According to Ms. Peoples, USAA's failure to investigate or make an individualized determination regarding the reasonableness or necessity of a provider's charges before denying payment violated Washington statutory law. She alleged that, due to this practice of algorithmic review, USAA routinely failed to pay all reasonable medical expenses for treating an insured's injuries arising from a covered event, in violation of the PIP statute. She and class members sought actual damages, including unpaid medical bills and expenses incurred to investigate USAA's allegedly wrongful conduct.

Mr. Stedman alleged that his insurer, Progressive, terminated PIP benefits whenever an insured reached "maximum medical improvement" and that this practice violated the Washington law that listed the only permissible reasons to terminate PIP benefits.

He alleged that by terminating benefits on the basis of maximum medical improvement, Progressive routinely failed to pay all reasonable medical expenses for treating an insured's injuries arising from a covered event, in violation of the PIP statute. He and class members sought to enjoin Progressive from using maximum medical improvement to limit PIP claims and actual damages, including unpaid medical bills.

USAA and Progressive moved to dismiss the CPA claims, contending that the insureds had not been "injured in [their] business or property" as required by the CPA for them to be able to sue. The U.S. District Court for the Western District of Washington consolidated the cases solely for the purpose of asking the Supreme Court of Washington whether the plaintiffs had alleged cognizable CPA injuries.

The district court then certified the following questions to the Washington Supreme Court:

With regards to the injury to "business or property" element of a CPA claim, can insureds in Ms. Peoples' and/or Mr. Stedman's circumstances, who were physically injured in a motor vehicle collision and whose Personal Injury Protection ("PIP") benefits were terminated or limited in violation of [Washington law], bring a CPA claim against the insurer to recover out-of-pocket medical expenses and/or to compel payments to medical providers?

With regards to the "injury to business or property" element of a CPA claim, can insureds in Ms. Peoples' and/or Mr. Stedman's circumstances, who were physically injured in a motor vehicle collision and whose Personal Injury Protection ("PIP") benefits were terminated or limited in violation of [Washington law], bring a CPA claim against the insurer to recover excess premiums paid for the PIP coverage, the costs of investigating the unfair acts, and/or the time lost complying with the insurer's unauthorized demands?

The Supreme Court of Washington's Decision

The court ruled that Ms. Peoples and Mr. Stedman had alleged an injury to "business or property" within the meaning of the CPA.

In its decision, the court explained that, under the CPA, a civil action for injunctive relief, damages, attorneys' fees and costs, and treble damages may be brought by any person who was injured in his or her "business or property."

The court added that it was "well established" that insureds could bring private CPA actions against their insurers for breach of the duty of good faith or for violations of Washington insurance regulations. In that regard, the court pointed out, the legislature has expressly declared that the insurance business was one "affected by the public interest" and the court itself has ruled that a violation of an insurance regulation was a per se unfair or deceptive act or practice.

Here, the court continued, the issue was whether the wrongful denial of PIP benefits was an injury to "business or property" for purposes of the CPA. It then decided that it was, holding that the deprivation of contracted-for insurance benefits was an injury to "business or property" regardless of the type of benefits secured by the policy.

Specifically, the court answered the first certified question yes and held that insureds who were wrongfully denied PIP benefits were injured in their "business or property."

Next, the court declined to reach the portion of the second certified question asking about excess premiums. With respect to the remainder of the question, it then held that when a CPA claim was predicated on an insurer's mishandling of a PIP claim, ordinary CPA principles governed whether investigation costs or time lost were injuries to business or property. The court noted that it has recognized that other business or property injuries, apart from the wrongful deprivation of benefits, could be caused when an insurer engaged in unfair or deceptive practices, and it concluded that the principles articulated in those cases applied when a CPA claim was predicated on an insurer's mishandling of a PIP claim.

The case is Peoples v. United Services Automobile Ass'n, No. 96931-1 (Wash. Nov. 27, 2019). Attorneys involved include: Brendan Wesley Donckers, Breskin Johnson & Townsend PLLC, David Elliot Breskin, Breskin Johnson & Townsend PLLC, Young-Ji Ham, Washington Injury Lawyers, PLLC, Duncan Calvert Turner, Badgley Mullins Turner, PLLC, Randall C. Johnson Jr., Law Office of Randall C. Johnson, Daniel Andrew Rogers, Badgley Mullins Turner, PLLC, Daniel R. Whitmore, Law Offices of Daniel R. Whitmore, PS., for Plaintiffs. Jay Williams, Schiff Hardin LLP, David C. Scott, Schiff Hardin LLP, Michael A. Moore, Corr Cronin LLP, Victoria Elizabeth Ainsworth, Corr Cronin LLP, Casie Collignon, Baker Hostetler LLP, James Raymond Morrison, Baker Hostetler, Justin Winquist, Baker Hostetler LLP, Paul G. Karlsgodt, Baker & Hostetler LLP, Philip Albert Talmadge, Talmadge/Fitzpatrick, for Defendant. Linda Blohm Clapham, Carney Badley Spellman, P.S., Michael Barr King, Carney Badley Spellman PS as Amicus Curiae on behalf of American Property Casualty Insurance Association. Valerie Davis McOmie, Attorney at Law, Daniel Edward Huntington, Richter-Wimberley PS, as Amicus Curiae on behalf of Washington State Association for Justice Foundation.