Court Opinion

ID: 4706623
Source: CourtListenerOpinion
Date Created: 2021-07-27 00:50:50.004057+00
Date Added: 2024-06-11T08:06:37.896616
License: Public Domain

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      ~JJl,                                                                  Ronafd R. Carpenter
                                                                             Supr~nte Coun; Ci'i1<

                            IN THE SUPREME COURT OF THE STATE OF WASHINGTON

              McCARTHY FINANCE, INC., a                    )
              Washington corporation; McCARTHY             )
              RETAIL FINANCIAL SERVICES, LLC, a            )
              Washington limited liability company;        )
              HEMPHILL BROTHERS, INC., a                   )
              Washington corporation; and its affiliates   )   No. 90533-9
              and subsidiaries, J.A. JACK & SONS, INC.,    )
              a Washington corporation, LANE MT,           )
              SILICA CO., a Washington corporation;        )
              PUCKETT & REDFORD, PLLC, a                   )
              Washington professional limited liability    )
              company; and ANNETTE STEINER, a              )
              single person;                               )
                                                           )   EnBanc
                                   Respondents,            )
                                                           )
                       v.                                  )
                                                           )
              PREMERA, a Washington corporation;           )
              PREMERA BLUE CROSS, a Washington             )
              Corporation; LIFEWISE HEALTH PLAN            )
              OF WASHINGTON, aWashington                   )
              Corporation; and WASHINGTON                  )
              ALLIANCE FOR HEALTHCARE                      )   Filed      APR 0 2 2015
              INSURANCE TRUST, and its Trustee, F.         )
              BENTLEY LOVEJOY,                             )
                                                           )
                                   Petitioners.            )
                                                           )
                                                           )
   McCarthy
                     v Premera,
                                                           
                    Fin. Inc.           No. 90533-9

                 GONZALEZ, J .-In Washington, health insurance premiums are approved by the

          Washington State Office of the Insurance Commissioner (OIC). Under the nationally

          recognized court created "filed rate doctrine," once an agency approves a rate, such as

          a health insurance premium, courts will not reevaluate that rate because doing so

          would inappropriately usurp the agency's role. However, courts may consider claims

          that are related to rates approved by an agency but do not require the courts to

          reevaluate such rates. In most cases, Washington courts must consider Consumer

          Protection Act (CPA), chapter 19.86 RCW, claims alleging general damages merely

          related to agency-approved rates. In the case before us, however, the plaintiffs allege

          that several entities doing business in the health insurance field violated the CPA but

           request specific damages the award of which would require a court to reevaluate the

           reasonableness of health insurance premiums approved by the OIC. Because

           awarding the specific damages requested by the plaintiffs would require a court to

           inappropriately substitute its judgment for that of the OIC, we affirm the trial court's

           dismissal of the plaintiffs claims.

                                                    FACTS

                 The plaintiffs' complaint alleges that two groups of defendants, (1) Premera,

           Premera Blue Cross, and Life Wise Health Plan of Washington (collectively Premera)

           and (2) the Washington Alliance for Healthcare Insurance Trust and its trustee, F.

           Bentley Lovejoy (collectively WAHIT), colluded and made false and misleading

                                                       2
   McCarthy
                                                   
                    Fin. Inc. v Premera, No. 90533-9

          representations to the plaintiffs that induced the plaintiffs to purchase health insurance

          policies under false pretenses.

                 Premera is a group of nonprofit health care service contractors that receive

          premiums from groups and individuals in return for providing health care services

          through a network of providers. Ch. 24.03 RCW; R.CW 48.44.010(9), .020(1). The

          Washington Alliance for Healthcare Insurance Trust is a nonprofit trust designed to

          hold insurance policies through which participating employers can obtain health

          benefit plans for their employees; the. trust is not a Premera affiliate.

                 The plaintiffs are several companies and one individual that purchased Premera

          policies (Policyholders). The Policyholders wish to form classes of groups and

          individuals that purchased Premera policies: class A, the large group class, consists of

          employer groups of more than 50 persons; class B, the small group class, consists of

          employee groups of at least 1 but not more than 50 employees; and class C consists of

           individuals.

                 The Policyholders claim that Premera and WAHIT violated the CPA. As the

           Court of Appeals summarized, the Policyholders claim CPA violations:

                 [B]ased on (a) assertions on the WAHIT web site that it is an "employer
                 governed trust," (b) advertising in WAHIT mailings that it "negotiate[s]" to
                 obtain high quality benefits at the "lowest possible cost" or "most affordable
                 cost," (c) assertions that WAHIT is a "member governed group," (d)
                 allegations that the insurers "falsely stated publicly that the reasons for the
                 annual premium increases are because of increases in the cost of medical,
                 hospital and health care" and "concealed from the plaintiffs and class members
                 the fact that the percentage increases in those costs were not required to justify

                                                        3
   McCarthy
                                                     
                    Fin. Inc. v Premera, No. 90533-9

                 the increase in premiums," and (e) allegations that the insurers "created
                 [WAHIT]" in order to enable it to accumulate its surplus.

          McCarthy Fin. Inc. v. Premera, 182 Wn. App. 1, 18, 328 P.3d 940 (2014) (alterations

          in original). The Policyholders allege that due to Premera and WAHIT's violations of

          the CPA they experienced "excessive, unnecessary, unfair and deceptive overcharges

          for health insurance," resulting in Premera obtaining "profits of millions of dollars"

          that helped enable Premera to amass a surplus of approximately $1 billion. Clerk's

          Papers (CP) at 10-11. The Policyholders also claim "that for a non-profit corporation

          to amass over $1 billion in surplus is contrary to the non-profit statute under which

          PREMERA ... is chartered and is a violation of public policy." !d. at 19.

                 The plaintiffs request only two specific forms of damages: (1) for the "unfair

          business practices and excessive overcharges for premiums," the plaintiffs request

          "the sum of the excess premiums paid to the defendants," in other words, a "refund[]

          of the gross and excessive overcharges in premium payments" and (2) "[i]fthe surplus

           is excessive and unreasonable," the plaintiffs assert that "the amount of the excess

           surplus should be refunded to the subscribers who have paid the high premiums

           causing the excess." !d. at 28.

                 On Premera and WAHIT' s motion, the trial court dismissed the Policyholders'

           suit in its entirety based on the filed rate, primary jurisdiction, and exhaustion of

           remedies doctrines. Specifically, the trial court dismissed all claims of class B (small

           group) and class C (individuals) pursuant to CR 12(b)(6) and dismissed all claims of

                                                        4
   McCarthy
                     v Premera,
                                                         
                    Fin. Inc.           No. 90533-9

          class A (large group) on summary judgment under CR 56. The Court of Appeals

          reversed the trial court in relation to certain ofthe Policyholders' CPA claims, which

          are identified above. McCarthy, 182 Wn. App. at 18. We granted Premera and

          WAHIT's petition for review. McCarthy Fin., Inc. v. Premera, 181 Wn.2d 1013,337

          P.3d 325 (2014).

                                                 ANALYSIS

          A . .Standard of Review

                 The trial court dismissed all of the Policyholders' claims on a CR 12(b)(6)

          motion or on summary judgment. CP at 157-58, 274-75. We review both dismissals

           de novo. FutureSelect Portfolio Mgmt., Inc. v. Tremont Grp. Holdings Inc., 180

           Wn.2d 954) 962,331 P.3d 29 (2014) (citing Kinney v. Cook, 159 Wn.2d 837,842, 154

           P.3d 206 (2007)); Jones v. Allstate Ins. Co., 146 Wn.2d 291, 300, 45 P.3d 1068 (2002)

           (citing Lybbert v. Grant County, 141 Wn.2d 29, 34, 1 P.3d 1124 (2000)).

           B. The Filed Rate Doctrine

                 Health insurance premiums in Washington must be approved by the OIC.

           RC\V 48.44.017(2), .020-.024, .040, .070, .110, .120, .180; WAC 284-43-901,-910

           through -930, -945, -950. Among its powers, the OIC may disapprove (1) ambiguous

           or misleading contracts and deceptive solicitations and (2) contracts the benefits of

           which are "unreasonable in relation to the amount charged for the contract." RCW

           48.44.020(3), (2), .11 0. The OIC considers numerous factors when determining

           whether a health insurance premium is reasonable, including "[h]ow much profit the

                                                      5
   McCarthy
                                                  
                    Fin. Inc. v Premera, No. 90533-9

          company expects to make[,] ... generally called 'contribution to surplus' or

          'projected profit[,]' ... [which] depends on the company's current level of surplus as

          well as the type of business." CP at 323. The Policyholders do not challenge that the

          OIC approved the health insurance premiums that the Policyholders paid.

                 Consumers' .power to challenge agency-approved rates is limited by the

          common law filed rate doctrine. See Wegoland Ltd. v. NYNEX Corp., 806 F. Supp.

          1112, 1113-16 (S.D.N.Y. 1992) (providing a history of the doctrine). As this court

          observed:

                        The "filed rate" doctrine, also known as the "filed tariff' doctrine, is a
                 court-created rule to bar suits against regulated utilities involving allegations
                 concerning the reasonableness of the filed rates. This doctrine provides, in
                 essence, that any "filed rate"-a rate filed with and approved by the governing
                 regulatory agency-is per se reasonable and cannot be the subject of legal
                 action against the private entity that filed it. The purposes of the "filed rate"
                 doctrine are twofold: (1) to preserve the agency's primary jurisdiction to
                 determine the reasonableness of rates, and (2) to insure that regulated entities
                 charge only those rates approved by the agency. These principles serve to
                 provide safeguards against price discrimination and are essential in stabilizing
                 prices. But this doctrine, which operates under the assumption that the public
                 is conclusively presumed to have knowledge of the filed rates, has often been
                 invoked rigidly, even to bar claims arising from fraud or misrepresentation.

           Tenore v. AT&T Wireless Servs., 136 Wn.2d 322,331-32,962 P.2d 104 (1998)

           (footnotes omitted). In cases such as this that involve claims and damages related to

           agency-approved rates, courts must determine whether the claims and damages are

           merely incidental to agency-approved rates and therefore may be considered by courts

           or would necessarily require courts to reevaluate agency-approved rates and therefore

           may not be considered by courts. See id. at 344.

                                                      6
   McCarthy
                     v Premera,
                                                            
                    Fin. Inc.           No. 90533-9

                 But while a court must be cautious not to substitute its judgment on proper rate

          setting for that of the relevant agency, the legislature has directed that the CPA be

          liberally construed. See, e.g., RCW 19.86.920; Panag v. Farmers Ins. Co. of Wash.,

          166 Wn.2d 27, 37, 204 P.3d 885 (2009); Indoor Billboard/Wash., Inc. v. Integra

          Telecom of Wash., Inc., 162 Wn.2d 59, 73, 170 P.3d 10 (2007); Short v. Demopolis,

          103 Wn.2d 52, 60, 691 P.2d 163 (1984). The mere fact that a claim is related to an

          agency-approved rate is no bar. The CPA itself addresses the limited times when

          agency action exempts application of the CPA. See RCW 19.86.170; Vogt v. Seattle-

          First Nat'! Bank, 117 Wn.2d 541, 550-52, 817 P.2d 1364 (1991); In re Real Estate

          Brokerage Antitrust Litig., 95 Wn.2d 297,300-01, 622 P.2d 1185 (1980)). In most

           cases, courts must consider CPA claims even when the requested damages are related

          to agency-approved rates because, 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 the claims.

                 In this case, however, rather than requesting general damages or seeking any

           damages that do not directly attack agency-approved rates, the Policyholders

           specifically request ( 1) a "refund[] of the gross and excessive overcharges in premium

           payments" and (2) a refund of"the amount of the excess surplus." CP at 28. The

           Policyholders' requested damages cause their CPA claims to run squarely against the

           filed rate doctrine. Even assuming that the Policyholders can successfully prove all

                                                       7
   McCarthy
                     v Premera,
                                                            
                    Fin. Inc.           No. 90533-9

          the elements of their CPA claims, 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 ore 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 ore and thereby inappropriately usurp the role of the ore.

                 Given that application of the filed rate doctrine is decisive in this case, we

           decline to address either the primary jurisdiction or exhaustion of remedies doctrines.

                                                CONCLUSION

                 We reverse the Court of Appeals and affirm the trial court's dismissal of the

           Policyholders' claims.

                                                       8
                            
          McCarthy Fin. Inc. v Premera, No. 90533-9

          WE CONCUR:

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