Ki Sin Kim v. Allstate Ins. Co., Inc.

Decision Date24 November 2009
Docket NumberNo. 37256-8-II.,37256-8-II.
Citation223 P.3d 1180,153 Wash.App. 339
CourtWashington Court of Appeals
PartiesKI SIN KIM, individually, Respondent, v. ALLSTATE INSURANCE COMPANY, INC., a foreign corporation, and "ABC Corporation(s)" (1-5), Appellants.

Douglas Edward Wilson, Law Office of Douglas E. Wilson, Seattle, WA, for Respondent.

Morgan Emmerton Smith, Rory W. Leid, Cole Lether Wathen and Leid PC, Seattle, WA, for Petitioner.


¶ 1 On July 1, 2005, Ki Sin Kim was injured when a car driven by an uninsured motorist crossed the center line and collided head-on with her car. On July 21, 2005, Kim filed claims requesting coverage for her medical bills and wage loss under the personal injury protection (PIP) and uninsured motorist (UIM) provisions of her Allstate Insurance Company, Inc. insurance policy. Allstate investigated and, on January 31, 2006, denied coverage because Kim had misrepresented the nature and extent of her injuries and her ability to work. Kim sued Allstate for nonpayment, arguing that it acted in bad faith and in violation of the Consumer Protection Act (CPA), ch. 19.86 RCW, when it refused to pay her emergency room bills and when it "merged" her UIM and PIP files. Allstate moved for summary judgment, arguing that under the "void for fraud" provision of the policy, Kim's material misrepresentations voided the policy. Kim filed a cross-motion for summary judgment on the issues of bad faith and violation of the CPA. Finding that there were material issues of disputed fact, the trial court denied Allstate's summary judgment motion but it granted Kim's summary judgment motion on her bad faith and CPA claims. We granted Allstate's motion for discretionary review.

¶ 2 Because a material issue of disputed fact exists regarding the materiality and affect of Kim's lies on the policy coverage provisions, we affirm the trial court's denial of Allstate's summary judgment motion. But because Kim's material misrepresentations preclude a finding that Allstate acted in bad faith in violation of the CPA as a matter of law, we reverse the trial court's summary judgment on Kim's CPA claim and remand for entry of summary judgment in favor of Allstate on those claims.

Factual Background

¶ 3 On July 1, 2005, an uninsured motorist struck Kim while she drove home from her work as a cook at the Yoko Teriyaki restaurant in Milton, Washington. At the time of the accident, Kim had automobile insurance through Allstate, including PIP and UIM coverage. An ambulance took Kim to the emergency room at Tacoma General Hospital, where she received x-rays and computed axial tomography (CAT) scans of her head, abdomen, pelvis, and legs. Kim suffered a three- to four-inch laceration on her scalp and soft tissue swelling on the upper right side of her head as well as contusions on her left knee and left ankle. Kim's hospital records indicate that she did not experience any (1) traumatic abdominal or pelvic abnormalities; (2) fractures, dislocations, soft tissue swelling, or joint effusion in her left knee; or (3) fractures or soft tissue swelling in her ankle.

¶ 4 On July 21, 2005, Kim submitted a claim to Allstate for her medical expenses and lost wages under the PIP and UIM provisions of her automobile insurance policy with Allstate. The terms of Allstate's policy state that Allstate "may not" provide coverage if an insured intentionally misrepresents any material fact regarding the insured's claims. Specifically, the policy states:

Fraud or Misrepresentation

. . . .

[Allstate] may not provide coverage for any insured who has made fraudulent statements or engaged in fraudulent conduct in connection with any accident or loss for which coverage is sought under this policy.

Clerk's Papers (CP) at 77.

¶ 5 In Kim's proof of loss statement, she indicated that the entire left side of her body hurt, particularly her shoulders, left ankle, and left knee, and that she also suffered from neck and back pain. Kim also indicated that, as a result of her injuries, she had not been able to return to work. As part of its investigation of Kim's claim, Allstate hired a private investigator, John Maucotel, to observe Kim's activities on September 20 and 22, 2005. Maucotel reported that, over the course of both days, he saw Kim "walking, driving, turning her head from side to side ... and working in the kitchen of Yoko Teriyaki." CP at 45. Specifically, he reported that Kim worked at the restaurant for approximately four hours on each day. Maucotel did not see Kim use any "medical apparatus or support devices" on either day.

¶ 6 On October 7, 2005, Kim submitted a wage and salary verification form to Allstate, stating that she had not returned to work since the date of her accident and was seeking reimbursement for those lost wages from Allstate.

¶ 7 On October 10, 2005, Kim completed an independent medical examination (IME) with Dr. David Nicholes.1 As part of the IME, Nicholes reviewed Kim's medical records, completed a chiropractic examination of Kim, and viewed the surveillance tapes that Maucotel had recorded. According to Nicholes's report, Kim described her symptoms as "neck pain, severe headaches, left ankle swelling, and dizziness." CP at 109. She told Nicholes that she was "barely able to drive" because of her "leg pain." CP at 109. Kim also told him on at least three occasions that she has been unable to work since the accident. Kim further stated that she used crutches for two months after the accident and that standing for longer than 30 minutes caused neck pain.

¶ 8 Before Dr. Nicholes began the physical examination, he reviewed Kim's medical records since the accident. Kim's medical records included an intake form from a July 5, 2005 visit to the Oh Family Chiropractic Center where Dr. Changik Oh treated her. In the intake form, Kim complained of pain in her "neck, shoulders, head, hand, feet, back," as well as "light headedness, low back pain, nervousness ... jaw pain, bilateral arm pain, low back stiffness, tension, neck stiffness, swallowing difficulties," but that overall she felt her symptoms were improving. CP at 106. The intake form did not mention that Kim suffered from ankle pain. The handwriting on the intake form was not Kim's; instead, it matched the handwriting on the examination form and the chart notes. Curiously, the intake forms identify Kim as male.

¶ 9 Kim's records also included an intake form from a July 7, 2005 visit to the Life Chiropractic Clinic, where Dr. Kwang Lee treated her. Kim's intake form indicated that her symptoms included pain in her neck, chest, back, ribs, both legs, and that she was suffering from headaches. Kim's pain diagram noted multiple areas of pain, including her "knees, anterior ribs, head, upper back, arms, and low back." CP at 107. The pain chart does not indicate ankle pain. For unknown reasons, Dr. Oh's office submitted a second set of these original records, also dated July 7, 2005. The second intake form added the additional chief complaint of "head surgery and stitched" that was not on the original documentation. CP at 107. The second pain diagram adds that Kim is suffering from "left ankle pain." CP at 107. There was no documentation regarding when these additions were made, who made these additions, or why these additions were made. According to Dr. Nicholes, medical professionals should create medical records contemporaneously with the patient's visit, and that any individual who modifies those records should initial and date the modification and include the reason for the modification.

¶ 10 When Dr. Nicholes examined Kim's left ankle, he did not observe any "obvious swelling," but when he initially palpated the ankle, Kim "pulled away and winced," stating that the pain was "severe." CP at 111. But a few moments later when she was distracted, Nicholes again "palpated her left ankle [this time] quite deeply" and she did not complain of any pain or discomfort. CP at 111. Moreover, Nicholes found that Kim had "full, unrestricted inversion, eversion, flexion, and extension of the ankle with no pain" and that she had "no muscle weakness." CP at 111.

¶ 11 Dr. Nicholes also noted that, when Kim presented for the interview and examination, she "was limping significantly on her left leg, ... was very unsteady on her feet[,] and complained of much pain in her left ankle." CP at 113. Nicholes described Kim's presentation as being characterized by "grunting, groaning and grimacing with all examination procedures," but that her examination was inconsistent; for example, when her lower extremity testing was conducted, she complained of pain in her shoulder, and there is no "anatomic, physiologic, or neurologic association with left shoulder pain and the orthopedic tests that [Nicholes] conducted." CP at 113. Moreover, Nicholes determined that Kim's "apparent limping [was] not credible." CP at 115. Specifically, he indicated that the nature of her limp was inconsistent with that of a person who was actually suffering from an ankle injury. According to Nicholes, "[w]hen a person with an ankle injury limps and favors a lower extremity, they place their foot on the floor and very carefully apply weight to advance their gait and then quickly remove the weight from that leg." CP at 115. In contrast, Kim "walked on her left leg by putting all the pressure on her heel, forcing her foot up and carrying her weight on her heel." CP at 115.

¶ 12 Despite Kim's disproportionate number of subjective complaints, Dr. Nicholes could not find any objective explanations for her condition; instead, Nicholes found that Kim had "normal reflexes, normal sensation, and normal muscle tone," and that she had far greater range of motion when Nicholes was not performing tests than when he was.2 CP at 115. Moreover, he found that Kim's activities as described by Maucotel were "in marked contrast to her presentation" during the October IME and...

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