O.K. Lumber Co. v. Providence Washington Insurance Co

In O.K. Lumber Co. v. Providence Washington Insurance Co., 759 P.2d 523 (Alaska 1988), Alaska Statute 21.36.125, Alaska's UCSPA, explicitly states that there is no private cause of action. The court, however, had to determine whether this language extended to third-party claims as well. The act prohibited conduct that occurred so frequently that it became a trade practice, and it set forth specific remedies for violations. Id. at 527. The list of prohibited conduct was extensive, the standards for determining whether a violation occurred were imprecise, and the monetary sanctions were small; this was in contrast with potentially large compensatory and punitive damage awards which would be available in a private cause of action. Id. These considerations gave rise to a presumption of exclusivity. Id. While the legislature intended for the statute to benefit both insured parties and third-party claimants, inferring a private cause of action was inconsistent with the statutory scheme, and the court concluded that no third-party cause of action existed. Id. Alaska Stat. 21.36.125 provides in pertinent part: (a) A person may not commit any of the following acts or practices: (1) misrepresent facts or policy provisions relating to coverage of an insurance policy; (2) fail to acknowledge and act promptly upon communications regarding a claim arising under an insurance policy; (3) fail to adopt and implement reasonable standards for prompt investigation of claims; (4) refuse to pay a claim without a reasonable investigation of all of the available information and an explanation of the basis for denial of the claim or for an offer of compromise settlement; (5) fail to affirm or deny coverage of claims within a reasonable time of the completion of proof-of-loss statements; (6) fail to attempt in good faith to make prompt and equitable settlement of claims in which liability is reasonably clear; (7) engage in a pattern or practice of compelling insureds to litigate for recovery of amounts due under insurance policies by offering substantially less than the amounts ultimately recovered in actions brought by those insureds; (8) compel an insured or third-party claimant in a case in which liability is clear to litigate for recovery of an amount due under an insurance policy by offering an amount that does not have an objectively reasonable basis in law and fact and that has not been documented in the insurer's file; (b) The provisions of this section do not create or imply a private cause of action for a violation of this section.