The Washington Supreme Court held today that violation of Washington Administrative Code (“WAC”) regulations alone does not support a cause of action under the Insurance Fair Conduct Act (“IFCA”) in Perez-Crisantos v. State Farm Fire and Casualty Co., No. 92267-5, with eight justices joining the lead opinion. The Court’s findings included the following:

  • IFCA does not state a cause of action for first party insureds “whose claims were processed in violation of the insurance regulations,” but it explicitly lays out a cause of action for first party insureds who are unreasonably denied a claim.
  • When the Washington State Voters were presented with the IFCA initiative, the ballot title clearly indicated an intent to create a cause of action for unreasonable denial of coverage, not for regulatory violations. On the whole, the Court concluded that the legislative history suggests that IFCA does not create an independent cause of action for regulatory violations.
  • The reading sought by Mr. Perez-Crisantos would render portions of IFCA superfluous.

In reaching this conclusion, the Court agreed with the rationale of prior federal decisions that an independent cause of action based on a WAC violation was not created.  Among the decisions cited by the Court was Country Preferred Ins. Co. v. Hurless, 2012 WL 2367073 (W.D. Wash. 2012), in which Soha & Lang, P.S. successfully represented the insurer on this issue.

The litigation between State Farm and Mr. Perez-Crisantos arose from his insurance claim regarding a motor vehicle accident caused by another driver. Mr. Perez-Crisantos made an underinsured motorist (“UIM”) claim with State Farm. State Farm determined that Mr. Perez-Crisantos had been fully compensated, and declined to make further payments under the UIM coverage. Mr. Perez-Crisantos sued State Farm on multiple grounds, including a claim for violation of IFCA.  Mr. Perez-Crisantos premised his IFCA claim on, among other things, State Farm’s alleged violation of certain WAC regulations.

This is a fair and reasonable reading of the Insurance Fair Conduct Act and good news for insurers and, in the long run, their customers.


Disclaimer: The opinions expressed in in this blog are those of the authors and do not necessarily reflect those of Soha and Lang, P.S. or its clients.