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On June 16, 2026, Division Two of the Washington Court of Appeals decided Labeaume v. First National Insurance Company of America and answered a question that has split federal judges in this state for more than a decade: can an insured still bring an Insurance Fair Conduct Act (IFCA) claim after the insurer pays the disputed benefit in full? The court said in most cases, yes. In doing so, it shut a door that insurers have been pushing on for years. You can read the published opinion here.
What I find most compelling about the decision is that it reinforces IFCA’s purpose of protecting consumers from insurance bad faith and forcing insurers to do the right thing and honor their promise to pay benefits.
A quick refresher on IFCA
IFCA, RCW 48.30.015, lets a first party insured sue when an insurer “unreasonably denied a claim for coverage or payment of benefits.” A successful claimant can recover actual damages, attorney fees, and costs. The statute also has a pre-suit notice requirement: before filing a lawsuit, the insured must give the insurer 20 days’ written notice and a chance to fix the problem.
The facts
Jane Labeaume was hurt in a crash caused by another driver. After settling with that driver, she made an underinsured motorist (UIM) claim with her own insurer, First National. Based only on the records she had already sent and without doing any further investigation, First National decided the settlement had fully compensated her and refused to pay her any UIM benefits. Labeaume had to sue and then arbitrate. The arbitrator found her total damages were more than double First National’s valuation and awarded her $94,822.80 in UIM benefits. First National promptly paid the full award.
Only then did Labeaume serve her IFCA notice and add IFCA claims for First National’s long delay in payment of benefits under the theory that the long delay equated to a denial of payment of benefits. First National moved for summary judgment with a tidy argument: it had already paid every dollar the arbitrator said she was owed, before she ever filed her IFCA claim, so there was nothing left to sue over. Pay the damages caused by the collision once a neutral decides what they are, the theory goes, and the pre-suit notice provision wipes the slate clean because there is nothing left for the insurer to “cure” during the 20-day waiting period.
What the court held
The court rejected that argument. It held that paying the full insurance benefit—after a determination of damages but before the IFCA notice—does not automatically bar an IFCA claim. Slip op. at 28–30.
The reasoning is straightforward. If full payment were a complete defense, an insurer could deny a valid claim, force the insured through months or years of litigation, and then escape IFCA entirely by cutting a check for the amount a judge or arbitrator eventually orders. That would reward stonewalling and gut protections for consumers in IFCA. Slip op. at 28.
The court also stressed that an IFCA claim is not just about the benefit itself. Under Beasley v. Geico, an insured can recover the personal harm an unreasonable denial causes—emotional distress, the economic fallout from unpaid bills, loss of interest or use of the insurance benefits—plus treble damages and attorney fees. Those harms pile up over the lifetime of a long-delayed claim and litigation that follows, and paying the underlying benefit does nothing to compensate the policyholder for those additional harms.
The court explained that it chose the interpretation of the statute that best fulfilled its purpose of protecting consumers. The legislative purpose would have been undermined if insurers were permitted to use the pre-suit notice provision in the manner argued for by First National. The court said that an insurer faced with an IFCA notice can avoid liability under IFCA by paying the benefits it should have paid plus any extracontractual, personal damages incurred by their insured. Slip op. at 28.
The line the court drew: denial versus delay
This is not a free pass for every policyholder, and the court was careful to say so. Borrowing from the federal district court in the Morella v. Safeco Insurance Co. of Illinois decision, it held that IFCA reaches an effective denial of benefits—not just any delay. The contrast between the two cases the court used as examples helps illustrate that line.
In Morella, Safeco valued a claim at more than $10,000 but offered just $1,500 to settle; an arbitrator later awarded $62,000. The court found that a paltry offer that no reasoned evaluation of the facts could support is an effective denial, the court held, even if the insurer eventually pays the amount awarded by the arbitrator. By contrast, in Young v. Safeco Insurance Co. of America, the insurer accepted coverage and simply disputed the repair estimate, asking the insured for a reasonable number he never supplied. The court noted that this was a good faith dispute over the amount owed, not a denial—and delay alone, when it grows out of a genuine disagreement about value, does not trigger IFCA. Slip op. at 22–24.
Which side of that line First National’s conduct falls on is the real fight. It refused to pay anything based only on the documents Labeaume had already sent and did no independent investigation of its own. Whether that was an effective denial or a reasonable dispute is a question for the jury, not for summary judgment.
Why it matters
This is the first published Washington appellate decision to confront the insurer’s “we paid, so you can’t sue under IFCA” theory head-on and reject it. Federal courts here have split on the question for years, and the Court of Appeals pointedly noted the issue would benefit from state Supreme Court review. Until that happens, Labeaume is the controlling appellate word—and a clear one: an insurer cannot legally escape IFCA by unreasonably forcing its insured to litigate for the insurance benefits they were entitled to and then buy its way out of the IFCA claim by paying just the damages judgment at the end.