Beasley v. GEICO: After This, Is Anything Left for Insurers Under IFCA?
Tuesday, June 7, 2022
by: Stephanie Andersen

Section: Spring 2022

Stephanie Anderson, Forsberg & Umlauf, P.S. has advised insurers on all manners of coverage and alleged bad faith in Washington since 1992. She has successfully tried to verdict both coverage and bad faith cases, including a federal court multi-million dollar covenant judgment settlement case in which the jury found no bad faith.
In Jerymaine Beasley v. GEICO, 508 P.3d. 212, 2022 WL 1151426 (Wash App. Apr. 19, 2022, published in part), Division II of the court of appeals held “actual damages” under the Insurance Fair Conduct Act (“IFCA”) specifically include noneconomic damages (a component of which is emotional distress damages), a ruling completely at odds with and likely the death knell of Schreib v. Am. Family Mutual, 129 F. Supp. 3d 1129 (W.D. Wash. 2015). In Schreib, Judge Robart of the Western District of Washington analyzed IFCA “actual damages” as a matter of first impression and expressly found it did not include emotional distress damages. The Schreib court considered the following in reaching this conclusion:
  • The term “actual damages” under IFCA is not subject to a plain language interpretation and is therefore ambiguous
  • Because the term is ambiguous, the court looks to legislative history for “clear direction from our legislature”
  • The court reviewed hundreds of pages of transcripts on IFCA legislative hearings and found just three statements on “emotional damages,” all of which were from the same person, who was not a legislator
  • These “stray statements” did not rise to “clear direction from our legislature” so the court next considered IFCA’s requisite degree of culpability
  • IFCA provides a reasonableness (negligence) standard. Because the statute does not concern intentional torts, and under White River Estates v. Hiltbruner, 134 Wn.2d 761 (1998), emotional distress damages are available only for intentional torts, no emotional distress damages are recoverable under IFCA.
Beasley turned this analysis on its head. Two months after Schreib, the Washington Supreme Court affirmed Segura v. Cabrera, 362 P.3d 1278 (2015). The Beasley court relied on the Supreme Court’s Segura decision to find the Supreme Court had moved away from Hiltbruner’s intentional tort test, and to rule noneconomic damages (a component of which is emotional distress damages) were expressly available as “actual damages” under IFCA. The Beasley court noted the contrary ruling in Schreib did not bind it, and that since IFCA has no federal counterpart Schreib was particularly irrelevant. Id. at 220. The Beasley court ruled:
  • Segura shows the intentional tort test of Hiltbruner no longer applies
  • The term “actual damages” is ambiguous (agreeing with Schreib on this point)
  • Because “actual damages” is ambiguous, and the legislative history of IFCA demonstrates the act was intended to protect insureds, provide them new remedies and in part serve a punitive purpose, “actual damages” includes noneconomic damages
  • “Noneconomic damages” are “subjective, nonmonetary losses, including, but not limited to pain, suffering, inconvenience, mental anguish, disability or disfigurement incurred by the injured party, emotional distress, loss of society and companionship, loss of consortium, injury to reputation and humiliation, and destruction of the parent-child relationship.” See RCW 4.56.250(1)(b).
Id. at 224 – 225. The Beasley court reversed the trial court which had, following Schreib, ruled the UIM insured could not recover emotional distress damages under IFCA.
The court disagreed with Beasley that the trial court could simply treble the jury’s bad faith award to reach a new IFCA award, noting while an IFCA violation necessarily constitutes bad faith, bad faith claims do not necessarily include IFCA violations:
Although some insurance bad faith and IFCA claims could overlap, it is possible that some of an insurer's self-serving actions or violations of insurance regulations may not ultimately result in the unreasonable denial of a claim and, thus, would establish only an insurance bad faith claim. Because the claims may differ, the damages could also differ. And because the damages under each category of claim are not necessarily the same, we cannot presume that the bad faith damages the jury awarded also were caused by the IFCA violations. Accordingly, we hold that merely tripling the bad faith noneconomic damages is not an appropriate remedy.
Id. at 226. The Beasley court remanded the matter to the trial court to determine emotional distress damages under IFCA.
Schreib held an insured could not recover emotional distress damages under IFCA; Beasley holds an insured may recover emotional distress damages and all other forms of noneconomic damages under IFCA.
In the unpublished portion of the decision, the Beasley court found the UIM insurer had violated IFCA by refusing to pay the undisputed amount of the claim (in that case, the amount offered) to the insured.
Post Beasley, at least UIM insurers are in a brave new world where the Court of Appeals has held that all noneconomic damages – including but not limited to emotional distress damages – are available to an insured who can show the insurer violated IFCA.
And, although this portion of Beasley is currently unpublished, insurers may now expect to face increased claims by fault-free UIM insureds asserting that an insurer who fails to promptly pay the undisputed amount of its insured’s claim has violated IFCA by unreasonably denying coverage or payment of benefits.