A Montana Melody in Washington

It’s hard to see a verdict like Keodalah v. Allstate and not wring your hands, especially if you’re a claims professional who is handling losses in Washington. What does the future hold for the profession if personal bankruptcy is a potential outcome for doing your job to the best of your abilities? Who among us haven’t had a bad day and made a wrong decision—did we expect to pay for it by forfeiting our homes and careers?

Former Allstate in-house staff counsel Sarah Lee’s cover story this month does a great job of explaining the circumstances of Keodalah and some of the potential fallout. But as she mentions in her piece, Washington isn’t the first state to give plaintiffs the option of holding individual claims professionals liable for violating unfair claims practices acts. Two others have done so: Montana and West Virginia.

So I called up CLM Member John Bohyer, managing partner at Bohyer, Erickson, Beaudette & Tranel P.C. in Missoula, Montana, who, among other practice areas, focuses on bad faith. He offered some tepid reassurances.

“In the 1993 case, O’Fallon v. Farmers Ins. Exch., the purpose of naming individual [claims professionals] had nothing to do with their liability, and everything to do with keeping the insurer from removing the case to federal court.” Bohyer says that plaintiff’s attorneys want to avoid moving cases to federal courts if possible because they have to prove their cases to a unanimous jury instead of Montana’s requirement of a two-thirds verdict.

Hopefully, for claims professionals’ sakes, Montana’s past is an indication of Washington’s future. In the meantime, they shouldn’t worry too much, since insurers would be wise to indemnify them unconditionally—they wouldn’t want their employee suddenly becoming the plaintiff’s new star witness.