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INSURANCE BAD FAITH: Washington vs. BC (continued)

This is a continuation from my last post on insurance bad faith in Washington and British Columbia

(11) Delaying the investigation or payment of claims by requiring an insured, claimant, or the physician of either to submit a preliminary claim report and then requiring subsequent submissions which contain substantially the same information.

(12) Failing to promptly settle claims, where liability has become reasonably clear, under one portion of the insurance policy coverage in order to influence settlements under other portions of the insurance policy coverage.

(13) Failing to promptly provide a reasonable explanation of the basis in the insurance policy in relation to the facts or applicable law for denial of a claim or for the offer of a compromise settlement.

(14) Unfairly discriminating against claimants because they are represented by a public adjuster.

(15) Failure to expeditiously honor drafts given in settlement of claims. A failure to honor a draft within three working days of notice of receipt by the payor bank will constitute a violation of this provision. Dishonor of any such draft for valid reasons related to the settlement of the claim will not constitute a violation of this provision.

(16) Failure to adopt and implement reasonable standards for the processing and payment of claims once the obligation to pay has been established. Except as to those instances where the time for payment is governed by statute or rule or is set forth in an applicable contract, procedures which are not designed to deliver a check or draft to the payee in payment of a settled claim within fifteen business days after receipt by the insurer or its attorney of properly executed releases or other settlement documents are not acceptable. Where the insurer is obligated to furnish an appropriate release or settlement document to an insured or claimant, it shall do so within twenty working days after a settlement has been reached.

(17) Delaying appraisals or adding to their cost under insurance policy appraisal provisions through the use of appraisers from outside of the loss area. The use of appraisers from outside the loss area is appropriate only where the unique nature of the loss or a lack of competent local appraisers make the use of out-of-area appraisers necessary.

(18) Failing to make a good faith effort to settle a claim before exercising a contract right to an appraisal.

(19) Negotiating or settling a claim directly with any claimant known to be represented by an attorney without the attorney's knowledge and consent. This does not prohibit routine inquiries to an insured claimant to identify the claimant or to obtain details concerning the claim.

The Administrative Code regulations provide the starting point for determining the strength of a plaintiff's claim - because the legislatively proscribed activities can be used to support any of the three theories of recovery a plaintiff may choose.

The WAC regulations are intended to set the minimum standards for an insurer's good faith conduct. See WAC 284-30-300. The courts presume that if the plaintiff can establish a violation of a WAC provision, they have established grounds for pursuing a bad faith claim. Conduct which is not specifically addressed by the WAC's can still amount to "bad faith" under judicially-generated definitions of the doctrine...but violation of a WAC provision is the cleanest way to prevail on a bad faith claim.

Violation of a WAC provision, while not negligence per se, is treated as evidence of negligence by the Washington courts. See RCW 5.40.050. Thus, violation of a WAC provision would also provide the predicate for any common-law tort claims asserted...to the extent that such claims offered broader remedies than those offered in "bad faith".

Finally, violation of a WAC provision is deemed to be an "unfair or deceptive act in trade or commerce" permitting the plaintiff to bring a claim under the state's Consumer Protection Act (CPA). A single WAC violation has been held to be sufficient to support a plaintiff's CPA claim, regardless of the fact that the Insurance Commissioner could only take administrative action on such conduct if it was violated with such frequency as to constitute a general business practice. See Industrial Indemnity Co. of Northwest, Inc. v. Kallveig, 114 Wn.2d 907, 923-25, 792 P.2d 520 (1990). Provided that the plaintiff can establish the other requirements of a CPA claim have been met by the circumstances (usually true), the plaintiff is entitled to (1) an award of attorney's fees and costs, which are not generally available to Washington plaintiffs in negligence cases, as well as punitive damages (again, not generally available to Washington plaintiffs) up to US $10,000 for each act constituting a CPA violation.

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