Undeterred by the initial denial, Christine Moody challenged OCCU’s decision. She argued that the insurer failed to conduct a thorough investigation and improperly relied on the presence of marijuana, a legal substance in Oregon for recreational use, as the sole reason for denying the claim.
Traditionally, policyholders in Oregon faced an uphill battle when suing their insurance companies for bad faith practices. The state’s Unfair Claims Settlement Practices Act (UCSPA) did not explicitly grant a private right of action, meaning policyholders couldn’t directly sue insurers for bad faith denial of claims.
However, Christine Moody’s case took a different turn. She argued that OCCU’s actions violated the UCSPA’s standards for fair claims handling, and this, in turn, formed the basis for her negligence and emotional distress claims.
A Landmark Decision: A Shift in Power Dynamics?
The Oregon Supreme Court, in a unanimous decision, sided with Christine Moody. The court acknowledged the lack of a clear private right of action under the UCSPA, but importantly, it found that Christine Moody could still pursue her negligence and emotional distress claims based on the insurer’s alleged violation of the UCSPA’s standards.
