Opinion ID: 2623334
Heading Depth: 1
Heading Rank: 5

Heading: AS 21.89.020(c) and (e) Give Rise to Enforceable Duties Against Insurance Companies.

Text: Alaska Statute 21.89.020 does not provide that an insured or other person may bring a private action to enforce its provisions. Indeed, there is no enforcement language in section .020. But there is a general enforcement provision applicable to Title 21 of the Alaska Statutes which provides that for any violation of Title 21 a civil penalty of not more than $2500 may be imposed by the state after an administrative hearing. [21] Although the statute is silent on the question of private enforcement, private actions to enforce the requirements of section .020 have been maintained and approved by this court. In State Farm Mutual Automobile Insurance Co. v. Harrington this court ruled that an insured could enforce in a private action the minimum limits mandate of AS 21.89.020(c) as well as the nonwaiver requirement of AS 21.89.020(e). [22] We ruled similarly concerning AS 21.89.020(c) and the requirements for mandatory UM/UIM coverage in Title 28 in Burton v. State Farm Fire and Casualty Co. [23] But in these cases the defense that AS 21.89.020 was not privately enforceable was not raised. By contrast, in O.K. Lumber Co. v. Providence Washington Insurance Co. we held that a third-party claimant does not have a private claim against an insurance company under the Unfair Claims Settlement Practices Act, AS 21.36.125. [24] In so holding we noted that the act prohibited repeated practices, not a single incident of misconduct, and therefore does not readily lend itself to enforcement by a private cause of action arising from a single claim. [25] We also observed that the act contained an elaborate enforcement system, giving rise to an implication of exclusivity. [26] Further, we stated that the act prohibited many different types of conduct, some of which were relatively minor, and that the standards concerning whether or not violations were committed were often imprecise. [27] Balanced against these characteristics were the relatively modest monetary sanctions imposed for statutory violations. [28] In consideration of all of these factors we concluded that an implied private right of action in favor of a third-party claimant would be inappropriate with respect to the Unfair Claims Settlement Practices Act. [29] Section 874A of the Restatement (Second) of Torts (1979) discusses a number of factors that are helpful in determining whether or not a private cause of action should be implied based on a statute. We have followed section 874A in a number of cases. [30] Although our O.K. Lumber opinion does not cite section 874A, most of the reasons which we give for not implying a cause of action based on the statute there are reasons that are similar to the factors listed in this section of the Restatement. [31] But when these factors are applied to AS 21.89.020, they indicate that a private cause of action should be allowed. Section 874A lists six factors: (1) The nature of the legislative provisionis it clear and specific or broad and general? (2) The adequacy of existing remediesare they sufficient to accomplish the policy of the provision or do they require supplementation? (3) Will allowing an implied tort action based on the statutory provision interfere with statutory remedies or supplement existing means of enforcement? (4) The significance of the purpose of the legislative provision. (5) The extent of the change in tort law that permitting an implied cause of action would bring about. (6) The burden the new implied tort cause of action will place on judicial machinery. We will briefly discuss these factors as they apply to AS 21.89.020(c) and (e). As to the first factor, the offer requirement of subsection .020(c) and the waiver-in-writing requirement of subsection .020(e) are both clear and specific, easily lending themselves to usage in a private tort action. And, unlike the Unfair Claims Settlement Practices Act involved in O.K. Lumber, a single act of violating either subsection .020(c) or (e) is a violation of the statute. Concerning the second and third factors relating to the adequacy of existing remedies and the effect that a private tort action would have on existing remedies, the statutory remedy for violations of Title 21 is expressed in AS 21.90.020. It is a civil penalty of not more than $2500 assessed by the state in administrative proceedings before the Division of Insurance. This is the sole statutory remedy applicable to subsections .020(c) and (e). Again this contrasts with the multiple remedies described in O.K. Lumber with respect to the Unfair Claims Settlement Practices Act. [32] The $2500 penalty is relatively modest, and the enforcement resources of the Division of Insurance are necessarily limited. Without a tort remedy it seems likely that many violations of the requirements of subsections (c) and (e) would go unredressed. Further, it is difficult to see how providing an implied tort remedy could interfere with state enforcement. The tort action should provide a meaningful incentive to insurance companies to comply with the statutory requirements. Concerning the significance factor, it seems sufficient to observe that compliance with subsections .020(c) and (e) is not a minor matter. The legislature has concerned itself since 1984 with making UM/UIM coverages available to the public. [33] And more generally, the objective of adequate compensation for those who are injured in motor vehicle accidents by the fault of another has been recognized since statehood. [34] The legislature stated in the preamble to the Motor Vehicle Safety Responsibility Act as follows: The legislature is concerned over the rising toll of motor vehicle accidents and the suffering and loss inflicted by them. The legislature determines that it is a matter of grave concern that motorists be financially responsible for their negligent acts so that innocent victims of motor vehicle accidents may be recompensed for the injury and financial loss inflicted upon them.[ [35] ] As indicated above, permitting a private tort remedy for violations of subsection (c) and (e) will advance the achievement of this objective. With respect to the extent of the change in tort law, permitting a private action based on subsections (c) and (e) will not make a drastic change. As the Harrington [36] and Burton [37] cases demonstrate, private actions based on statutory violations of section .020 have been maintained for at least a decade without the present objection being raised. Likewise, concerning the sixth factor, burden on the courts, the statutory requirements of those sections are specific and not difficult to apply. We anticipate that no significant increase in litigation will be brought about by permitting private actions based on these sections. Based on the foregoing, we conclude that private tort actions may be brought based on violations of AS 21.89.020(c) and (e).