Pearl Averill’s daughter was in a car accident where the car was totaled. Farmers was her insurer. Farmers paid Ms. Averill for the total loss less a $500 deductible and then sought to recover the amount it paid directly from the other person involved in the accident. Without Ms. Averill’s involvement, Farmers engaged in an arbitration with the insurance company for the other driver. The arbitrator determined that both parties were 50% at fault for causing the accident. Farmers then recovered half of the $500 deductible from the other party’s insurer. It refunded the $250 to Ms. Averill. Ms. Averill argued that Farmers was not entitled to keep the other half of the deductible because Ms. Averill had not been “made whole” for her loss. The Court of Appeals disagreed, holding that the “made whole doctrine” only applies in situations where an insurance customer pursues a recovery from an at fault party, but is not fully compensated for their loss. Since Farmers and not Ms. Averill was the entity that pursued recovery from the at fault party, the Court of Appeals determined, Ms. Averill could not claim that she was not “made whole.”
Archive for the ‘Consumer Protection’ Category
Court of Appeals: Div. I: No “Made Whole” Argument Where Insurance Customer Does Not Seek Recovery ThemselvesApril 29, 2010
Dentist Savidge recommended a porcelain-capped crown on one of Young’s molars. Savidge’s website states that his crown’s are made of gold or porcelain and temporary crowns are “can be made of stainless steel.” She had the crown put in and later felt a burning, confusion, fatigue, and discoloration. She presented to another dentist who determined that the crown was made of mostly nickel, a known toxic metal. Young sued Savidge and argued that he committed medical malpractice, engaged in misrepresentation, violated the CPA, and breached their contract. She gave Savidge notice of intent to sue. The trial court granted summary judgment in favor of Savidge because Young failed to bring her claim within the allotted statute of limitations and for failure to file a certificate of merit.
Young appeals arguing that her informed consent claim did not fall under the Medical Malpractice SOL. The court disagreed holding that the claim did fall under the medical mal SOL because the dentist was engaged in health care when he failed to inform her of the risk of nickel. The claim was time barred for failure to bring within three years of the act or one year of discovery, even with the statutory amendments that allow for 90 day tolling and an additional five days Young was 3 days late in filing her suit.
Young argues that the breach of contract claim should not have fallen under the med mal statute even though it arose out of health care. The court disagreed and held that the claim was time barred under the same analysis as above.
Young argues that her intentional misrepresentation claims should not have fallen under the med mal statute. The court agreed and held that intentional misrepresentations are not governed by the med mal statute, however whether the claim was time barred under the general three year statute remains a material fact as to when Young discovered the facts constituting fraud.
Similarly the court found that there was a genuine issue of material fact as to whether the CPA claims are governed under the former RCW 4.16.350(3). The court remands for a trial on the merits.
The trial court also held that Young failed to file a certificate of merit. Putnam changed the law on the certificate of merit issue holding that this step is not required of medical malpractice cases. The court of appeals held this decision applies retroactively and thus the trial court erred in its granting of summary judgment on that issue.
Court of Appeals: Div. III – Dealership’s Taking Advantage of Vulnerable Customers Not A Violation of Consumer Protection ActApril 26, 2010
This case involved two separate parties that both felt like they had been taken advantage of by a car dealer. The facts are certainly disturbing. The two parties were Kathleen Walker and Florence Pedraza. Both parties visited an auto sale that was advertised in both the newspaper and on the radio by Wenatchee Kia. The sale took place in Ellensburg for one week.
Walker Case: Ms. Walker had suffered brain damage from having a brain tumor removed. She was unable to read or write and relied heavily upon her 16-year-old daughter Ashley. The Walkers went to the sale specifically looking for an advertised Kia Sportage. At the lot, Ashley did not see the advertised vehicle and was driving off the lot when Brad the salesman jumped in front of their vehicle. Brad convinced the Walkers to look at a different Sportage and they decided to buy it. Here come the real heart-warming facts: Brad convinced the Walkers (16-year-old Ashley and her brain damaged mother) to buy a Sportage with a manual transmission even though Ashley didn’t know how to drive a manual transmission. “Brad assured her she could easily learn.” Brad went with the Walkers to their home to help search for the title to their trade-in although the record said he slept on the couch while the Walkers searched.
After finding the title and returning to the lot to consummate the sale, Ashley had to sign the sales agreement on behalf of her mother. Then they called a friend to drive the vehicle home because it had a manual transmission.
Pedraza Case: Ms. Pedraza was an 86-year-old woman who supplemented her income by working at the local Taco Bell with Ashley Walker. She also wanted a to buy the Sportage advertised for $13,000. She ended up buying a different one for roughly $24,000 (tax & license). With the cost of financing she paid about $29,000.
Wenatchee’s No. 1 Salesman
Both Walker and Pedraza brought claims against Wenatchee Kia for violations under the Consumer Protection Act (CPA). After a confusing litigation history wrought with failures to file required documents, both parties moved for summary judgment. The trial court dismissed the claims based on the dealership’s claim that there was a one year statute of limitations under the Auto Dealers Practices Act (ADPA) and that there was no causal connection between the dealership’s practices and the parties’ decisions to buy the vehicles. Plaintiffs appealed.
The dealership claimed that the one year statute of limitations set forth in the ADPA (enacted in 1967) supersedes the four year statute of limitations set forth in the CPA (enacted in 1961). The Court of Appeals did not agree. Early provisions of the ADPA (RCW 46.70) stated that the chapter “shall be cumulative to existing laws.” In addition, RCW 46.70.310 specifically states “Any violation of this chapter is deemed to affect the public interest and constitutes a violation of chapter 19.86 RCW” (the CPA statute). I think I would have started with this last argument, but hey that’s just me.
The dealership also argued that the CPA did not apply here because the CPA specifically says that it does not apply to “transactions permitted by any other regulatory body.” Thus, they argued, since dealership advertisements are regulated by the Department of Licensing, the CPA does not apply. The Court of Appeals agreed that Wenatchee Kia’s advertisements did not violate the Washington Administrative Codes requirements, but the cause of action was not based on whether the advertising complied with the Code or not.
“The complaint alleged that the dealer’s sales practices did not conform to its advertising, thus amounting to deceptive behavior in violation of the CPA. In other words, the activity regulated by the code involves advertising, not sales practices. The fact that the dealership advertised its sale does not immunize its allegedly deceptive sales tactics from the reach of the CPA.”
So the trial court erred in dismissing the case based on a violation of the statute of limitations. However, not such a happy ending! Remember the trial court also dismissed because it found no causal connection between the dealership’s practices and the parties’ decisions to buy the vehicles. After reviewing the facts, in a light most favorable to the non-moving party, the Court of Appeals agreed that there was no connection.
“The record suggests that the dealership took advantage of vulnerable customers. It does not establish that CPA violations occurred.” So all we can do is get the word out there about a dealership that takes advantage of the elderly and the disabled. Good sell Brad!
Its a little difficult learning a new text editor, so you’ll have to bear with me.
Yes, the Prof has gone mac.
This isn’t the first time I’ve gone mac of course, but its the first time I’ve outgrown MacJournal, the blogging program I first used to connect to Typepad when I created the blog.
One other small announcement. You may have noticed we are no longer blogging how each vote came down. It is more of a pain than the benefit conveyed. You will now simply see the authors of the various opinions and, if relevant, how the votes came down.
That being said, let’s get on with the case…its a boring one and I haven’t had my coffee yet:
So BFOA is essentially five guys, all docs. Three of the five were the officers of BFPT, a physical therapy place that, not so shockingly, gets a LOT of referrals from BFOA. In fact, a third of BFOA’s patients are referred to BFPT, and was well over 2/3 of BFPT’s patients.
Columbia is mad about that, because they’re not getting referrals and they felt patients weren’t being told about physical therapy options other than BFPT. There’s some evidence that BFOA patients were told that the docs would ONLY give a referral to BFPT.
So the questions before the court: Is this a violation of the corporate practice of medicine doctrine? Does this violate the Professional Service Corporation Act? Does this violate the antirebate statute? Does this violate the CPA?
The court tackled the Practice of Medicine Doctrine and the PSCA in one fell swoop. Essentially, because the doctors could have employed physical therapists under the PSCA, then there’s no craziness in allowing the docs to do the same with the PTs in a different entity.
BFOA argued RCW 18.100.150(1) authorized its employment of physical therapists:
An individual or group of individuals duly licensed . . . to render the same professional services within this state may organize and become a shareholder or shareholders of a professional corporation for pecuniary profit under the provisions of Title 23B RCW for the purpose of rendering professional service.
Columbia argued that a prohibition on engaging in business other than the professional services for which the PS was incorporate operated to stop BFOA from employing PTs. The court held that Physical Therapy falls under the larger umbrella of practicing medicine.
Physical therapy is one aspect of the practice of medicine. The practice of medicine is defined by RCW 18.71.011(1) as “[o]ffer[ing] or undertak[ing] to diagnose, cure, advise or prescribe for any human disease, ailment, injury, infirmity, deformity, pain or other condition, physical or mental, real or imaginary, by any means or instrumentality.” This broad definition readily encompasses all the acts constituting the statutory definition of the practice of physical therapy. RCW 18.74.010(8). The physical therapy licensing statute simply permits nonphysicians to engage in a limited practice of medicine without liability for the unauthorized practice of medicine. Cf. RCW 18.71.030(4) (providing that the prohibition on the unauthorized practice of medicine does not prohibit the practice of any healing art for which the practitioner is licensed). The upshot is that physical therapy is part of the practice of medicine and, by extension, part of “the same professional service . . . for which” BFOA’s members are licensed. RCW 18.100.010. The practice of medicine is the purpose for which BFOA was incorporated and, even when employing physical therapists, BFOA does not engage in any business other than the practice of medicine. As such, BFOA’s employment of physical therapists does not violate RCW 18.100.080 but is instead authorized by RCW 18.100.050(1), which allows the creation of a professional service corporation for the purpose of rendering the same professional service for which its organizers are duly licensed.
As far as the antirebate statute, “the statute exempts from its coverage profits earned by an employee of a firm and flowing to the firm’s owners, provided the owners practice in the firm, RCW 19.68.040.” Of particular note is the difference between this and Day v. Inland Empire Optical, Inc., 76 Wn.2d 407, 456 P.2d 1011 (1969). In Day, the docs reaping the profits weren’t employed by the entity receiving the referrals. Here, the docs receiving the profits did actually practice at BFPT.
Finally, as to the CPA, there are facts that may provide for an unfair and deceptive trade practice (telling the patients that they can ONLY get a referral to BFPT, or not informing patients of alternate PT options). One claim survives.
The question before the Court was whether Washington State is a proper place for a nationwide class of Plaintiffs. Essentially, ATT passed on a governmental charge as a “Universal Connectivity Charge” to its customers. The customers, understandably, were upset, as this was never disclosed as a charge, nor was the reason for the charge really ever explained (I speak from personal experience here).
The trial court denied class cert, finding that individual questions predominated. Division I reversed and certified the nationwide class.
The Washington Supreme Court, in striking down a nationwide class, upheld the choice of law provisions in the contract. Thus, each individual state’s residents would have a separate set of law, making it difficult to administer a nationwide class. Hence, the only class that can still be had is Washington residents. Additionally, the Washington CPA claim is a bit tied to using Washington Law.
The Court made a big deal of the extra burden imposed by a nationwide class. Of course that burden is based on their choice of law finding. If the Court had found that the choice of law provision was one of adhesion (like their similar view of arbitration clauses), the extra burden to Washington Courts would have been minimal.
Finally, as the dissent states: “Not every state contract law is materially different for purposes here, and the trial court abused its discretion by failing to consider whether the laws of the states could be grouped together in a manageable number of subclasses.”
Quinn purchased a truck from Cherry Lane. Cherry Lane had purchased the truck at auction and replaced the speedometer cluster. Due to miscommunication, the odometer was never reset to the correct mileage (about 60,000 miles more). However, Cherry Lane discovered the mistake, contacted Quinn and attempted to make things right. Quinn had not lived up to his part of the bargain (submitting four titled vehicles as trade-in), the bank would no longer finance, and thus Cherry Lane repossessed the truck. You know how people feel about their trucks in Eastern Washington. Quinn filed suit and the trial court dismissed.
Federal law requires parties transferring vehicles to disclose known irregularities in the odometer reading. A civil action is available only if the purchaser establishes that the transferor acted with intent to defraud. Even though Cherry Lane had knowledge about the correct odometer reading, this knowledge had not been communicated to the sales staff. The trial court found no intent on behalf of Cherry Lane. On appeal, Quinn argued that the knowledge of the correct mileage could be imputed to the sales staff. The Court of Appeals held that while knowledge can be imputed, intent to defraud is not an issue of law, but an issue of fact. The trial court weighed the evidence and found that it was insufficient to find intent. “An appellate court is simply not permitted to reweigh the evidence and come to a contrary finding’ with an issue of insufficient evidence.
However, Quinn also argued that the State statutes in regard to altering odometers do not require intent and thus we are left with the knowledge argument. The Court of Appeals held that knowledge is again a factual question left to the trier of fact and the Court of Appeals will not reweigh that evidence. The Court of Appeals also affirmed the trial court’s finding that there was never a sale because Quinn did not submit his trade-ins and the financing fell through.
Chief Judge Schultheis filed a dissent. According to C.J. Schultheis, a reweighing of the evidence didn’t need to take place, because the evidence as it stood (undisputed) still was evidence of violations of the statute. He viewed this as statutory application versus factual issues (as the majority viewed this case).
Dr. Jolley sued Regence Blueshield for violating the Consumer Protections Act and for terminating his practitioner agreement, arguing that Regence failed to provide him with a fair review. The trial court granted summary judgment on both issues in favor of Regence. Dr. Jolley appeals.
Dr. Jolley and Regence entered into a practitioner agreement whereby the agreement was later amended to satisfy the WACs in regards to the process of dispute resolution. The agreement discussed termination in three sections including an at will termination clause, a termination upon suspension of the doctor’s ability to practice medicine, and a section stating that a provider may be terminated if they fail to meet the Company’s Credentialing criteria.
In 2003 the Washington State Department of Health Medical Quality Assurance Commission (MQAC) issued charges against Dr. Jolley for having sexual relations with his patients’ mothers. His license was suspended but he was granted a stay for the suspension and was placed on probation for 10 years. Regence notified him that his contract automatically terminated when his license was suspended and explained his right to appeal. During the appeal process his contract was later reinstated by an arbitrator, however, Regence again terminated his contract under the at will clause. Jolley appealed. Regence later stated that they had terminated him for conditions on his license. An arbitrator found for Regence and stated specifically that Regence met their fair review standard and provided Jolley with an opportunity to state his case.
The Court of Appeals addressed the issue of fair review, which requires notice and an opportunity to be heard. Jolley argued that he did not receive proper notification because he was told his termination was under the at will clause but later found out that it was due to conditions on his license. The Court disagreed with Jolley holding that Regence had reasons for its at will termination, which did not convert it to a for cause termination. Second, Jolley argued that he did not have the opportunity to be heard, however, the court disagreed finding that Jolley went through both Regence’s internal appeals process and an arbitration provided to him, which gave amble opportunity to be heard.
The Court of Appeals held that he lacked standing to bring a CPA claim, but even if his claim were considered it would fail because there is not evidence to support an unfair or deceptive act or practice.
Ambach went in for surgery, got a staph infection post surgery and had to have a fusion as a result. Ambach brought suit for medical negligence and for a CPA claim, the basis of which was the increased cost for surgery. In holding that the CPA claim did not fly, the court discussed the implications if CPA claims were allowed to ride on top of a standard personal injury claim with nothing more:
Ambach attempts to describe her qualifying injury as “specific and limited” to a traditional CPA claim of “the cost of a product . . . acquired due to fraud or deception.” However, at hearing on the motion for summary judgment, Ambach agreed that her CPA injury was “part and parcel of a personal injury claim” but argued that the “damages” she suffered could be seen as distinct from malpractice damages if a jury decided there was a “consumer protection violation.” Ambach’s focus on her loss of money as a qualifying CPA injury ignores the larger reality of her claimed injury: “medical expenses, wage loss, loss of earning capacity, and out-of-pocket expenses” are, as Ambach has admitted, personal injury damages.
The court then looked at other elements of a CPA claim and found that those were lacking as well:
Ambach’s failure to state a cognizable CPA claim is not just that she attempts to disguise her personal injuries as sounding in business or property, but also that she fails to allege the truly public nature of Dr. French’s actions. In Michael v. Mosquera-Lacy, 165 Wn.2d 595, 200 P.3d 695 (2009), we held no CPA claim could be had where the claim relates to the doctor’s “judgment and treatment of a patient,” and the claimant fails to submit evidence that the injurious procedure was “advertised or marketed.” Because Michael could not show that the dentist’s office “advertised to the public in general” or actively solicited the claimant’s business, we held she “failed to show her lawsuit would serve the public interest.”
S&K Motors did business as Pinnacle Masada. Pinnacle had a bad employee appropriately named Stephen Casino. Mr. Casino had a gambling problem and stole a bunch of money from Pinnacle.
Pinnacle gave Casino a second and third chance to change his ways on the condition that he pay back the amount he stole out of his pay check. Mr. Casino did not change his way and kept stealing. Pinnacle finally fired him.
Pinnacle had insurance with Harco National Insurance Co. Harco provided insurance coverage for employee theft, but only up to the point where the employer learns of the theft.
Harco provided coverage for the theft up to the time that Pinnacle learned about the theft, but did not provide coverage for the period during which Pinnacle gave Mr. Casino second and third chances.
By the time Pinnacle submitted its claim to Harco, Mr. Casino had already paid back a good chuck of what he stole. Pinnacle argued that it was entitled to recover the amount that Mr. Casino had re-paid.
The Court of Appeals held that because the theft had continued, the “occurrence” included all of the thefts. The court went on to say that even though Harco was not obligated to pay for the losses sustained by Pinnacle after it learned that Mr. Casino had stolen from it the first time, it also was not entitled to recover any money it paid until Pinnacle had been “made whole” under Sherry v. Fin. Idem. Co., 160 Wn.2d 611, 160 P.3d 31 (2007).
Harco also got dinged for attorney fees under Olympic Steamship v. Centennial Ins. Co., 117 Wn.2d 37, 811 P.2d 673 (1991).
Note to insurers: When there’s a doubt about coverage or subrogation, do yourself a favor by giving your customers the benefit of the doubt. That’s what the courts usually do.
In Washington, people buy auto insurance. There are a variety of different kinds of auto insurance and people buy different varieties of insurance for a variety of reasons. One kind of coverage people often buy is called Personal Injury Protection, or PIP. PIP is a form of no fault coverage that pays for the cost of medical expenses a person incurs as a result of being injured in a car crash. Theoretically, PIP pays your medical bills whether the crash was your fault, the fault of someone else or a combination. There’s a catch. If someone else is determined to be at fault, the insurance company that paid PIP benefits may be entitled to be paid back for what they’ve paid for your care.
In Washington, we have a system of comparative fault. In other words, Washington law recognizes that harm can be caused by more than one person. Washington law requires a jury to determine what percentage of “fault” is attributable to every person that caused harm to happen.
In Washington, there is a public policy favoring full compensation for injuries. In other words, the civil justice system is designed to make a person “whole” by requiring someone that causes injury to another to pay money damages for all the harms and losses they cause. If I hurt someone, I am obligated to pay for all of harms and losses I cause that person. That’s one reason I have insurance. I know that I’m capable of making a mistake while driving. If I make a mistake and I hurt someone, I want my insurance company to pay for the harms and losses I caused. If they other person is partially responsible for causing their own harm, I am only required by law to pay for the harms and losses that were my fault.
Here’s where it gets tricky. If a jury decides that the other person was partly responsible for their own injuries and I am only legally obligated to pay a percentage (i.e., less than 100%) of the other person’s damages, the other person cannot be made whole. In that situation, the other person is not required to repay their insurance company for the PIP benefits the insurance company paid. That’s what the Supreme Court said in Sherry v. Financial Indemnity Co., 160 Wn.2d 611, 160 P.3d 31 (2007). Insurance companies were not happy.
Here’s where it gets even trickier. What happens where the parties settle a case before a jury gets to decide what constitutes “full compensation” or determines what percentage of fault each party bears? That’s what this case was about.
In this case, Loc Thien Truong’s insurance company, Allstate, and the insurance company of the driver he was in a crash with, PEMCO, determined that both parties were 50% at fault. Apparently, nobody cared about that because it had to do only with how much PEMCO would pay Allstate for the damage to Truong’s car.
Truong was injured in the crash and demanded that PEMCO pay $34,000.00 for his injuries. PEMCO said it only owed $2,500. Ultimately, PEMCO agreed to pay $9,347.54. Mr. Truong apparently decidrf that it wasn’t worth the delay and expense of litigation to have a jury (or arbitrator) determine what full compensation amounted to. Truong took the money.
Truong told Allstate that he was not fully compensated for his injuries. He told Allstate that he was not obligated to reimburse Allstate for the $4,172 in medical expenses. Allstate disagreed. Truong sued Allstate, claiming they were acting in bad faith. The trial court agreed with the insurance company. The trial court also said that Truong filing the lawsuit was frivolous and ordered him and has lawyers to pay about $15,000 in attorney fees.
The Court of Appeals agreed with the trial court that Truong had not proven that he was not fully compensated by the settlement but disagreed that the claim was frivolous.
Note to self: When agreeing to a settlement with a third party where there is a viable argument that my client bears comparative fault, make sure the first party carrier agrees to reduce or waive their subrogation claim before settling with the third party carrier.
Note to Supreme Court: If contemplating granting review, carefully review how the Court of Appeals decision in Peterson v. Safeco Ins. Co., 95 Wn. App. 254, 976 P.2d 632 (1999), decided before Sherry, is distinguishable (hint: look at the dollar amounts involved and remember, Sherry had not been decided yet). Also, query how an insurer can agree that their customer is 50% at fault for a crash when dealing with another insurance company, but then disavow that agreement when dealing with their premium-paying customer.