In December, 2023, the Oregon Supreme Court decided Moody v Oregon Community Credit Union and Federal Insurance Company, 371 Or 772 (2023). In Moody, a widow sued for her emotional distress caused by her life insurer’s mishandling of the claim for her husband’s death. Plaintiff alleged the carrier violated Oregon’s Fair Claims Practices Act, ORS 746.230. The court held, after extensive analysis, that Mrs. Moody’s claim for solely emotional distress against her life insurance company was valid under Oregon law and could go to trial.
Before Moody, claims for purely emotional distress against insurance companies by their insureds were mostly impossible, because claims for solely emotional distress were limited to cases where:
- The defendant also caused bodily injury,
- Defendant acted intentionally, or
- Defendant’s conduct infringed on a separately protected legal interest of Plaintiff (for example trespass on Plaintiff’s real property).
Moody expanded the rights of insureds injured by their insurer’s violation of statutory claim handling rules, such as the requirement that carriers adjust claims in a timely manner. Developing future case law should provide more guidance on the scope and effect of Moody. For now, however, the Court’s decision provides some additional recourse to hold insurance companies accountable for mishandling claims.
