Class plaintiffs must prove individual damage claims

By Jeffrey P. Downer

Class-action plaintiffs must prove each class member’s individual damages, rather than merely proving the aggregate of all damages, according to the Washington Court of Appeals.

In Sitton v. State Farm Mut. Auto. Ins. Co., no. 49923-8-I (Feb. 2003), plaintiffs sued State Farm for bad faith in denying coverage for medical expenses. Individual plaintiffs had sought personal-injury-protection (PIP) benefits under their State Farm auto policies. The policies permitted State Farm to refer their claims to medical-utilization reviews for evaluation of whether treatment was reasonable, necessary, and due to a covered accident. The reviews resulted in denial of part or all of plaintiffs’ claims.

Plaintiffs sued, alleging that State Farm uses the review process in bad faith solely to deny or limit benefits as part of a secret cost-containment policy. Plaintiffs asked the trial court to certify their claims as a class action. The trial court certified the class on multiple grounds and ordered that the case proceed in two phases. In Phase I, the trial court would decide issues of liability, bad faith, causation, and the damages suffered by the class as a whole. In Phase II, the court would address the amount of individual class members’ damages on the bad-faith claims.

The Court of Appeals reversed, agreeing with State Farm that that procedure "contemplates an award of damages without requiring plaintiffs to prove individual causation and without permitting State Farm to advance its defenses." The appellate court rejected this approach because it presupposes that if bad faith occurred, the full amount of each claim was valid. The effect would be to eliminate plaintiffs’ burden of proving causation.

The Lee Smart Quarterly is a publication of the law offices of Lee, Smart, Cook, Martin & Patterson, P.S., Inc. for clients and others. It is intended as general information only and is not to be construed as legal advice. You should consult an attorney if you have any specific legal questions.

Editor: Jeffrey P. Downer	Eml: jpd@leesmart.com
Phone: 206.621.3482	Toll Free: 877.624.7990