Facts: After respondent Rajvir Panag was involved in an automobile accident while uninsured with a motorist insured by petitioner Farmers Insurance Company, Farmers Insurance Company retained a collection agency to recover the full amount it had paid on the claim from Panag. Once she had settled a personal injury claim stemming from the accident, Panag filed suit against Farmers Insurance Company, asserting that its collection methods constituted an unfair and deceptive business practice in violation of Washington’s Consumer Protection Act (Washington Revised Code §19.86). The trial court granted summary judgment for Farmers Insurance Company, ruling that Panag had failed to establish injury insofar as she did not remit payment in response to the notices sent by the collection agency. Upon appeal, the Washington Court of Appeals reversed, holding that Panag had suffered cognizable injury. Farmers Insurance Company appealed this decision to the Supreme Court of Washington.

Question(s): Is the Consumer Protection Act applicable to deceptive insurance subrogation collection activities?

If so, did Panag suffer injury as a result of Farmers Insurance Company’s collection methods?

Conclusion: Justice Madsen’s opinion for the Court affirmed the Washington Court of Appeals, concluding that the Consumer Protection Act was not limited in its applicability to disputes between parties to a consumer transaction and that insurance subrogation collection activities may constitute an unfair and deceptive business practice in violation of the Consumer Protection Act if they deceptively mischaracterize an unadjudicated insurance subrogation claim as a debt collection notice. The Court also held that Panag may have suffered injury as a result of Farmers Insurance Company’s collection methods despite not having remitted payment in response to the notices sent on behalf of Farmers Insurance Company as she may have incurred legal expenses beyond those associated with her personal injury claim in investigating the notices. Thus, the Court remanded the case for trial.

Docket No. 80357-9 (from Court of Appeals Division I Case No. 56625-3)

Petitioner: Farmers Ins. Co., of WA & Credit Control Servs., Inc.,

Respondent: Panag

Other Parties: Stephens (respondent) v. Omni Ins. Co. & Credit Control Servs., Inc. (petitioners)

Briefs:

Argument: Tuesday, June 24, 2008 10:00am

[Source: TVW, http://tvw.org]

Decided: Thursday, April 2nd, 2009

Prevailing Party: Panag (Respondent)

Vote: 5-4

Citation: Pending

Alexander

Johnson
(Dissent)

Madsen
(Majority)

Sanders

Chambers

Owens

Fairhurst

Johnson

Stephens