District Court Again Refuses To Apply Washington's New Punitive Damages Statute Retroactively
Washington's recent adoption of a treble damages statute -- The Insurance Fair Conduct Act, RCW ch. 48.30 ('IFCA") -- has changed the landscape for insurers and insureds going forward. Insurers now face the possibility of a punitive damages claim whenever they do not accept coverage for a claim.
A number of insureds have also sought punitive damages for claims denials made prior to passage of IFCA on December 6, 2007. Federal district courts in Washington have already concluded several times that IFCA does not apply retroactively -- Malbco Holdings v. Amco Insurance Co., 546 F.Supp.2d 1130 (E.D. Wash. 2008) and Scanlon v. Life Insurance Company of North America, Case No. C08-0256-JCC (W.D. Wash. Dec. 12, 2008); HSS Enterprises, LLC v. AMCO Insurance Co., 2008 WL 312695 (W.D. Wash. Feb. 1 2008); Aecon Buildings, Inc. v. Zurich North America, 2008 WL 895978 (W.D. Wash. March 28, 2008); and Pacific Coast Container, Inc. v. Royal Surplus Lines Insurance Co., 2008 WL 2705588 (W.D. Wash. July 8, 2008).
In Rinehart v. Life Insurance Company of North America, the insured plaintiff attempted to sidestep the non-retroactive application of IFCA by focusing upon the insurer's conduct after adoption of IFCA. The case involved long term disability benefits; the insurer terminated benefits in October 2007 prior to IFCA, but denied the insured's appeal of that decision 11 days after IFCA's passage. The insured argued that the insurer's denial of the appeal constituted an independent unreasonable act in violation of IFCA. On March 2, 2009, ruling on the insured's motion for a jury trial on the issue of punitive damages, Judge Ronald Leighton rejected the insured's argument and dismissed the punitive damages claim. Relying upon the Malbco and Scanlon decisions, the court reasoned that the precipitating event behind the claim was the decision to terminate benefits made prior to IFCA.
