Insurance Adjusters Escape Liability

Jeff Bone | October 15, 2019

Last year, I posted about a Washington Court of Appeals decision, Keodalah v. Allstate Ins. Co., No. 75731-8-I (filed Mar. 26, 2018), in which Division I reversed a decision of the trial court and held that individual insurance adjusters may be personally liable for statutory bad faith and violation of the Consumer Protection Act (CPA) under RCW ch. 19.86 in connection with their handling of an insured’s claims.  As I noted in that post, given the fact that the decision dealt with a matter of first impression, could dramatically change the landscape of coverage litigation in Washington, and had a few curious omissions, it was likely that the Washington Supreme Court would grant review of the decision.

The Supreme Court did, in fact, grant review, and late last week it issued its decision reversing the Court of Appeals.

On the statutory bad faith claim, the Court started its analysis from the premises that the relevant statute, RCW 48.01.030, does not create an express private right of action.  The Court accordingly asked whether there as an implied private right of action, using the three-factor test articulated in Bennett v. Hardy, 113 Wn.2d 912 (1990):  (1) whether the plaintiff is within the class for whose benefit the statute was enacted, (2) whether legislative intent, explicitly or implicitly, supports creating or denying a remedy, and (3) whether implying a remedy is consistent with the underlying purpose of the legislation.  The Court found that the first factor was not met because statute benefits the public at large rather than an identifiable class of people.  The Court found that the second factor was not met because the fact that the insurance code has several specific enforcement mechanisms, but did not expressly create a private cause of action, indicated that the legislature did not intend to create a private cause of action for violation of RCW 48.01.030.  The Court found that the third factor was not met for similar reasons.

On the CPA claim, the Court found that the provisions of the Washington Administrative Code making certain violations per se violations of the CPA applied, by their express terms, only to insurers (not adjusters).  It also rejected Keodalah’s argument that a breach of RCW 48.01.030 could form the basis for a CPA violation.

In short, under the Supreme Court’s decision, it appears settled that an insured may not bring a claim against an adjuster for statutory bad faith or violation of the CPA in connection with claims-handling practices.

The Court’s decision does, however, leave one outstanding question.  As Justice Yu noted in her dissent, Keodalah’s complaint alleged both statutory and common law claims for bad faith.  The trial court dismissed the common law bad faith claim and the Court of Appeals did not address that dismissal.  In Justice Yu’s view, the Court should have recognized that an insured may have a claim against an adjuster for common law bad faith in light of precedent and considerations of “policy, common sense, logic, and justice.”  It thus remains to be seen whether the Court, down the road, will address the specific question of whether an adjuster can be liable for common law bad faith.[1]

If you have any questions about the Court’s decision or its impact on litigation between and insurer and its insured, do not hesitate to contact Jeff Bone at



[1] Dicta in the majority’s decision indicates that the answer may be that there is no such duty.  The majority noted in passing that “just as this court has limited bad-faith tort claims to the context of the insurer-insured relationship, so it has limited CPA claims based on breach of the statutory duty of good faith.”

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