March 18, 2019 The Court of Appeals of Washington determined that not giving weight to the opinions of the insureds doctors when they opposed the insurer's doctors was a decision made in bad faith. The case is Leahy v. State Farm Mut. Auto. Ins. Co., 3 Wash. App. 2d 613, 418 P.3d 175 (2018).

Shannon Leahy suffered some soft tissue injuries when her car was struck from behind. The other driver was at fault, but only had a $25,000 liability insurance limit that was split between 3 injured parties. Leahy only received $9,128.50 from the other drivers insurance. Leahy had insurance through State Farm with $25,000 in personal injury protection and $100,000 in UIM coverage. She received medical treatment for her injuries.

While seeking treatment for the soft tissue injuries, Leahy also sought UIM benefits for other injuries including treatment for dermatomyositis (DM) which she had been diagnosed with after the accident. She alleged that the accident caused or triggered the DM. State Farm told Leahy that it would likely seek a second opinion to determine whether the DM was caused by the accident. A rheumatologist that represented Leahy concluded that her DM was caused by the accident, and reported that information to State Farm. State Farm selected a rheumatologist to review Leahy's doctor's report in order to determine whether or not the DM was caused by the accident. The State Farm rheumatologist concluded that it was probable that Leahy's DM was not caused by the accident, and there was no causal relationship between car accident trauma and a DM flair. State Farm made an offer of $11,000, and a waiver of its subrogation rights based on its determination that Leahy's soft tissue injuries were the only injuries caused by the accident. Leahy rejected the offer and sued State Farm for the policy limits. The jury found in favor of Leahy and State Farm paid the policy limits. Leahy amended her complaint to add claims for bad faith, violation of the Consumer Protection Act, and a violation of the Insurance Fair Conduct Act. The court granted summary judgment in favor of State Farm and Leahy appealed.

On appeal, the Court of Appeals reinstated Leahy's claims and determined that State Farm violated the law by failing to consider the opinions of Leahy's physicians that her injuries were aggravated by the crash. Leahy's rheumatologist was board certified. The court determined that there was a reasonable dispute whether State Farm could simply ignore the opinions of a board-certified physician in favor of the opinion of a physician who was paid by State Farm. The court determined that Leahy was entitled to have a jury decide if the conduct of State Farm was reasonable. The court also determined that State Farm's low offer, compared to the recovery she ended up with at trial, could show that State Farm acted in bad faith.

Editors Note: This case emphasizes that insurers cannot categorically ignore the opinions of an insureds treating physicians. This overall decision is good for policyholders, particularly Washington policyholders, because it means insurers can't only rely on the analysis of an insureds injuries that is given by the physician that they pay, but they have to give weight to the opinion of the physician treating the insured, so long as that physician is aptly certified. This decision will potentially help to clear up any suspicion that the physician hired by the insurer is deciding in their favor based solely on who has hired them. If State Farm had accorded some weight to the physicians that were speaking on behalf of Leahy, they would have been able to avoid a jury trial.

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