Plaintiffs allege that Bankers developed onerous procedures to delay and deny insurance claims. Examples of these procedures include failing to answer phone calls, losing documents, denying claims without notifying policyholders, denying claims for reasons that did not comport with Oregon law, and paying policyholders less than what they were owed under their policies. Bankers allegedly collected premium payments and, without good cause, delayed and denied insurance benefits to which Plaintiffs were entitled under their policies.

The U.S. District Court for the District of Oregon dismissed the plaintiffs' elder financial abuse claim for failure to state a claim, concluding that Oregon's elder financial abuse statute applied only in the "bailment or trust scenarios expressly referenced in the statutory language."

The plaintiffs appealed to the Ninth Circuit, which certified the following question to the Oregon Supreme Court:

Does a plaintiff state a claim under Oregon Revised Statutes 124.110(1)(b) for wrongful withholding of money or property where it is alleged that an insurance company has in bad faith delayed the processing of claims and refused to pay benefits owed under an insurance contract?

Oregon Law

ORS 124.110 provides:

(1) An action may be brought under ORS 124.100 for financial abuse in the following circumstances:

* * * * *

(b) When a vulnerable person requests that another person transfer to the vulnerable person any money or property that the other person holds or controls and that belongs to or is held in express trust, constructive trust or resulting trust for the vulnerable person, and the other person, without good cause, either continues to hold the money or property or fails to take reasonable steps to make the money or property readily available to the vulnerable person when:

(A) The ownership or control of the money or property was acquired in whole or in part by the other person or someone acting in concert with the other person from the vulnerable person; and

(B) The other person acts in bad faith, or knew or should have known of the right of the vulnerable person to have the money or property transferred as requested or otherwise made available to the vulnerable person.

(Emphasis added.)

The Oregon Supreme Court's Decision

The court ruled that allegations that an insurance company, in bad faith, delayed the processing of claims and refused to pay benefits owed to vulnerable persons under an insurance contract did not state a claim under Oregon's "vulnerable persons" statute for wrongful withholding of "money or property."

The court reasoned that the plaintiffs' argument that Bankers' failure to pay insurance benefits to them constituted elder financial abuse ran into "an initial, and fatal, textual barrier." According to the court, the plaintiffs' position essentially read out of the statute the first element of the claim: that Bankers had acquired "ownership or control of the money or property from [the plaintiffs]." If, as the plaintiffs asserted, "the money or property" was their contractual right to receive insurance benefits under the policies, Bankers had not "acquire[d]" that contractual right "from" the plaintiffs, the court said.

Rather, the court observed, the plaintiffs had paid insurance premiums to Bankers in exchange for insurance policies. The court added that the plaintiffs were not seeking the return of the money they had transferred to Bankers in the form of premium payments, but instead the contractual benefits they were entitled to under Bankers' insurance policies, which were "not the same thing."

Because "the money or property" that the plaintiffs transferred to Bankers – premiums – was factually and legally different from the insurance policy benefits they claimed Bankers was withholding from them, the plaintiffs were "unable to establish the first element of their elder financial abuse claim," and that claim failed, the court concluded.

The case is Bates v. Bankers Life and Casualty Co., No. SC S064742 (Ore. Jan. 19, 2018). Attorneys involved include: Rachele R. Selvig, Cauble Cauble & Selvig, LLP, Grants Pass, argued the cause and filed the briefs for the plaintiffs. Adam J. Kaiser, Alston & Bird LLP, New York, New York, argued the cause and filed the brief for the defendants. Also on the brief were John M. Aerni, New York, New York, and Vicki L. Smith, Lane Powell PC, Portland. Erin K. Olson, Law Office of Erin Olson, PC, Portland, filed the brief for amicus curiae Oregon Trial Lawyers Association. Also on the brief was Emily Teplin Fox, Portland.