In reading one of Ted Frank’s posts yesterday at Overlawyered, I was reminded that I have neglected to blog about a strange case from Washington, Woo v. Fireman’s Fund. I have actually followed this case for a couple years — Washington is right across the Columbia River from Portland and I practice a fair amount in the state — and I know Washington coverage law well, so I’m overdue in writing about the case.
This decision, where the Washington Supreme Court found an insurer had a duty to defend a dentist accused of improper conduct, is, I regret to say, a mess.
I don’t say that merely because the case involves a dentist, Dr. Woo, who taunted one of his employees, Tina Alberts, about her pet pig, Walter, with photos of skinned wild boars, saying that "There is how Walter will look."
I don’t say that merely because the state Supreme Court leaves out some of the details of Dr. Woo’s boorish behavior to make the decision seem more palatable (additional facts are contained in the prior, reversed decision by the Court of Appeals, Division I).
I don’t say that merely because Dr. Woo, when Alberts was under general anesthesia for replacement of two teeth with implants, in conspiracy with his other staff inserted fake boar tusks in her mouth, pried her eyes open and took pictures. He later decided not to show the pictures to Alberts, but his staff did a month later at a birthday celebration for Alberts, and they also showed her the actual fake boar tusks. While Alberts was assisting Woo with a dental procedure immediately after, he suggested that Alberts could take the fake boar tusks home as a "trophy." (Happy Birthday!! I hope you like me talking about skinning and gutting your pet, being played for a fool by me and your colleagues and having fake pig teeth stuck in your mouth while you are unconscious, because that’s what you’re getting).
I don’t say that merely because Dr. Woo justified his conduct by claiming it was part of his efforts to create a "friendly working environment" in the office — reasoning that is equally offensive to what he did to Alberts.
I don’t say it merely because no one really likes a dentist anyway, especially one that talks about skinning your pets and who likes to stick weird stuff in your mouth while you are out cold and then take pictures. After all, insurance isn’t just for nice people.
I don’t even say it because I disagree with the result — I can possibly see a duty to defend under the general liability portion of Woo’s policy on the grounds that the intentional acts exclusion did not apply because Woo, while he intended the conduct, may not have intended the result — that Alberts broke down in tears when she saw the pictures, quit shortly afterward and sued Woo. This, however, is highly arguable, because although whether a result is intended is measured from the standpoint of the insured, some sort of reasonable person standard must be applied or you will have doofuses claiming that they just didn’t know that acts like, I don’t know, skinning pets and placing your body in "humorous" positions while you are unconscious could possibly result in emotional distress. I mean, come on, don’t we need stuff like that to keep the office environment friendly?
I say it instead because the Supreme Court made a number of dubious assertions, and its reasoning is less than stellar and convincing throughout. Before I go on, let’s recap a few facts and talk a bit about Washington coverage law.
After Alberts sued, Woo’s insurer, Fireman’s Fund, denied the duty to defend under three parts of his policy: professional liability, employment practices and general liability. In Washington, if an insurer wrongly denies the duty to defend, it is estopped from denying indemnity. It can also be liable for bad faith damages for a wrongful denial. (In Oregon, neither of these things are true — there is no coverage by waiver or estoppel, and wrongful denial of the duty to defend calls only for contract damages, plus attorney fees in the coverage action, not tort damages). Woo settled with Alberts for $250,000 — a good value for Woo considering what he did — then won this amount back in a coverage lawsuit against Fireman’s Fund, plus more than $750,000 in bad faith damages and attorney fees from a jury. The Court of Appeals reversed, finding no duty to defend under any section of the policy, and the Supreme Court partially reversed the Court of Appeals, finding a duty to defend existed under the professional liability and general liability sections of the policy, and reinstated the jury award.
Let me say one other thing before talking more about what I don’t like about this case. I am not the type to criticize a case out of a partisan spirit. I don’t engage in rah rah rah on behalf of either insurance companies or policyholders. I try my best to look at insurance coverage as an intellectual endeavor, and in analysis on this blog, I am not speaking as an advocate for anyone’s position, I am only trying to hold a mirror up to nature.
Here’s some of the things I don’t like about the case:
Dubious proposition No. 1: "Fireman’s is essentially arguing that an insurer may rely on its own interpretation of case law to determine that its policy does not cover the allegations in the complaint and, as a result, it has no duty to defend the insured." The court seems to be saying that insurers have a duty to defend wherever no case is directly on point against coverage, and that the insurer cannot base its decision on its own interpretation of case law. Let’s consider just how bogus this statement is: in how many coverage cases is there a case directly on point? Be honest, how many times do you find a case that is the same on the law and the facts? Maybe one time in 100? One time in 500? Insurers and their coverage lawyers can’t interpret the law, or can’t interpret unsettled areas of law? Even considering that the insurer must give the insured every benefit of the doubt when evaluating the duty to defend, this is complete nonsense.
Dubious proposition No. 2: "The acts that comprised the practical joke were integrated into and inseparable from the overall procedure. In sum, Alberts’ complaint alleges that Woo inserted a flipper, albeit oddly shaped, during a dental surgery procedure while he was operating an office for the practice of dentistry." The court said this on its way to finding that Woo was engaged in providing professional services under that portion of his policy. Let’s look closely at this statement. "Inserted a flipper, albeit oddly shaped." Consider that phrase for a moment. Isn’t that sort of like pouring hot coffee down a guy’s shirt and saying you "provided for him to take a steaming bath, albeit in an unusual manner"? Would the practical joke have been "integrated into and inseparable from the overall procedure" if, instead of fake pig teeth Dr. Woo made from his own molds, he had put in store-bought fake pig teeth? How about if he put in fake Dracula teeth? Fake mastodon tusks? How about if he used marker pens to color her teeth like a rainbow? How about if he filled her mouth with purple Jell-O, or a bouquet of red carnations, or two dozen Cuban cigars, or his tongue? Let’s consider how you would react if you heard a dentist did this to you, or to your wife, or to your mother, or to your daughter. What would you do? I know what I’d do, I’d pick up a torch and a pitchfork and lead a mob to his office. I doubt that, when we got there, we would be soothed by an explanation that such an assault was "integrated into and inseparable from the overall procedure." Merely because you take advantage of an unconscious person to do something with their mouth does not make it dentistry.
Dubious proposition No. 3: Regarding whether Woo should have expected or intended his acts to result in the injuries Alberts received, the court said this:
We conclude the Court of Appeals improperly analyzed the significant of the act at issue by focusing only on the facts that Woo inserted the boar tusk flippers for his own purposes and the injuries did not arise from the treatment Alberts requested. It ignored the fact that application of Blakeslee [a case that says intent to cause the resulting injury is always imputed to sexual abuse, the universal rule in insurance coverage] to other contexts could inappropriately narrow the duty to defend. It also failed to consider that sexual contact is never an appropriate component of dental treatment whereas other actions could conceivably fall within the broad definition [of dental services] in the insurance policy and [a Washington statute].
Does this make any sense to you? "Sexual contact is never an appropriate component of dental treatment whereas" knocking patients out cold and putting fake pig teeth in their mouth is? I can’t believe what I’m reading. Say I’m your lawyer, and I’m handling, I don’t know, some matter involving the estate of your recently deceased father. Say I send you some trumped up letter as a "practical joke" about how the undertaker lost your Dad’s dentures, and I send you a Photoshopped picture of your father’s body with fake boar tusks, saying the undertaker has decided to use these instead of the dentures. Say I request that you come to my office so we can discuss suing the undertaker, and when you get there, I, my colleagues and staff have you walk into a huge conference room filled with those wind-up chattering teeth, and after we have a big laugh at your expense, tell you it was all part of a fun-filled plan to foster closer relationships with clients. Let’s see a show of hands. Appropriate component of legal services? Not? OK, that’s what I thought.
One could go on and on, but time and space are finite, so I leave you with the following:
Fireman’s had obtained an attorney’s "opinion letter" advising that it had no duty to defend. Opinion letters are generally worthless, and this was no exception. The letter carefully noted the unsettled reach of the "sexual assault exception," but concluded there was no duty here. The Washington Supreme Court found that Fireman’s had thus given itself, rather than its policyholder, the benefit of the doubt.
Attorney coverage opinions are worthless? I guess he’s never read mine, they are pretty darn good and pretty valuable to the client. In fairness, he may be referring to the attempted use of coverage opinions to show the lack of bad faith by an insurer — this is called the "advice of counsel defense" and it holds that an insurer can’t act in bad faith when it is following its attorney’s advice on the interpretation of a legal question, even if the insurer was mistaken in its coverage determination. That would not seem to be his point, however, for two reasons. First, because the court noted that the coverage opinion Fireman’s Fund got said the law was equivocal, and the court did not analyze the opinion as a potential defense to bad faith, but instead as a further manifestation of the insurer’s giving itself, rather than the insured, the benefit of the doubt on unsettled law. Second, advice of counsel, when it is used, is often used successfully as a defense to bad faith.