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Certification From The United States District Court For The Western District of Washington v. State Farm Mutual Automobile Insurance Company

Supreme Court of Washington, En Banc

June 7, 2018

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, a foreign automobile insurance company, Defendant.

          MADSEN, J.

         This case concerns a class action insurance claim suit pending in federal court. The federal district court has asked this court to answer two certified questions concerning whether an insurer's use of a "maximum medical improvement" (MM) provision violates WAC 284-30-395(1).


         This case began with an auto policy claim by plaintiff Brett Durant. Durant has been a policyholder with State Farm Mutual Automobile Insurance Company since 1995 and carried $35, 000 in personal injury protection (PIP) coverage. On July 21, 2012, Durant was injured in a motor vehicle accident. He opened a PIP claim with State Farm. State Farm then sent him a "coverage letter" that stated:

The policy provides coverage for reasonable and necessary medical expenses that are incurred within three (3) years of the accident. Medical services must also be essential in achieving maximum medical improvement for the injury you sustained in the accident.

Docket (Dkt.) #30 (Decl. of Brett Durant) at 2 & Ex. C (emphasis added).[1]

         Durant sought treatment with chiropractor Harold Rasmussen, DC, who diagnosed injuries including sprains to the neck, back, pelvis, and right shoulder. After a shoulder MRI (magnetic resonance imaging) showed a ligament sprain and "a possible small type I SLAP [(superior labral anteroposterior)] tear, " Durant was referred to an orthopedic surgeon who diagnosed "mild bursitis/tendinitis, " which was treated with physical therapy and cortisone injections. Id. at 2.

         Four months after the accident, State Farm sent Dr. Rasmussen a form letter with blanks to fill in inquiring about Durant's progress. The letter was directed toward State Farm's MMI standard, asking, "Has the patient reached maximum medical improvement?" and "If the patient has not reached maximum medical improvement, what is your target maximum medical improvement date?" Id. at 2 & Ex. D. Dr. Rasmussen responded that Durant was not at MMI but his target date was "2-1-13." Id. at Ex. D.

         Durant's injuries were not resolved by that date, and he continued to receive chiropractic and massage therapy. State Farm then sent another letter to Dr. Rasmussen, which inquired, "You have treated Brett past his given MM[I] date of 2/1/2013. Please explain." Dkt. #32 (Decl. of Tyler Firkins), Ex. Q at 11 of 13. Dr. Rasmussen replied, "Patient was not stable and needed treatment to 3/27/2013." Id.

         Durant continued to have back, shoulder, and pelvic issues and continued to receive care. His care providers billed his PIP claim as before, but State Farm denied each bill on the basis that, "[s]ervices are not covered, as your provider advised us you previously reached maximum medical improvement." Dkt. #30, Ex. F.

         Durant retained an attorney who wrote to State Farm asking them to pay the outstanding medical bills. The attorney explained that State Farm must use the standard authorized by WAC 284-30-395(1); that whether Durant had reached MMI was irrelevant; and that unless State Farm had a competent medical opinion that Durant's treatment was not reasonable, necessary, or related, State Farm must pay the bills.

         The attorney provided State Farm a letter from Dr. Rasmussen explaining that Durant's continuing injuries meant that he would require periodic care for his spinal and pelvic dysfunction and that during periods of exacerbation, Durant should receive treatment to restore movement and to reduce his pain. The State Farm claim representative ignored Dr. Rasmussen's opinion and authored a letter that reiterated the previous denial, noted that Durant had previously reached MMI, and stated that the Office of the Insurance Commissioner (OIC) "thoroughly reviews and approves policy language proposed by insurance companies." Dkt. #30, Ex. H. Durant's attorney responded by letter that Durant needed medical treatment from time to time due to exacerbations in order to maintain his recovery and that this treatment should be considered reasonable, necessary, and related under WAC 284-30-395(1). By that time, Durant had unpaid medical bills of more than $1, 000 that had been denied by State Farm, but State Farm stood by its decision and continued to deny payment based on its MMI standard.

         Durant filed this action in King County Superior Court in 2015, alleging that State Farm's use of the MMI standard violates its duty of good faith, breaches the insurance contract, violates the Insurance Fair Conduct Act, RCW 48.30.010-.015, and violates the Consumer Protection Act, chapter 19.86 RCW. State Farm removed the case to federal court. The United States District Court granted Durant's motion to certify a class of plaintiffs. State Farm moved for reconsideration. In denying the motion for reconsideration, the district court also granted Durant's motion to certify the following two questions to this court:

1. Does an insurer violate WAC 284-30-395(1)(a) or (b) if that insurer denies, limits, or terminates an insured's medical or hospital benefits claim based on a finding of "maximum medical improvement?"
2. Is the term "maximum medical improvement" consistent with the definition of "reasonable" or "necessary" as those terms appear in WAC 284-30-395(1)?[2]


         First Certified Question: Does State Farm's limitation of medical claims based on its MMI provision violate WAC 284-30-395(1)(a) or (b)?

         Durant contends that the plain language of the regulation in question answers the first certified question. We agree.

         "Certified questions from federal court are questions of law that this court reviews de novo." Brady v. Autozone Stores, Inc., 188 Wn.2d 576, 580, 397 P.3d 120 (2017) (citing Carlsen v. Glob. Client Sols., LLC, 171 Wn.2d 486, 493, 256 P.3d 321 (2011)). "This court may reformulate the certified question." Id. (citing Allen v. Dameron, 187 Wn.2d 692, 701, 389 P.3d 487 (2017)). Further, the meaning of a statute is a question of law that is reviewed de novo. State v. J.M., 144 Wn.2d 472, 480, 28 P.3d 720 (2001). This court's fundamental objective in determining what a statute means is to ascertain and carry out the legislature's intent. Id. If the statute's meaning is plain on its face, then courts must give effect to its plain meaning as an expression of what the legislature intended. Id. A statute that is clear on its face is not subject to judicial construction. Id.

         This court interprets regulations under the rules of statutory construction. Mader v. Health Care Auth., 149 Wn.2d 458, 472, 70 P.3d 931 (2003). It construes the act as a whole, giving effect to all of the language used. Id. If a regulation is unambiguous, intent can be determined from the language alone, and the court will not look beyond the plain meaning of the words of the regulation. Id. at 473.

         We begin with the plain language of the regulation. WAC 284-30-395(1) provides in relevant part:

(1) Within a reasonable time after receipt of actual notice of an insured's intent to file a personal injury protection medical and hospital benefits claim, and in every case prior to denying, limiting, or terminating an insured's medical and hospital benefits, an insurer shall provide an insured with a written explanation of the coverage provided by the policy, including a notice that the insurer ...

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