Major Court Victory For Oregon Consumers
One of the important reasons we buy insurance is to have peace of mind. We pay insurance companies for the right to be helped out when something bad happens, which gives some protection from the uncertainties of life. For years, Oregon has had an “unfair claim settlement practices act” on the books that says insurance companies should act fairly, but that law had been largely unenforceable by consumers.
Oregon statutes have long provided that insurance companies should not engage in a number of unfair practices, but until now, there was pretty much nothing consumers could do to enforce those laws in most cases. That changed with the Oregon Court of Appeals case of Moody v. Oregon Community Credit Union, which came out on January 26, 2022.
The Moody case involved a widow who sought to collect the small life insurance proceeds that are commonly offered by financial institutions, including through credit unions. The life insurance company denied the widow’s claim. She then sought to enforce her rights in court, including to have the insurance company pay damages for her emotional distress for the insurer’s failing to pay on the life insurance policy, reportedly without conducting a reasonable investigation and after failing to settle in good faith after the insurance company’s liability was reasonably clear.
The insurance company argued that the widow could not be compensated for the distress she was subjected to, even if the insurance company’s conduct was unfair and violated the law. The insurance company’s position reflected the conventional understanding of the limited value of the unfair claim settlement practices laws, which look good on paper but in practice mostly never had any teeth.
The Oregon Court of Appeals concluded that the conventional understanding was not actually the law, and determined that the widow had the right to seek damages for her emotional distress if she could prove that the insurance company violated the unfair claim settlement practices act (something a jury would determine). The case could be appealed to the Oregon Supreme Court, and even if upheld, it is not yet clear how the analysis of the Moody case may apply to a range of other insurance matters. Those involved in insurance legal disputes expect further developments in the courts.
The full Oregon Court of Appeals decision in the Moody v. Oregon Community Credit Union case can be read for free at Oregon Judicial Branch – Court Of Appeals Opinions.