The actions of the adjuster in this case are pretty egregious: Moun Keodalah was hit and injured by an uninsured motorcyclist. Investigations by both Allstate (Mr. Keodalah’s insurer) and the Seattle Police Department showed the following:
- That the motorcyclist was speeding between 60 – 74 m.p.h. in a 30-m.p.h. zone and had split lanes;
- That the bike’s excessive speed caused the collision;
- That Mr. Keodalah had not been on his phone; and
- That Mr. Keodalah had stopped at the stop sign;
Despite having the above information, Allstate offered Mr. Keodalah only $1,600, maintaining that he had run the stop sign and was 70% at fault. Mr. Keodalah was forced to take his case to trial, where a jury awarded him $108,868.20 and found the motorcyclist to be 100% at fault. He then filed a lawsuit against Allstate and the individual adjuster for violations of Washington’s Insurance Fair Conduct Act (IFCA), insurance bad faith, and Consumer Protection Act (CPA) violations. Allstate and the adjuster appealed.
The Washington Supreme Court determined that Mr. Keodalah’s claims against the individual adjuster was not allowed. Addresing the bad faith claim, the Court used the three-pronged test articulated in Bennett v. Hardy, 113 Wn.2d 912, 784 P.2d 1258 (1990). The Court considered (1) whether the plaintiff is within the class for whose benefit the statute was enacted, (2) whether legislative intent, explicitly or implicitly, supports creating or denying a remedy, and (3) whether implying a remedy is consistent with the underlying purpose of the legislation. See Swank v. Valley Christian Sch., 188 Wash.2d 663, 675-76, 398 P.3d 1108 (2017).
To the first factor, the Court found that the applicable statute’s language was to protect the “integrity of insurance” and the “public interest”. Thus, it did not support finding an implied cause of action (a legal theory under which one can file a lawsuit, like negligence or assault). Similarly, the Court found that there was not sufficient evidence of legislative intent to support claims against individual adjusters. Finally, the Court determined that implying a cause of action against individual adjusters was not consistent with the underlying purpose of the legislation at issue. The Justices reasoned that the legislature’s purpose was to support enforcement mechanisms of the insurance code and common law actions for bad faith. They also worried that a broad reading of the statute could be construed to allow insurance companies to sue their insureds.
Consumer Protection Act
The Court also determined that Mr. Keodalah’s CPA claim could not be maintained against the adjuster. Pointing to the Washington Administrative Code (WAC) provisions that the Plaintiff had used to support his claim, the Court emphasized that the acts defined as unfair or deceptive were those of the insurer (see WAC 284-30-330). In such a case, while the adjuster has behaved badly, they did not owe Mr. Keodalah a duty under those regulations, and thus those regulations could not be used to sustain a CPA claim against the adjuster.
Ultimately the Court’s legal reasoning is sound. However, that does not mean that we agree with the outcome. Mr. Keodalah should not have been treated in such a poor manner by his own insurance company. A duty to act in good faith, applied to individual adjusters, would provide an additional incentive to treat insureds fairly. Perhaps this is an issue the Washington Legislature would be willing to consider. Until then, do not despair – Mr. Keodalah is still able to maintain his bad faith and CPA claims against Allstate.
If you have been treated unfairly by your insurance company, do not hesitate to reach out to the attorneys at Ember Law to answer your questions.