific treatments
at Dr. Hanson's office that suggested “a
pre-determined treatment protocol” for motor-vehicle
accident victims. Dkt. # 48-1 at 30, 34. Upon investigation,
the employee found that the symptoms noted by Dr. Hanson to
justify this treatment plan had not been reported by other
providers who saw the same patients. Dkt. # 48-1 at 34.
Accordingly, the Court need not accept as true
defendants' allegations that “State Farm has no
evidence to support a claim that Dr. Hanson committed fraud
of any kind in any individual case or in his practice as a
whole, ” or that State Farm “targeted Dr. Hanson
as a project for no other reason than his practice was a
significant source of claim expense to State Farm.”
Dkt. # 48-1 at 10, ¶¶ 78, 80. See
Sprewell, 266 F.3d at 988 (“The court need not . .
. accept as true allegations that contradict matters properly
subject to judicial notice or by exhibit.”).
defendants have failed to allege facts supporting an
allegation of actual malice as to plaintiffs' report to
the NICB of suspected insurance fraud by Dr. Hanson,
plaintiffs are entitled to statutory immunity from all claims
arising out of that report. See RCW 48.50.070. As
all three of defendants' proposed counterclaims stem from
this report, all three counterclaims are barred, and adding
them through an amended countercomplaint would be futile.
See Nordyke, 644 F.3d at 787 n.12.
the foregoing reasons, defendants' motion for leave to
amend their counterclaims (Dkt. # 48) is DENIED.
 Plaintiffs reported Mr. Hanson to the
NICB on July 14, 2016, the same day they filed this suit.
Dkt. # 1; Dkt. ...