The Washington State Supreme Court today issued its en bancopinion in McCarthy Finance, Inc. et al. v. Premera et al., WA S. Ct. Case No. 90533-9.  The Court held that Washington law does apply the filed rate doctrine in the insurance context, and that the doctrine bars actions that would require a court to “reevaluate rates” approved by the regulator.   

In Premera, a putative class challenged the amount of premium charged by Premera for its health insurance policies.  Plaintiffs alleged that Premera had advertised that rate increases were necessary due to rising costs, and that it provided health insurance policies that were as affordable as possible.  Plaintiffs contended that these statements were false, at least in part because Premera could have supported increasing costs with existing capital rather than increasing rates.  Plaintiffs claimed violation of the Washington Consumer Protection Act for this alleged false advertising, and sought relief in the form of premium refunds and reduced rates. Plaintiffs included purchasers of insurance in the individual, small group, and large group markets, and the putative class was divided into subclasses accordingly.

Premera responded with a motion to dismiss (as to the individual and small group subclasses) and a motion for summary judgment (as to the large group subclass).  In both motions, Premera argued that the action was barred by the filed rate, primary jurisdiction, and exhaustion of administrative remedies doctrines.  The trial court ruled in Premera’s favor.  The Court of Appeals agreed that Washington State would accept the filed rate doctrine – an issue of first impression – but held that the doctrine did not apply to bar a CPA action alleging false advertising.

National Association of Mutual Insurance Companies (“NAMIC”) and Property Casualty Insurers Association of America (“PCI”) joined Premera, as amici curiae, in urging the Washington Supreme Court to take review.  The Court granted review.  NAMIC and PCI filed anamicus curiae brief, supporting Premera, arguing that the filed rate doctrine should bar the action.  The Washington Attorney General filed an amicus curiae brief arguing that plaintiffs’ CPA action should proceed.

The Washington Supreme Court recognized the filed rate doctrine in the insurance context, and also recognized the primacy of CPA claims: “to the extent that claimants can prove damages without attacking agency-approved rates, the benefits gained from courts considering CPA claims outweigh any benefit that would be derived from applying the filed rate doctrine to bar claims.”

But, that is not the case where a claimant’s “requested damages cause their CPA claims to run squarely against the filed rate doctrine.”  In the case before the Court, the damages sought by plaintiffs were either (1) a refund of premium reflecting the “excessive” premium charges, or (2) a refund of “the amount of [Premera’s] excess surplus”, which plaintiffs contended Premera could have used to support its financial needs rather than increasing rates.  As the Court explained:

{A} court’s awarding either of the two specific damages requested by the Policyholders would run contrary to the purposes of the filed rate doctrine because the court would need to determine what health insurance premiums would have been reasonable for the Policyholders to pay as a baseline for calculating the amount of damages and the Washington OIC has already determined that the health insurance premiums paid by the Policyholders were reasonable.  Accordingly, the Policyholders’ claims are barred by the filed rate doctrine because to award either of the specific damages requested by the Policyholders a court would need to reevaluate rates approved by the OIC and thereby inappropriately usurp the role of the OIC.

The Court reversed the Court of Appeals and affirmed the trial court’s judgment.