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Bates v. Bankers Life And Casualty Company

Supreme Court of Oregon

January 19, 2018

Lorraine BATES, Charles Ehrman Bates, Eileen Burke, Jaci Evans, as Successor Personal Representative for the Estate of Thomas Marier, and Dalla Francis, as Personal Representative for the Estate of George Alexander, Plaintiffs,
v.
BANKERS LIFE AND CASUALTY COMPANY, an Illinois insurance company and CNO Financial Group, INC., a Delaware corporation, Defendants.

          Certified order dated February 24, 2017; certified accepted March 21, 2017; argued and submitted November 7, 2017

         On certified question from the United States Court of Appeals for the Ninth Circuit; U.S. District Court No. 3:13-CV-00580-PK; U.S. Court of Appeals No. 14-35397

          Rachele R. Selvig, Cauble Cauble & Selvig, LLP, Grants Pass, argued the cause and fled the briefs for the plaintiffs.

          Adam J. Kaiser, Alston & Bird LLP, New York, New York, argued the cause and fled the brief for the defendants. Also on the brief were John M. Aerni, New York, New York, and Vicki L. Smith, Lane Powell PC, Portland.

          Erin K. Olson, Law Office of Erin Olson, PC, Portland, fled the brief for amicus curiae Oregon Trial Lawyers Association. Also on the brief was Emily Teplin Fox, Portland.

          Before Balmer, Chief Justice, and Kistler, Walters, Nakamoto, Flynn, and Duncan, Justices. [*]

         [362 Or. 338] Case Summary: The Ninth Circuit certified a question to the Oregon Supreme Court: Does a plaintiff state a claim under ORS 124.110(1)(b), which prohibits the financial abuse of a vulnerable person, for "wrongful withholding of money or property where it is alleged that an insurance company has in bad faith delayed the processing of claims and refused to pay benefits owed under an insurance contract?" Held: Plaintiffs did not state a claim because they alleged that defendants failed to pay out required insurance benefits to vulnerable insurance beneficiaries, but under ORS 124.110(1)(b), a plaintiff must allege that a defendant wrongfully "continues to hold" "money or property * * * acquired" from the plaintiff. That requirement was not met here, the Court explained, because an insured's contractual right to insurance benefits are not "money or property" that the insurance company "acquired" in the context of ORS 124.110(1).

         The certified question is answered.

         [362 Or. 339] BALMER, C. J.

         This case is before the court on a certified question from the United States Court of Appeals for the Ninth Circuit under ORS 28.200 and ORAP 12.20. See generally Western Helicopter Services v. Rogerson Aircraft, 311 Or. 361, 811 P.2d 627 (1991) (discussing factors court considers in exercising discretion to accept certified questions). The certified question relates to claims under ORS 124.110 for financial abuse of "vulnerable persons"-here, elderly persons-who purchased long-term care insurance from defendant Bankers Life & Casualty Co. (Bankers) and sought to receive insurance benefits under their policies.[1]The Ninth Circuit certified to this court, and we accepted, the following question:

"Does a plaintiff state a claim under Oregon Revised Statutes 124.110(1)(b) for wrongful withholding of money or property where it is alleged that an insurance company has in bad faith delayed the processing of claims and refused to pay benefits owed under an insurance contract?"

Bates v. Bankers Life & Cas. Co., 849 F.3d 846, 847 (9th Cir 2017).

         For the reasons that follow, we answer in the negative: Allegations that an insurance company, in bad faith, delayed the processing of claims and refused to pay benefits owed to vulnerable persons under an insurance contract do not state a claim under ORS 124.110(1)(b) for wrongful withholding of "money or property."[2]

         We take the facts from the Ninth Circuit's certification order, supplemented by the federal court pleadings. The certification order states:

"Plaintiffs are elderly Oregonians or their successors who purchased long-term healthcare insurance policies sold by [Bankers and its parent company]. These policies [362 Or. 340] are designed to provide health services for elderly people who can no longer care for themselves and are intended to cover expenses for in-home care providers, assisted living facilities, and nursing homes.
"Plaintiffs allege that Bankers developed onerous procedures to delay and deny insurance claims. Examples of these procedures include failing to answer phone calls, losing documents, denying claims without notifying policyholders, denying claims for reasons that did not comport with Oregon law, and paying policyholders less than what they were owed under their policies. Bankers allegedly collected premium payments and, without good ...

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