ALS-DIV -I
COJ'J OF. A.Pr'E.
WASiiiNGTON
SiiVE. OF
2018 PAJG 13 fk1110:
IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
GROUP HEALTH COOPERATIVE, )
a Washington nonprofit corporation,
) No. 76365-2-1
)
Respondent, ) DIVISION ONE
)
v. )
) PUBLISHED OPINION
NATHANIEL COON and LORI COON, )
husband and wife, )
)
Appellants. ) FILED: August 13, 2018
)
LEACH, J. — Group Health Cooperative seeks reimbursement for health care
benefits it provided to Nathaniel (Joel) and Lori Coon. The trial court determined on
summary judgment that Group Health had an enforceable right to reimbursement from
settlement funds obtained by the Coons. , The Coons appeal from that decision.
Because disputed factual issues prevent the resolution of Group Health's claims on
summary judgment, we reverse and remand for further proceedings.
FACTS
The parties do not dispute many underlying facts. Nathaniel Coon had knee
surgery at the Everett Clinic (Clinic) in March 2012. After the surgery, he developed an
aggressive infection in his leg that ultimately resulted in an above-the-knee amputation.
The Coons' insurer, Group Health, paid approximately $372,000 in medical expenses
for his treatment. In December 2013, an attorney for the Coons wrote to Group Health,
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advising that he was representing the Coons in connection with a medical malpractice
claim against the Everett Clinic for injuries he sustained from complications during the
knee surgery procedure. He stated that the Clinic was disputing both negligence and
causation. He requested that Group Health provide a breakdown of its "subrogation
lien" for benefits it had paid relating to this claim. Group Health wrote back, including an
itemized list of providers and expenses that had been covered. Group Health asked to
be kept informed of settlement negotiations and to be contacted before final settlement
"to confirm Group Health's subrogation amount."
The Clinic was unable to determine the cause of the infection, and the Coons
likewise, despite considerable effort, could not identify a theory of negligence and
causation that would support a malpractice lawsuit against the Clinic. The Clinic
voluntarily paid the Coons over $300,000 to help with medical expenses, wage loss,
travel and accommodation expenses (the amputation occurred out of state), and other
expenses. The Clinic also asked the Coons to participate in mediation to resolve any
claim by the Coons for additional compensation.
A declaration from attorney Todd Gardner, submitted to the trial court by the
Coons, suggests a possible motivation for the mediation request:
It appears that there were factors that motivated The Everett Clinic
to enter into pre-litigation negotiations in this case that were not centered
on traditional assessments of liability and damages. It appears from the
correspondence I have reviewed, that The Everett Clinic targeted this
case as the type of case they would try to resolve before litigation was
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filed under a new program designed to reduce litigation filings and provide
some level of compensation to patients who have suffered grievous
injuries on their watch. This provided an opening for plaintiffs to mediate
the claim with The Everett Clinic without the need for filing litigation.
Before the mediation, both the Coons' lawyer and the Clinic's lawyer sent letters
to the mediator. Each provided background on Coon's injury and discussed that party's
view of the case. The letter from Coons' counsel explained that no lawsuit had been
filed: "this is an attempt at a pre-litigation resolution of the claim." The Clinic had
"initiated the resolution effort":
The Everett Clinic and its insurer initiated the resolution effort before I
became involved. They have been very cooperative in helping Mr. and
Mrs. Coon financially to deal with the consequences of his injury, including
making monthly payments to help Mr. Coon hire people to assist in
running his lawn care and landscaping business. The Coons very much
appreciate that help.
Counsel went on to explain that he had not established a theory of liability:
We have consulted with several liability experts, including an
orthopedic surgeon, an orthopedic infectious disease expert, a hospital-
infection expert, and an expert in operating room construction and
ventilation systems. . . . I also had an extensive telephone conference with
Dr. Robert Trousdale, the orthopedic surgeon most closely involved with
Joel's care at the Mayo Clinic [where the amputation occurred]. At this
point, we have several hypothetical theories about how the fungal infection
was acquired by Joel. However, without extensive discovery we are not
able to pin-point a specific explanation of how this happened. Basically, at
this point we have a res ipsa loquitur case.
According to the letter, Dr. Trousdale had suggested a possible liability theory,
that fungal spores were tracked into the operating room "by a provider, possibly on the
sole of a shoe." Dr. Trousdale "said that this kind of fungal infection would not ordinarily
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occur if appropriate sterile techniques and procedures were followed and the positive
pressure ventilation system was designed and operating properly."
The letter described how Coon's amputation had impacted him and his family.
The injury interfered with Coon's ability to operate his business and engage in the
outdoor activities he had previously enjoyed. His claimed damages included $2 million
in future care costs and $7 million in future economic loss. The letter made this
statement about noneconomic damages: "Joel and Lori would present very well to a
jury, and I have no doubt that any award for the non-economic impact of this injury
would be for many millions of dollars."
The letter from the Clinic's counsel explained that the fungal infection acquired by
Coon was "extremely rare, aggressive, and resistant to most known and FDA-approved
antifungal agents." After an "extensive review," the Clinic was still "unable to find a
definite source or cause" of Coon's infection. As part of its review, the Clinic had
consulted with experts who determined that the doctors who performed Coon's surgery
met or exceeded the standard of care. The Clinic had determined it was "unlikely" that
the infection was caused by conditions in the operating room.
In view of the fact that neither the Clinic nor the Coons could determine what
caused the infection, the Clinic's lawyer suggested that the Coons would face difficulty
proving liability:
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The parties have agreed to mediation in the hope of reaching a final
settlement without the need for litigation. TEC [the Everett Clinic],
however, is concerned that the Coons' expectations for settlement may
not prove to be realistic. TEC believes that the Coons may not fully
appreciate the difficulty they face in trying to prove, to a reasonable
degree of medical probability, how the infection occurred, its source or
cause, or what, if any, specific precautions that allegedly should have
been taken but were not taken would have prevented the infection from
occurring. The damages the Coons are seeking should be significantly
discounted to account for the difficulties of proof of liability and causation
that they face.
Given the difficulty in identifying, more probably than not, the source of the
SP [Scedisporium prolificans] spores, it is also difficult to establish more
probably than not that any additional precautions could have been taken
(that should have been taken) that would have prevented Mr. Coon's SP
infection. The simple fact remains that this exceedingly rare SP infection
is so highly resistant to most, if not all, readily available anti-fungal agents
that it is unlikely that any customarily-employed infection control procedure
would have killed the SP and prevented the infection.
Counsel described the Coons' estimated damages as "over-inflated." The Clinic
was "not prepared to acquiesce" in those estimates.
The mediation resulted in a settlement: the Clinic agreed to pay the Coons $2
million in exchange for their agreement to fully release the Clinic from any claims.
According to the parties' appellate briefing, $2 million was less than the Clinic's
insurance policy limits.
Group Health's insurance contract provided it with "Subrogation and
Reimbursement Rights" if the Coons received funds from another source:
If GHO [Group Health Options, Inc.] provides benefits under this
Agreement for the treatment of the injury or illness, GHO will be
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subrogated to any rights that the Member may have to recover
compensation or damages related to the injury or illness and the Member
shall reimburse GHO for all benefits provided, from any amounts the
Member received or is entitled to receive from any source on account of
such injury or illness, whether by suit, settlement, or otherwise. This
section VII.B more fully describes GHO's subrogation and reimbursement
rights.
A later paragraph in the same section contained the fuller description of these
rights, and it made Group Health's right of subrogation conditional upon the injury being
"caused by a third party":
If the Injured Person's injuries were caused by a third party giving rise to a
claim of legal liability against the third party and/or payment by the third
party to the Injured Person and/or a settlement between the third party
and the Injured Person, GHO shall have the right to recover GHO's
Medical Expenses from any source available to the Injured Person as a
result of the events causing the injury, including but not limited to funds
available through applicable third party liability coverage and
uninsured/underinsured motorist coverage. This right is commonly
referred to as "subrogation." GHO shall be subrogated to and may
enforce all rights of the Injured Person to the full extent of GHO's Medical
Expenses.
And the next contract paragraph limited Group Health's rights: "GHO's
subrogation and reimbursement rights shall be limited to the excess of the amount
required to fully compensate the Injured Person for the loss sustained, including general
damages."
Finally, the contract also prohibited the Coons from prejudicing Group Health's
contract rights:
The Injured Person and his/her agents shall do nothing to prejudice
GHO's subrogation and reimbursement rights. The Injured Person shall
promptly notify GHO of any tentative settlement with a third party and shall
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No. 76365-2-1 / 7
not settle a claim without protecting GHO's interest. If the Injured Person
fails to cooperate fully with GHO in recovery of GHO's Medical Expenses,
the Injured Person shall be responsible for directly reimbursing GHO for
100% of GHO's Medical Expenses.
On April 28, 2014, three days after the Clinic settlement, the Coons' lawyer first
notified Group Health about it. He described the settlement amount as "woefully
inadequate" but explained that "we felt that the chances of proving liability" were "very
small":
The claim against the Everett Clinic by Mr. and Mrs. Coon has
settled for $2,000,000. This amount is woefully inadequate to cover the
actual damages suffered by Mr. Coon, his wife, and their two children.
Even without allocating a portion of the settlement to claims of Mrs. Coon
and the children (who all were required by the Everett Clinic to release
their claims as part of the settlement), Mr. Coon has not even come close
to being "made whole". . . .
The reality is that we felt that the chances of proving liability on the
part of the Everett Clinic for the fungal infection and its consequences
were very small. The particular fungal organism is extremely rare and has
been implicated in orthopedic surgeries on only a handful of occasions
throughout the world. We consulted with nationally-known orthopedic and
infectious disease experts and were unable to obtain expert medical
support for a claim.
The letter concluded, "Under these circumstances, we are requesting that Group Health
waive its subrogation claim."
Group Health did not respond. The Coons' lawyer sent a follow-up letter three
weeks later, May 19, 2014. It said, "We have been holding back the lien amount in my
firm's trust account. Please be advised that we will disburse the remaining settlement
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No. 76365-2-1/8
funds on May 30, 2014." When no response was received by 4:00 p.m. on that date,
the funds were disbursed.
By letters dated May 30 and June 3, counsel for Group Health declined to waive
the company's interest in the settlement funds. The June 3 letter said, "If Nathaniel J
Coon felt that he would not be fully compensated by the $2,000,000.00, he was under
no obligation to accept it."
In a response letter dated June 9, 2014, the Coons' lawyer explained that his
clients accepted $2 million because of proof problems, not because that amount fully
compensated them:
As you know from reading the mediation letters of both the claimant
and defendant, no one could determine how Mr. Coon ended up with a
very rare fungal infection from his [knee] surgery, let alone whether
anyone was negligent in allowing that to happen. We had consulted with
a number of potential experts, and were unable to come up with a viable
theory or with expert support for a claim of negligence. Had we been able
to do so, I would have strongly recommended that the Coons not settle for
the amount ultimately offered, because it was far below any reasonable
prediction of a jury verdict range.
The settlement occurred before a lawsuit was filed. Mr. Coon had
no option but to accept the very low settlement offer, given the fact a
malpractice lawsuit could not be filed in the absence of a viable theory of
liability and expert medical support for that theory. As an attorney, I could
not ethically file such a lawsuit, and unless discovery in the lawsuit
produced different facts and evidence, a motion for summary judgment
likely would have resulted in dismissal.
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(Emphasis added.) Counsel again requested that Group Health waive its stated
subrogation lien.
The parties could not resolve the matter, and Group Health filed this lawsuit. Its
amended complaint for declaratory relief requested a determination of Group Health's
subrogation rights and judgment against the Coons for $372,634 plus interest and
attorney fees.
Both parties moved for summary judgment. Group Health asserted there was no
question that it held contractual subrogation rights under its policy with the Coons.
Group Health pointed out that the Coons had collected "from the alleged tortfeasor"
more than six times the amount of their medical expenses for a claim that had no viable
threat of liability and no expert medical support. "To allow Defendant to retain the full
proceeds of the settlement he received from the alleged tortfeasor, as well as the full
amount that GHC expended on his behalf is the epitome of a double recovery." Group
Health argued that it was entitled to summary judgment for the additional reason that
the Coons breached their insurance contract when they failed to provide prompt
notification of the settlement and failed to hold the settlement funds in trust pending
determination of Group Health's subrogation and reimbursement rights. Group Health
asserted, "Defendants accepted a settlement of a doubtful and disputed claim for less
than policy limits. The Defendants are unable to show that the settlement did not fully
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No. 76365-2-1 / 10
compensate them for the injury." Group Health sought an order "declaring that it has a
valid and enforceable subrogation claim" and ordering the Coons to pay Group Health
"the amount of its outstanding subrogation claim."
The Coons argued, in response, that they were not "made whole" by the
settlement; thus, Group Health was not entitled to reimbursement because the
"condition precedent" of full compensation had not occurred.1 They attached
declarations submitted by two medical malpractice lawyers (Todd Gardner and Kathy
Cochran), opining that the settlement award did not amount to full compensation. The
Coons' motion for summary judgment sought dismissal of all claims.
The court granted summary judgment to Group Health, concluding, "By settling
for less than the available insurance policy limits in consideration of Defendants'
evidence of damages versus risk of failure at trial, NATHANIAL COON and LORI
COON's agreement to settle constitutes full compensation for their damages as a
matter of law."
The Coons appeal from that decision. They have not appealed the separate
order denying their motion for summary judgment.
1 The Coons did not ask the trial court to reduce any reimbursement the trial
court found that they owed Group Health by its proportionate share of attorney fees
incurred to obtain the Clinic settlement. See Mahler v. Szucs, 135 Wn.2d 398, 429, 957
P.2d 632 (1998). However, we note that Group Health's June 3 letter offered to
"participate in an equitable and proportionate share of attorney fees and costs."
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No. 76365-2-1 / 11
ANALYSIS
This court reviews a summary judgment order de novo, engaging in the same
inquiry as the trial court.2 We construe all facts and reasonable inferences from them in
the light most favorable to the nonmoving party—here, the Coons.3 Summary judgment
is appropriate when there is no genuine issue as to any material fact and the moving
party is entitled to judgment as a matter of law.4
The Coons' position on appeal is the same as below: Group Health is not
entitled to reimbursement because the settlement did not result in full compensation.
They claim the settlement covered only a portion of their general damages and none of
their special damages.
The Coons rely exclusively on an insured party's right to full compensation that
arises from the common law. They do not rely on the contract language limiting Group
Health's rights "to the excess of the amount required to fully compensate the Injured
Person for the loss sustained, including general damages." At oral argument, the
Coons' counsel expressly disavowed any reliance on this provision. For this reason, we
do not consider its effect on Group Health's claim.
2Brown v. Snohomish County Physicians Corp., 120 Wn.2d 747, 752, 845 P.2d
334 (1993).
3 Loc Thien Truong v. Allstate Prop. & Cas. Ins. Co., 151 Wn. App. 195, 201, 211
P.3d 430 (2009).
4 CR 56(c).
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No. 76365-2-1 / 12
Group Health responds, first, that the appeal is moot because the Coons
"materially breached" the insurance contract: "[a] party is barred from enforcing a
contract that it has materially breached."8 Group Health alleges that the Coons
breached the contract by failing to provide adequate notice of the settlement, failing to
protect Group Health's subrogation interests, refusing to provide reimbursement, and
disbursing the funds counsel held in trust. When the trial court denied the Coons'
summary judgment motion, it found as an undisputed fact that the Coons did not consult
Group Health before settling their claim against the Everett Clinic.
Alternatively, Group Health contends that the common law "made whole" rule
does not apply here because there is no third partly liable to the Coons, relying on Cook
v. USAA Casualty Insurance Co.6 Group Health appropriately does not defend the trial
court's decision on the basis that the Clinic settlement made the Coons whole.7
Breach of Contract
When an insured breaches an insurance contract by failing to give the insurance
company notice of a settlement, the law provides the company a remedy only if it can
show prejudice.8 Here, undisputed facts establish that the Coons breached the notice
5 Rosen v. Ascentry Techs., Inc., 143 Wn. App. 364, 369, 177 P.3d 765 (2008).
6 121 Wn. App. 844, 847, 90 P.3d 1154 (2004).
7 See Liberty Mut. Ins. Co. v. Tripp, 144 Wn.2d 1, 22, 25 P.3d 997 (2001)(no
precedent for the position that settlement for less than the tortfeasor's policy limits
raises a presumption of full compensation).
8 Tripp, 144 Wn.2d at 16.
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No. 76365-2-1/13
requirements of the contract. But Group Health has not established by undisputed facts
any prejudice caused by this breach. Group Health merely makes a conclusory
allegation that it was prejudiced by the release of the settlement funds from the Coons'
attorney's trust account.
In view of Group Health's position that the Clinic had no liability to Coons, one
could reasonably infer that the Coons' settlement did not impair any claim that Group
Health might otherwise have pursued against the Clinic. Also, one can reasonably infer
from Group Health's payment of Clinic charges that the Clinic had knowledge of at least
an equitable reimbursement claim at the time of settlement. This may preclude the
release signed by the Coons from extinguishing Group Health's direct claim against the
Clinic.9 Thus, the Coons can show at least a factual dispute about prejudice to Group
Health. So we reject Group Health's claim that the Coons' breach makes this appeal
moot.
Applicability of the "Made Whole" Doctrine
Group Health relies exclusively on the provisions of its contract, and not any
common law right of reimbursement, to support its claim. In Thiringer v. American
Motors Insurance Co.,1° the Washington Supreme Court adopted a "made whole" rule
that limits this contractual right:
9 Leader Nat'l Ins. Co. v. Torres, 113 Wn.2d 366, 373-74, 779 P.2d 722(1989).
10 91 Wn.2d 215, 219, 588 P.2d 191 (1978).
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No. 76365-2-1 / 14
The general rule is that, while an insurer is entitled to be
reimbursed to the extent that its insured recovers payment for the same
loss from a tort-feasor responsible for the damage, it can recover only the
excess which the insured has received from the wrongdoer, remaining
after the insured is fully compensated for his loss.
Group Health claims this rule does not apply in this case because there is no
third party liable to the Coons, citing Cook. In Cook, this court affirmed the summary
judgment dismissal of the Cooks' claims against its insurer, USAA. We held that the
Thiringer "made whole" rule does not apply when the insured has no basis in contract or
tort for a recovery from a third party.11
The reply brief of the Coons points out that Group Health is taking contradictory
positions when it argues that the absence of a liable tortfeasor prevents the Coons from
invoking the "made whole" principle of Thiringer. In oral argument before this court, the
Coons described Group Health's argument as "a two-edged sword." They argued that if
the absence of a liable tortfeasor prevents application of the "made whole" rule, then it
also prevents Group Health from asserting a right of subrogation.
"Generally, subrogation allows the insurer to be substituted to the rights of the
insured and pursue recovery directly from the tortfeasor or, when the insured recovers
from the tortfeasor, to be reimbursed from that recovery."12 Of the three elements our
Supreme Court considers necessary for legal subrogation, the first is "the existence of
11Cook, 121 Wn. App. at 849.
12 Paulsen v. Dep't of Soc. & Health Servs., 78 Wn. App. 665, 668, 898 P.2d 353
(1995)(emphasis added).
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No. 76365-2-1 /15
a debt or obligation for which a party, other than the subrogee, is primarily liable.'"13
The elements of legal subrogation set forth in Appleman's treatise include "existing and
assignable claims held by the policyholder against a tortfeasor" and "justice requires
that the tortfeasor pay for the loss."14
Group Health is bound by these principles of subrogation. There is no statutory
lien (like the one considered in Paulsen) to displace them. The policy itself, in the
paragraph that fully describes the insurer's subrogation rights, states that Group Health
has a right to recover its medical expenses from any source available to the injured
person "as a result of the events causing the injury." (Emphasis added.) Group Health
consistently refers to its claim as a subrogation lien. Its claim for relief seeks a
declaration that it has "a valid and enforceable subrogation claim." If Group Health
cannot establish the existence of a negligent third party who caused its insured to incur
medical expenses, this is not a subrogation case at all.
The Coons, the Clinic, and everyone else involved in this litigation have been
unable to develop a viable theory of liability against any entity. If this were summary
judgment in a malpractice lawsuit by the Coons against the Clinic or its doctors, the
Coons would lose because they did not present evidence of negligence and causation.
13 Livingston v. Shelton, 85 Wn.2d 615, 618-19, 537 P.2d 774 (1975) (quoting
Lawyers Title Ins. Co. v. Edmar Constr. Co., 294 A.2d 865, 869(D.C. Ct. App. 1972)).
14 5 JEFFREY E. THOMAS 8c SUSAN LYONS, NEW APPLEMAN ON INSURANCE LAW
LIBRARY EDITION § 49.02[3][b](2018)(emphasis added).
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But this is summary judgment in a declaratory action brought by Group Health against
the Coons to recover Group Health's alleged subrogation lien. Group Health has the
burden of proving there is a valid subrogation lien. The summary judgment stage is
past the point when speculation will suffice.15 Because Group Health has not
established that the Coons have a nonspeculative claim against a torffeasor, it has no
right to relief on summary judgment.
Both parties have briefed this appeal primarily on the assumption that this is a
subrogation case. Group Health claims that under Cook, the absence of a liable
tortfeasor means that the "made whole" rule does not apply. Assuming for the sake of
argument that Group Health has the right to assert a subrogation claim even when no
liable torffeasor has been identified, we nevertheless conclude that Group Health is not
entitled to relief on summary judgment. Group Health reads Cook too broadly.
Cook involved unusual facts.16 The Cooks suffered losses caused by a house
fire that started in a gas water heater flue during construction. They sued Lavine's, the
company that installed the flue, and Butler, their house builder. They also separately
sued their insurance company, USAA, over coverage for this loss. The Cooks and
USAA settled. USAA paid the Cooks its policy limits and retained a subrogation interest
in the Cooks' claims against Lavine's and Butler. The Cooks' claimed losses exceeded
15 Marshall v. Bally's Pacwest, Inc., 94 Wn. App. 372, 377, 972 P.2d 475 (1999).
16 Cook, 121 Wn. App. at 849.
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No. 76365-2-1 /17
the amount USAA paid them. So USAA retained separate counsel to appear and
represent it against Lavine's and Butler.
Butler settled. The Cooks and USAA presented different versions of the
settlement but agreed that USAA received $25,000 and Butler made its expert available
to the Cooks for trial against Lavine's.
After the Cooks rejected Lavine's settlement offer, USAA settled with Lavine's by
selling it USAA's subrogation interest. The Cooks agreed that this settlement did not
affect its claims against Lavine's. The Cooks proceeded to trial against Lavine's and
lost; a jury returned a defense verdict. Then the Cooks demanded that USAA "make
them whole for their uninsured losses" by paying them a portion of the funds that USAA
received from Lavine's and Butler. When USAA refused, the Cooks sued, claiming that
under Thiringer, USAA was not entitled to retain any subrogation settlement funds until
the Cooks were fully compensated.17 The trial court properly dismissed the suit on
summary judgment, and we affirmed because, in view of the defense verdict against
Lavine's, "[Once the Cooks did not suffer compensable injury, they bear the risk of
loss."18
Several aspects of this case distinguish it from Cook. First, in Cook, a court had
decided that the entity paying money to USAA had no liability to the Cooks before the
17 Cook, 121 Wn. App. at 847.
18 Cook, 121 Wn. App. at 849.
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No. 76365-2-1/ 18
Cooks demanded that USAA pay that money to them. USAA did nothing to interfere
with the Cooks' pursuit of more money from Lavine's and Butler after they received from
USAA the full amount available under its policy.
Here, no court had resolved the issue of the Clinic's liability to the Coons. For
whatever reason, the Clinic was willing to pay the Coons $2 million to settle and avoid
future litigation. The posture of the Coons, the Clinic, and Group Health is similar to that
of an injured party, an alleged tortfeasor, and the injured party's insurance company in
many personal injury settlements involving contested liability. In the absence of a
judicial decision absolving the Clinic of liability, it is not clear that the weakness of the
Coons' claims provides a basis for refusing to apply the Thiringer "made whole" rule.
An insurance company that is pursuing its right of subrogation after settlement of a
contested liability case should not be permitted to avoid application of the equities
advanced by Thiringer merely by asserting that the alleged tortfeasor had no tort
liability, especially when the absence of a liable tortfeasor suggests that the insurance
company had no right of subrogation to begin with.
Second, the Cooks received the full benefit of their insurance policy, having
received policy limits from USAA. Coons, by contrast, have not received policy limits.
Refusing to apply Thiringer here would deprive the Coons of the full benefit of their
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Group Health policy when a substantial fact question exists about the extent to which
they have been fully compensated for their losses.
Third, the Cooks tried to use Thirinqer as a sword to recover from USAA monies
that a court already determined that they had no legal right to recover from Lavine's.
The Cooks rejected a settlement offer from Lavine's and proceeded to trial. When this
choice produced no recovery, the Cooks sought to benefit from USAA's more
successful litigation strategy and transfer the economic consequences of their choice to
USAA, relying on Thiringer, which based its "made whole" rule on equitable principles.
The law has long recognized that "he who seeks equity must do equity.'"19 The Cooks
did not. The Coons did not engage in any similar inequitable conduct.
For these reasons, Cook does not bar application of Thiringer in this case. The
Coons have produced sufficient nonconclusory evidence to create a question of fact
about whether their damages exceed the $2 million paid by the Clinic.
CONCLUSION
The trial court incorrectly concluded that Group Health has a valid and
enforceable subrogation claim against the Coons. Group Health has not established
the existence of a third party tortfeasor who can be made to take responsibility for the
Coons' damages. Even assuming the "made whole" principle applies in this situation, it
19 Malo v. Anderson, 62 Wn.2d 813, 817,384 P.2d 867 (1963)(quoting 2 JOHN
NORTON POMEROY & SPENCER W.SYMONS, A TREATISE ON EQUITY JURISPRUDENCE § 385,
at 52(5th ed. 1941)).
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cannot be said that the Coons' agreement to settle with the Clinic for less than its policy
limits resulted in full compensation for their damages as a matter of law. Because no
court had found the absence of Clinic liability to the Coons for their losses, our decision
in Cook does not bar application of Thiringer in this case. Because questions of fact
exist about whether the Coons have received full compensation for their losses and
whether their breach of the Group Health contract prejudiced it, we reverse the trial
court and remand for further proceedings consistent with this opinion.
WE CONCUR:
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