CHAN HEALTHCARE GROUP, PS, a Washington professional services corporation, Respondent,
LIBERTY MUTUAL FIRE INSURANCE COMPANY and LIBERTY MUTUAL INSURANCE COMPANY, foreign insurance companies, Petitioners.
appeal turns on the standard governing a due process
collateral attack on a sister state's resolution of a
multistate class action. Under full faith and credit
principles, a collateral attack in Washington fails if that
same due process challenge was raised, litigated, and decided
in the sister state. Under these circumstances, Washington
courts do not second guess the analysis and resolution by the
trial and appellate courts in the sister state.
the substance of respondent's due process claim of
inadequate representation was raised, litigated, and decided
in Illinois, the Illinois settlement is entitled to full
faith and credit.
appeal concerns use by Liberty Mutual Insurance Company
(Liberty) of a computerized database to determine the amounts
payable for treatments covered by personal injury protection
(PIP) coverage under automobile insurance policies.
Washington's PIP statute requires automobile insurers to
pay all reasonable and necessary medical expenses incurred by
the insured. Insurers must "conduct[ ] a
reasonable investigation" before refusing to pay
claims.Liberty sets the benchmark reasonable
medical charges payable using the FAIR Health database,
reflecting other healthcare provider charges in the same
use of the FAIR Health database was previously challenged in
Lebanon Chiropractic Clinic v. Liberty Mutual Insurance
Company, a multistate class action lawsuit litigated in
Illinois. The class included Washington providers.
The lawsuit alleged that Liberty's use of the FAIR Health
database was unfair under the Illinois Consumer Fraud and
Deceptive Business Practices Act and other states'
equivalent acts, including the Washington Consumer Protection
Act.Chan, a Lebanon class member,
received reasonable notice and did not opt out.
October 2014, the parties in Lebanon reached a
proposed class settlement. In January 2015, class member Dr.
David Kerbs, a Washington chiropractor, filed an objection to
the proposed settlement asserting, among other things,
"Lebanon Chiropractic Clinic is an inadequate class
representative for Washington providers and has a conflict of
interests with Washington providers."Dr. Kerbs argued
the conflict of interest was the result of differences
between Illinois and Washington's consumer protection
February 2015, following a fairness hearing, the Illinois
court entered a final order and judgment approving settlement
and dismissing the case. In the order, the court acknowledged
Dr. Kerbs' objection, overruled all objections to the
proposed settlement, and determined the named plaintiff was
an adequate representative.
Kerbs appealed the judgment to the Appellate Court of
Illinois. He specifically challenged the adequacy of
representation resulting from conflict between the Illinois
and Washington's consumer protection and PIP statutes. In
February 2016, the Illinois appellate court affirmed the
trial court in an unpublished opinion.
September 2015, while Dr. Kerbs' appeal was still pending
in Illinois, Chan Healthcare Group, PS (Chan) filed the
current case against Liberty in King County Superior Court.
Chan alleged Liberty's reliance on the FAIR Health
database constituted an unfair practice under the Washington
Consumer Protection Act.
moved for a declaratory judgment that Lebanon did
not preclude the claims because the class representative was
an inadequate representative. Liberty moved for summary
judgment seeking dismissal of the case. The superior court
declined to give full faith and credit to the
Lebanon settlement and found the named plaintiff in
Lebanon did not adequately represent the interests
of Washington providers. The trial court granted Chan's
motion and denied Liberty's motion.
granted Liberty's motion for discretionary review.
contends the trial court erred when it failed to give full
faith and credit to the Lebanon settlement.
review a court's refusal to accord full faith and credit
to a foreign judgment de novo. The full faith and credit clause
of the United States Constitution requires states "to
recognize judgments of sister states." A state court
judgment in a class action is "presumptively"
entitled to full faith and credit from the courts of other
jurisdictions. "[P]arties can collaterally attack
a foreign order 'only if the court lacked jurisdiction or
constitutional violations were
involved."' Specifically, "a foreign state is
not required to give full faith and credit to a judgment
against an affected party who did not receive due process
when the judgment was entered." Due process in a class
action requires (1) "'reasonable notice' that
apprises the party of the pendency of the action, affords the
party the opportunity to present objections, and describes
the parties' rights, " (2) the opportunity to opt
out, and (3) "a named plaintiff who adequately
represents the absent plaintiffs'
there is no dispute Chan had adequate notice and did not
exercise the right to opt out. The sole dispute is whether
Chan can collaterally attack the Lebanon settlement
for lack of adequate representation. We must decide, under
full faith and credit, the standard for a collateral attack
asserting lack of due process in a sister state's class
In re Estate of Tolson, Division Two of this court
considered whether a Washington court was bound in a probate
proceeding to a prior determination by a California court
that decedent was domiciled in California at date of
death. Division Two concluded that while
"enforcement of a judgment under [the full faith and
credit clause] can be challenged by a showing that the court
rendering judgment lacked jurisdiction[, ]... it is also well
settled that if the jurisdictional question has been
litigated in the rendering court, principles of res
judicata attach, " and that question cannot be
relitigated on collateral attack.
Supreme Court adopted a similar approach in OneWest Bank.
FSB v. Erikson when considering "whether a
Washington court must give full faith and credit to an Idaho
court order encumbering Washington
property." "This case arose through OneWest
Bank FSB's attempted foreclosure of Washington property
based on a reverse mortgage that an Idaho court ordered
through [the decedent's] conservatorship
proceeding." The decedent's daughter
"challenged] the foreclosure, claiming the reverse
mortgage [was] void because she was the actual owner of the
property and the Idaho court had no jurisdiction to affect
Supreme Court concluded, "[W]e cannot question [the
decedent's] domicile because the personal jurisdiction
issue was already litigated and decided in the Idaho
conservatorship proceedings." The court was persuaded
the issue of jurisdiction was already litigated and decided
because the record, chiefly the Idaho court's docket
entries, revealed the decedent "objected to personal
jurisdiction in the Idaho court, but the court denied his
objection and exercised jurisdiction over
Although we do not have the particular Idaho court order at
issue, we have sufficient evidence that the Idaho court
considered challenges to [the decedent's]
domicile and ruled that it had jurisdiction to
appoint a conservator over him.... There was enough evidence
for the Idaho court to conclude it had sufficient contacts to
exercise jurisdiction over [the decedent]. If [the daughter]
wanted to challenge this determination, the Idaho court was
the proper forum for doing so. She cannot collaterally attack
that determination here.
collateral review of a sister state court's finding of
jurisdiction as provided by Tolson and OneWest
Bank is consistent with nonbinding federal authority
addressing the scope of collateral review in the context of a
due process challenge to a foreign court's class
Epstein v. MCA. Inc., the Ninth Circuit addressed
the effect of a Delaware state court judgment that approved a
class action settlement releasing exclusively federal
claims. The Ninth Circuit rejected a broad,
merit-based collateral review and held that collateral review
is limited to "whether the procedures in the
prior litigation afford the party against whom the earlier
judgment is asserted a 'full and fair opportunity' to
litigate the claim or issue." Due process "does
not require collateral second-guessing of those
determinations and that review."
with Tolson, OneWest Bank, and
Epstein, we hold Washington courts do not relitigate
questions of due process previously raised, litigated,
and decided by a sister state court when approving a
class settlement. To determine whether a due process issue
has been previously raised, litigated, and decided, we
consider (1) whether the specific due process objection was
before the sister state court, (2) whether the parties
presented briefing on the objection, and (3) whether the
sister state court ruled on the objection. If, after
conducting this limited collateral review we are reassured
the sister state court litigated and decided the same due
process objection currently raised, we will not second guess
the determination of that court.
Chan reargues Dr. Kerb's contention that the class
representative in Lebanon inadequately represented
Washington providers, noting
there are fundamental differences between the Washington and
Illinois consumer protection acts (including the public
interest impact prong in Washington and the more restrictive
requirement in Illinois of intent); between the remedies
available in Washington and Illinois (e.g. treble damages
versus punitive; rates of interest in judgments); and most
importantly in the substantive laws underlying the [consumer
protection act] claims of Washington and Illinois
same objection concerning lack of adequate representation was
before the Illinois trial court in Lebanon. Dr.
Kerbs objected to the proposed settlement because, among
other things, "Lebanon Chiropractic Clinic is an
inadequate class representative for Washington providers and
has a conflict of interests with Washington
parties in Lebanon presented briefing on that
specific conflict of interest. In his ...