Eastern district of washington breathing life into the third front of the insurance fair conduct act (“ifca”): ifca claims based upon washington administrative code (“wac”) violations

The IFCA battle has had many fronts, notably and most formidably the battle has surrounded whether IFCA applies when coverage is granted but the insurance company unreasonably denies the full amount of benefits owed under the policy. When the IFCA decisions were first coming out, this battle appeared to be heavily tipping in the insurance companies’ favor and Plaintiffs were crossing their fingers for non-removal. Cases such as, Morella v. Safeco Ins. Co. of Illinois, No. C12-0672RSL, 2013 WL 1562032, at *3 (W.D. Wash. Apr. 12, 2013)1, helped turn the battle around in the federal courts and Ainsworth v. Progressive Cas. Ins. Co., 180 Wn. App. 52, 79, 322 P.3d 6, 20 (2014) allowed plaintiffs to plant their flag in State Court.

During the coverage denial vs. non-coverage denial fights, another front of IFCA was also simultaneously being litigated but was relegated to the background while the bigger battle of whether IFCA even applied in non-coverage denial cases was being primarily fought. This is the front of whether IFCA applies for WAC violations.

So the question is, can you maintain an IFCA claim when coverage has been granted and there is no issue of whether benefits have been paid, but the insurance company violates WAC provisions in the claims handling process? If you’ve read any number of federal court opinions you may believe the answer is a resounding no.

But, if you read Langley v. GEICO Ins. Co., No. 1:14–CV–3069–SMJ, 2015 WL 778619 (E.D. Wash. Feb. 24, 2015), out of the Eastern District of Washington, you get to yes:

the Court finds that at a minimum, an independent implied cause of action exists under the IFCA for a first party claimant to bring a suit for a violation of the enumerated WAC provisions in RCW 48.30.015(5).

to maintain a cause of action under the IFCA, Plaintiff must prove either 1) an unreasonable denial of a claim for coverage, 2) an unreasonable denial of payment of benefits, or 3) a violation of WAC 284–30–330, 350, 360, 370, 380, or an unfair claim settlement practice rule adopted under RCW 48.30.010 by the insurance commissioner that is codified in chapter 284–30 of the Washington Administrative Code. RCW 48.30.015(1), (5).

See Langley supra.

In Langley Judge Mendoza rejected the lines of cases (coming out of the Western District of Washington) because in those cases the issue of whether IFCA applies to WAC violations was either not squarely addressed or at the times it was, the courts did not outline their statutory construction analysis, and they did not examine the IFCA statute under the lens of the doctrine of implied causes of action.

The doctrine of implied causes of action is premised upon the assumption that “‘the legislature would not enact a remedial statute granting rights to an identifiable class without enabling members of that class to enforce those rights.’” Langley, 2015 WL 778619, at *4 (quoting Bennett v. Hardy, 113 Wn.2d at 919–20, 784 P.2d 1258 (1990)) (other citations omitted). Under the Bennett test, a cause of action will be implied from the language of a statute when: (1) a plaintiff is “‘within the class for whose ‘especial’ benefit the statute was enacted’”; (2) explicitly or implicitly, legislative intent supports creating a remedy; and (3) implying a remedy is consistent with the legislations underlying purpose. Bennett, 113 Wn.2d at 919–20.

Applying the three-part Bennett test for implied causes of action, the Court in Langley concluded that an implied cause of action exists for IFCA claims based upon WAC violations.

the Court finds that at a minimum, an independent implied cause of action exists under the IFCA for a first party claimant to bring a suit for a violation of the enumerated WAC provisions in RCW 48.30.015(5). The Court rejects the progeny of cases from the Western District of Washington which reached a different conclusion, and concurs with the conclusion of Judge Rice’s 2014 opinions in Merrill and Hell Yeah Cycles.

Langley, 2015 WL 778619, at *6 (emphasis added).
The litigants in Langley did not outline the facts surrounding the WAC violations so this aspect of the case was not examined, but the Court did find that on the legal question of whether plaintiff could maintain an IFCA claim when there are no issues of coverage denial or payment of benefits, the answer is yes. Id. at *7

Failure to find substantive meaning in WAC violations as they relate to IFCA cause of action, would, in application, render the “or has violated a rule in subsection (5) of this section” in sections (2) and (3) the IFCA statute superfluous. It would render the ““or has violated a rule in subsection (5) of this section” superfluous because the in coverage denial or payment of benefits IFCA cases, the judge always has to award attorney fees and costs and there is always discretion to treble damages. So, what is the point of the “or has violated a rule in subsection (5) of this section”? Reading the statute as a whole, it provides nothing to a first party claimant unless it is given its own meaning—unless the “or” has life breathed into it and RCW 48.30.015(5) is allowed to stand on its own as a way to support an IFCA claim.

Remember, IFCA also provides in relevant part:

(5) A violation of any of the following is a violation for the purposes of subsections (2)

[which gives discretionary trebling] and (3) [which gives mandatory attorney fees and litigation expenses] of this section:

(a) WAC 284-30-330, captioned “specific unfair claims settlement practices defined”;

(b) WAC 284-30-350, captioned “misrepresentation of policy provisions”;

(c) WAC 284-30-360, captioned “failure to acknowledge pertinent communications”;

(d) WAC 284-30-370, captioned “standards for prompt investigation of claims”;

(e) WAC 284-30-380, captioned “standards for prompt, fair and equitable settlements applicable to all insurers”; or

(f) An unfair claims settlement practice rule adopted under RCW 48.30.010 by the insurance commissioner intending to implement this section.

The rule must be codified in chapter 284-30 of the Washington Administrative Code.

Statutory interpretation/construction 101 requires that all words in the statute must be given meaning and no words in the statutes are to be rendered superfluous. Langley applied the right analysis and came out the right way on this issue.

As the Langley Court references, there are a few Eastern District of Washington cases that touch favorably on the issue of WAC violations supporting an IFCA claim. These prior cases however do not analyze IFCA causes of action for WAC violations alone as the Langley Court did, but they are cases you can use to show how other courts have also supported the notion you are asserting—that an IFCA cause of action applies for WAC violations:

  • Hell Yeah Cycles v. Ohio Sec. Ins. Co., 16 F.Supp.3d 1224, 1235–36 (E.D.Wash. Apr. 28, 2014) (denying plaintiff’s summary judgment on IFCA violations for claims denials and WAC violations because material questions of facts remained and specifically stating: “The statute also specifies that a first-party claimant may sue his or her insurance company for violating any of the claims-handling regulations promulgated by the Washington State Office of the Insurance Commissioner at WAC 284–30–330 et seq. RCW 48.30.015(5).”)
  • Merrill v. Crown Life Ins. Co., 13–CV–0110–TOR, 2014 WL 2159266 (E.D.Wash. May 23, 2014) (stating in dicta that first party claimants have rights to a private cause of action against their insurers under the IFCA statute when the insurer (1) unreasonably denies a claim for coverage or payment of benefits; “and/or (2) violates one of several claims handling regulations promulgated by the Washington State Office of the Insurance Commissioner. RCW 48.30.015(1), (5).”) (emphasis added). Note: this is dicta because the plaintiffs raised and argued IFCA only on the basis of coverage denial/payment of benefits.While not mentioned in Langley, the following prior cases may also be useful on this issue:Eastern District of Washington:
  • Dye Seed, Inc. v. Farmland Mut. Ins. Co., No. CV-12-0218-LRS, 2013 WL 6587914, at *5 (E.D. Wash. Dec. 16, 2013) (stating in the context of a coverage denial case where the insurer failed to disclose to disclose coverages, “The Act provides a remedy to an insured who is “unreasonably denied a claim for coverage or payment of benefits’.” The statute also specifically states that a violation of WAC’s 284–30–330 & 350 is a violation of the statute. As discussed above, the Court finds that Farmland unreasonably denied a claim of coverage or payment of benefits. More specifically, the undisputed facts support a finding that Farmland failed to fully disclose to Dye Seed all pertinent benefits, coverages or other provisions of an insurance policy or insurance contract under which a claim is presented. Therefore, the Court finds that the statute, RCW 48.30.015, was violated.”)

Western District of Washington:

  • Tim Ryan Const., Inc. v. Burlington Ins. Co., No. C12-5770 BHS, 2012 WL 6567586, at *7 (W.D. Wash. Dec. 17, 2012) (stating in a summary judgment case in favor of the first party insured, in the context of a complicated coverage denial/ denial of co-defense case, where the insurer also failed to disclose all coverages available and failed to give a reasonable explanation for the basis of the denial, “An insured violates the IFCA by ‘failing to disclose to first party claimants all pertinent benefits coverages or other provisions of an insurance policy or insurance contract under which a claim is presented.’ RCW 48.30.015(5)(b) & WAC 284–30–350.”) Note: the respondent specifically raised that IFCA only applies when coverage denial is at issue, the Court, finding that coverage denial was not reasonable here, granted summary judgment for the petitioner and granted summary judgment on the issue of the WAC violation as well:

With Langley in hand, while you cannot yet plant your flag as the war is not yet won, the Eastern District’s recent opinion allows you to do triage, keep fighting, and this time go into your next battle with bigger and better weapons.


1. Morella interestingly the Morella Court found that IFCA cannot be supported on WAC violations alone.

2. The opinion also has an excellent summary of federal court opinions addressing the IFCA WAC violation cause of action. The Court’s synthesis and analysis is so spot on it is a good practitioner summary tool for your next IFCA case

3. The Court also cites to an earlier discovery dispute rulings: “Similarly, this Court, without providing a full explanation of its reasoning, stated in a discovery dispute that ‘it is a violation of the IFCA for an insurer to refuse to pay claims without conducting a reasonable investigation. WAC 284–30–330(4).’ Hover v. State Farm Mut. Auto. Ins. Co., No. CV–13–05113–SMJ, 2014 WL 4239655, at *4 (E.D.Wash. Aug.26, 2014) reconsideration denied, No. 13–CV–05113–SMJ, 2014 WL 4546048 (E.D.Wash. Sept.12, 2014) (“Defendant believes this was manifest error because ‘the only thing that gives rise to an IFCA violation is an unreasonable denial of a claim for coverage or payment of benefits.’ ECF No. 57 at 5. This is false.”).” Langley, 2015 WL 778619, at *3.