FI~E~ lbAs opinion was fited for record
IN CLERICI OPPICI ' at 6:aoetr"\ on A:pi,\ 2,7.-D\S
IUPRBECOURti'DaiOI'IINir
- 'DATE APR 0 2 20 5 I .
~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 Fin. Inc. v Premera, 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 Fin. Inc. v Premera, 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 Fin. Inc. v Premera, 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 Fin. Inc. v Premera, 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:
s~/52
~?'
-t:k~-
-=1--aM ~._____:_~q-=+-----
9