Kosovan v. Omni Ins. Co.

Citation496 P.3d 347
Decision Date05 October 2021
Docket NumberNo. 54904-2-II,54904-2-II
Parties Aliona KOSOVAN, Appellant, v. OMNI INSURANCE COMPANY, a foreign insurance carrier, Praxis Consulting, Inc., a foreign corporation, Respondents.
CourtCourt of Appeals of Washington

PUBLISHED OPINION

Cruser, J.

¶ 1 Aliona Kosovan appeals the trial court's orders granting summary judgment in favor of Omni Insurance Company (Omni) and Praxis Consulting, Inc. (Praxis), dismissing her Consumer Protection Act (CPA)1 claims against both entities. Kosovan was injured in a motor vehicle accident by an at-fault third party and obtained Personal Injury Protection (PIP) benefits under her insurance policy with Omni. Kosovan then sought to recover for personal injury damages she sustained in a suit against the tortfeasor. Before Kosovan settled with the tortfeasor and received full compensation for her injuries, Omni transferred its interest in collecting its subrogation2 claim for PIP benefits to Praxis, and Praxis submitted a subrogation claim letter to the tortfeasor's insurer. Kosovan filed suit alleging that Omni and Praxis’ conduct amounted to a violation of the CPA.

¶ 2 On appeal, Kosovan argues that the trial court erred in granting summary judgment in favor of Omni and Praxis because, at minimum, a genuine dispute of material fact remains as to each element of her CPA claim and Omni and Praxis were not entitled to judgment in their favor as a matter of law.

¶ 3 We hold that Kosovan raised a genuine issue of material fact as to each element of her CPA claim against Omni based on her allegation that Omni breached its duty as her insurer to exercise good faith under RCW 48.01.030 when it attempted to assert a right to recover PIP benefits before Kosovan was fully compensated for her injuries. However, we hold that Kosovan's claim against Praxis was properly dismissed as a matter of law.

¶ 4 Accordingly, we reverse the trial court's order granting summary judgment in favor of Omni, affirm the trial court's order granting summary judgment in favor of Praxis, and remand for further proceedings consistent with this opinion.

FACTS
I. THE COLLISION

¶ 5 On December 6, 2015, Kosovan was driving in Oregon when she was hit from behind by a car driven by Joseph Roland. Kosovan suffered a dislocated jaw

and hip, and she sustained a concussion. Kosovan also experienced severe pain in her back for which she sought care from a chiropractor. In addition to the regular chiropractic treatment that Kosovan received over the 18 months that followed, Kosovan received continued care for her jaw injury and had regular appointments with a neurologist. Kosovan incurred approximately $38,500 in medical expenses related to the collision.

¶ 6 Kosovan was insured by Omni when the collision occurred. In January 2016, counsel for Kosovan informed Omni that Kosovan had made a claim and "may institute a cause of action" against Roland. Clerk's Papers (CP) at 584. Roland was insured by United Services Automobile Association (USAA). Roland's policy limit for personal injuries was $25,000 for any single person injured in a collision, which is the mandatory minimum bodily injury coverage allowed under RCW 46.29.090. USAA accepted full liability for the collision on behalf of Roland.

II. SUBROGATION FOR PIP BENEFITS PAID TO KOSOVAN

¶ 7 Kosovan applied for PIP benefits from Omni, and her application reflected medical expenses totaling $38,566.23. Omni paid Kosovan $10,000 in PIP benefits, which was the maximum allowed under her policy. Kosovan's policy with Omni set forth procedures for seeking subrogation and reimbursement of benefits paid to its insured. Omni's insurance policy provided in relevant part:

OUR RIGHT TO RECOVER PAYMENT
A. If we make a payment under this policy and the person to or for whom payment was made has a right to recover damages from another we shall be subrogated to that right. That person shall do:
1. Whatever is necessary to enable us to exercise our rights; and
2. Nothing after loss to prejudice them.
....
B. If we make a payment under this policy and the person to or for whom payment is made recovers damages from another, that person shall:
1. Hold in trust for us the proceeds of the recovery; and
2. Reimburse us to the extent of our payment. However, any reimbursement due to us shall be reduced by our pro rata share of any reasonable and necessary costs and expenses, including deposition costs, witness fees and attorney's fees, incurred in bringing the claim.
....
E. We shall be entitled to a recovery under Paragraph (A.) or (B.) only after the person has been fully compensated for damages.

Id. at 52-53.

¶ 8 One week after Omni paid Kosovan her PIP benefit, Omni assigned its subrogation claim related to recovery of the PIP benefits it paid to Kosovan to Praxis. Praxis is a firm that conducts subrogation recovery on behalf of insurance companies to obtain reimbursement for the insurer's payment from a third party that is ultimately responsible for that payment. Praxis is not licensed to operate as a collection agency in Washington.

¶ 9 Under its agreement with Praxis, Omni submits a weekly list to Praxis of the PIP payments it issued "to determine whether subrogation potential exists." Id. at 407. Omni provides Praxis with "the date of loss, basic facts of the accident, amount of PIP paid and identity of the PIP insured." Id. at 298. Praxis would then "identify, investigate, pursue and collect recovery against [third] parties." Id. at 407. With regard to the PIP benefits paid to Kosovan, Praxis did not independently investigate the extent of Kosovan's alleged damages or whether Roland's personal liability coverage would pay for all of Kosovan's damages. Instead, Praxis relied on "direction and information received from Omni." Id. at 299.

¶ 10 After receiving the assignment from Omni, Praxis contacted USAA and confirmed that USAA had accepted full liability for the collision. Praxis then sent USAA a letter on October 19, 2017, regarding Omni's subrogation claim. The letter read:

Our investigation of the accident referenced below indicates that liability rests with your insured. Your files should now reflect that we are handling this file. On behalf of our client we now turn to you for reimbursement under the provisions of the Personal Injury Protection Law for benefits and expenses incurred by them to date in the amount of $10,000.00.
....
Please make your check payable to Praxis Consulting, Inc. A/S/0 OIC and forward to the address above.

Id. at 134.

¶ 11 Kosovan's counsel received a copy of the letter Praxis sent to USAA. A staff member at the firm Kosovan retained contacted Praxis with regard to the letter Praxis sent to USAA, asking for further information about the medical services that were paid by the PIP benefit. The staff member further notified Praxis that the statute of limitations related to Kosovan's claim would expire in the following month. Because the collision occurred in Oregon, the applicable statute of limitations was two years following the date of collision. OR. REV. STAT. § 12.110(1).

III. USAA'S SETTLEMENT OFFER AND KOSOVAN'S CPA CLAIM

¶ 12 Just over two weeks before the statute of limitations was set to expire, USAA offered a $25,000 policy limit settlement to Kosovan. In the offer letter, USAA noted that it "received a PIP subrogation in the amount of $10,000.00," and asked Kosovan to please have Omni or Praxis fax a letter to USAA if she can get Omni or Praxis to waive the subrogation claim. Id. at 191.

¶ 13 After receiving the settlement offer from USAA, Kosovan filed a notice to the insurance commissioner under the Insurance Fair Conduct Act (IFCA), RCW 48.30.015, asserting that Omni was improperly attempting to recover its subrogation claim directly from the tortfeasor. Kosovan then filed a complaint naming Omni and Praxis as defendants on January 10, 2018, claiming that their conduct in pursuing the subrogation claim for PIP benefits paid violated the CPA. Kosovan alleged that Omni and Praxis improperly sought to recover on their subrogation claim because Kosovan had not been " ‘made whole’ " for the injuries she suffered in the collision. Id. at 2.

¶ 14 A subrogation recovery adjustor on behalf of Praxis contacted Kosovan's counsel on January 23, 2018 and asked why counsel had not contacted Praxis to inform Praxis of the "made whole" issue prior to filing suit. Id. at 418. The representative then asked whether Kosovan's counsel would forgo the CPA suit if Praxis agreed not to pursue the subrogation "lien." Id. at 417.

¶ 15 On February 19, 2018, USAA informed Praxis that it would not reimburse Omni for the PIP benefits Omni paid because Kosovan's damages exceeded its policy limits. In light of this information, Praxis responded that it would not seek reimbursement from USAA and that "USAA could settle its claim with [Kosovan]." Id. at 410.

¶ 16 Kosovan's claim, however, was not settled until after April 25, 2018, when USAA received written confirmation that Praxis and Omni did not intend to pursue the subrogation claim. After Kosovan's deposition was taken, Praxis sent a letter to Kosovan confirming that it did not intend to pursue its subrogation claim. Kosovan then forwarded Praxis’ letter to USAA, at which time USAA disbursed the settlement proceeds to Kosovan.

IV. PROCEDURAL HISTORY

¶ 17 Praxis moved for summary judgment, seeking dismissal of Kosovan's CPA claim on the basis that it did not commit an unfair or deceptive act when it exercised the right to seek subrogation for PIP benefits Omni paid to Kosovan. Omni joined Praxis’ motion, arguing that the claims against Omni should be dismissed for the same reasons.

¶ 18 The trial court granted...

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