Washington High Court Finds No Need for Proof of Objective Symptoms of Emotional Distress in Insurance Bad Faith Cases.

The Washington Supreme Court recently ruled that plaintiffs do not have to provide evidence of objective symptomatology to support claims for emotional distress damages in insurance bad faith cases.

The plaintiffs, a minor and her parents, sued their insurance company after it refused to provide coverage for the child’s mental health treatment through an outdoor youth program that offered therapeutic interventions for mental illness. Despite policy coverage for the residential treatment for mental health, the insurer argued that a “wilderness exclusion” clause excluded coverage for the program. The clause excluded coverage for programs or activities related to outdoor activities like outward bound, wilderness, camping, or tall ship programs.

The trial court dismissed the plaintiffs’ bad faith claim because it found that they did not provide evidence of objective symptomatology to support their emotional distress damages claim. However, the appellate and later the Supreme Court of Washington found that the trial court had erred in its belief that objective symptomatology was necessary to prove the claim for emotional distress damages in an insurance bad faith case.

Although objective symptomatology is needed to prove the negligent infliction of emotional distress in Washington, the Court held that the objective symptomatology requirement does not extend to the insurance bad faith context. The Court noted that the objective standard applied in negligent infliction of emotional distress cases is needed to limit the legal consequences of negligence to the general public. In contrast, insurance bad faith claims, even though they are based on negligence, can only be committed by insurers that are obligated to act in good faith and who voluntarily enter a relationship with insureds that contain quasi-fiduciary aspects that set them apart from the common defendant in negligent infliction of emotional distress cases.

Because of the quasi-fiduciary aspects of the insurer-insured relationship, the Court noted that insurers are trusted with protecting not only the financial security of their policyholders but also their peace of mind. and the Court added that “every meritorious insurance bad faith claim arises from an insurer’s failure to act reasonably in accordance with its quasi-fiduciary duty to protect the insured’s peace of mind.” As a result, the Court held that it is foreseeable that if an insurer acts in bad faith, it can cause significant emotional distress to the insured, thus removing the need to provide objective symptomatology of emotional distress in such cases.

The case is P.E.L., P.L. & J.L. v. Premera Blue Cross, No. 101561-5, in the Supreme Court for the State of Washington.