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(Article from Insurance Law Alert, February 2017)

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Resolving a conflict among lower courts, the Washington Supreme Court ruled that the Insurance Fair Conduct Act (“IFCA”) does not create an independent cause of action for regulatory violations.  Perez-Crisantos v. State Farm Fire & Cas. Co., 2017 WL 448991 (Wash. Feb. 2, 2017). 

Perez-Crisantos sought coverage from State Farm for injuries sustained in a car accident.  State Farm agreed to pay the limits of his personal injury coverage, as well as $400 for lost wages, but denied his claim for underinsured motorist coverage.  Perez-Crisantos sued State Farm alleging violations of the IFCA and Consumer Protection Act.  The action was stayed pending arbitration of the claims.  After an arbitration panel awarded Perez-Crisantos another $24,000, he amended his complaint against State Farm to clarify that the basis for his IFCA claim was State Farm’s alleged violation of a Washington Administrative Code provision that prohibits insurers from forcing first-party policyholders to litigate to recover “amounts due under an insurance policy by offering substantially less than the amounts ultimately recovered in such actions.”  WAC 284-30-330(7).  A Washington trial court dismissed the claims.  The Washington Supreme Court granted direct review and affirmed.

The IFCA provides a cause of action against insurers who unreasonably deny coverage and permits courts to award attorneys’ fees or treble damages under certain circumstances.  RCW 48.30.015.  Addressing a matter of first impression, the Washington Supreme Court ruled that the IFCA does not create a new and independent private right of action for violations of state regulations in the absence of an unreasonable denial of coverage.  Although the court deemed the statutory language ambiguous, it concluded that legislative history did not evidence an intent to create a private cause of action for regulatory violations.