New Washington Supreme Court Ruling on Insurance Bad Faith

On May 23, 2019, Washington State’s Supreme Court released its decision in Diaz Barriga Figueroa v. Prieto Mariscal, a case dealing with whether work product privileges apply to statements made by an insured to an insurer following an accident, whether their status as an insured arises by statute or by contract. The Supreme Court affirmed the Court of Appeal’s ruling, finding that statements the insured provided in a personal injury protection (PIP) application is the insured’s privileged work product. The ruling conclusively states that the PIP insurer may not share such information with other insurers, use it when defending a liability claim (if the PIP insurer and liability insurer are the same), or otherwise use it against the PIP insured’s wishes.

This is a great decision for Washington insureds and should force the insurance companies whose business policies state that they will use any signed authorization however they see fit under any coverage to change their bad faith practices. Insurers can no longer force their insureds to provide information under their PIP policies and then use that information against the insured in an action involving different coverages.

This ruling should also extend where a UIM insurer uses the duty to cooperate and first party investigative tools available to them under the UIM policy to require their UIM insured to provide statements, present for medical examinations, etc. Otherwise, the insurer would be able to circumvent this ruling by simply performing its investigation and making requests for information under the UIM policy instead of the PIP policy, since most insureds have UIM and PIP policies through the same insurance company.

And using a single adjuster to handle PIP/UIM and liability claims should be considered presumptively unreasonable because there is no way for the single adjuster to perform their claim handling duties under all of the coverages without impermissibly commingling privileged information and running afoul of the Diaz ruling.

 

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