In Derenski v. USAA General Indemnity Company, the Honorable James Robart held that an insurer’s underinsured motorist settlement offer does not constitute an “undisputed amount” where neither party characterized the offer as such and there was no demand for payment of any sum as an “undisputed amount”. Accordingly, the nonpayment of such a settlement offer cannot form the basis for a cause of action under the Insurance Fair Conduct Act.
This case arises from a March 20, 2018, auto accident involving USAA insured, Heather Derenski, and an at-fault underinsured motorist (“UIM”). Derenski was injured in the accident and made a claim to USAA on April 9, 2018, after which USAA opened a claim. Her USAA personal automobile policy had limits of $25,000 for personal injury protection (“PIP”) and UIM limits of $300,000 per person and $500,000 per accident.
Derenski reported to USAA that she sustained “whiplash,” a possible concussion, pain in her right hip, low back pain, neck pain, and an abdominal injury from the seatbelt. USAA paid her medical expenses under her PIP coverage.
On January 26, 2021, Derenski’s attorney notified USAA that the at-fault party had $25,000 in liability limits, which Derenski intended to accept and then pursue a UIM claim. USAA opened a corresponding claim and requested information about her injuries and treatment, as well as other supporting documentation. Derenski’s counsel provided an update regarding Derenski’s injuries and treatment, but otherwise did not respond to USAA’s request for information.
Derenski sent a demand letter to USAA on October 26, 2021, and included details regarding her injury and damages. There was no total monetary demand; rather, Derenski claimed medical bills totaling $13,458.44, and out-of-pocket expenses totaling $10,339.32.
On November 10, 2021, USAA offered Derenski $5,000 to resolve her UIM claim. A month later, Derenski responded not with a counteroffer but with a demand that USAA provide an explanation for its offer. In addition, Derenski offered to allow USAA to interview her under oath, agreed to attend an independent medical examination, and gave USAA permission to contact her medical providers. USAA interviewed Derenski on March 30, 2022, and shortly thereafter increased its offer to $25,000.00. Thereafter, between April 20, 2022, and December 13, 2022, USAA sent eleven (11) letters to Derenski seeking a response to the $25k offer without avail.
Derenski obtained new counsel on December 15, 2022, who asked for communications related to the matter and a copy of the policy. USAA provided this information and advised the UIM claim was unresolved pending a response to the April 2022 settlement offer.
On February 28, 2023, Derenski sent a 20 Day Insurance Fair Conduct Act (“IFCA”) letter to USAA and therein demanded the $300,000 UIM policy limit. USAA timely responded with a denial to pay the limit and requested a response to the April 2022 $25,000 settlement offer. Rather than respond, Derenski filed suit against USAA in King County Superior court alleging breach of contract; violation of the IFCA; insurance bad faith; and violation of the Washington Consumer Protection Act (“CPA”).
The matter was removed to the U.S. District Court for the Western District of Washington, and USAA moved for summary judgment on Derenski’s extra-contractual claims. The Court granted USAA’s motion in part, holding that USAA did not violate IFCA to the extent that Derenski’s IFCA complaint was based on USAA’s failure to pay “undisputed amounts.” The court based this conclusion on the fact that neither USAA, nor Derenski ever characterized the $25,000 settlement offer as “undisputed,” nor did Derenski ever ask USAA to pay an “undisputed amount.” Under these facts, Derenski could not establish a genuine dispute of material fact whether USAA refused to pay an undisputed amount, and summary judgment was appropriate. The Court denied the remainder of USAA’s motion given the existence of disputes of material fact.
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