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COMPLAINT FOR: (1) DECLARATORY RELIEF;
(2) BREACH OF CONTRACT; (3) ANTICIPATORY
REPUDIATION OF CONTRACT; (4) INSURANCE
BAD FAITH; AND (5) VIOLATIONS OF
CONSUMER PROTECT ION ACT - 1 STEIN, SUDWEEKS & STEIN, PLLC
2701 FIRST AVE., SUITE 430
SEATTLE, WA 98121
PHONE 206.388.0660 FAX 206.286.2660
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UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON AT TACOMA
VANCOUVER CLINIC INC. P.S., a
Washington corporation,
Plaintiff ,
v.
AFFILIATED FM INSURANCE
COMPANY, a Rhode Island corporation ,
Defendant . No.
COMPLAINT FOR : (1) DECLAR ATORY
RELIEF; (2) BREACH OF CONTRACT;
(3) ANTICIPATORY REPUDIATION OF
CONTRACT; (4) INSURANCE BAD
FAITH; AND (5) VIOLATIONS OF
CONSUMER PROTECTION ACT
JURY DEMAND
Plaintiff the Vancouver Clinic Inc. P.S. (“TVC”) alleges as follows:
I. INTRODUCTION
1. COVID -19 has infected more than 2.1 million people in the United States and
caused more than 116,000 deaths.1 The World Health Organization has declared the outbreak of
this communicable disease to be a pandemic .2 Government officials have implemented far -
reaching measures to try to control and limit the spread of COVID -19.
1 See Coronavirus in the U.S.: Latest Map and Case Count , NYT IMES .COM (last accessed Ju ne 16, 2020),
available at https://www.nytimes.com/interactive/2020/us/coronavirus -us-cases.html . To be clear, by citing articles
and other authorities in support of its allegations, TVC is not incorporating or admitting anything in these articles and
authorities beyond what it has alleged.
2 See WHO Director -General's opening remarks at the media briefing on COVID -19, WHO.INT (Mar. 11,
2020) , available at https://www.who.int/dg/speeches/detail/who -director -general -s-opening -remarks -at-the-media -
briefin g-on-covid -19---11-march -2020 . Case 3:20-cv-05605-BJR Document 1 Filed 06/23/20 Page 1 of 19
COMPLAINT FOR: (1) DECLARATORY RELIEF;
(2) BREACH OF CONTRACT; (3) ANTICIPATORY
REPUDIATION OF CONTRACT; (4) INSURANCE
BAD FAITH; AND (5) VIOLATIONS OF
CONSUMER PROTECT ION ACT - 2 STEIN, SUDWEEKS & STEIN, PLLC
2701 FIRST AVE., SUITE 430
SEATTLE, WA 98121
PHONE 206.388.0660 FAX 206.286.2660
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2. In addition to causing an unfathomable loss of life, COVID -19 has devastated the
economy. COVID -19 has caused businesses to permanently shutter and tens of millions of
Americans to lose t heir jobs.
3. COVID -19 has inflicted particularly severe economic hardship on the healthcare
industry.3 Healthcare providers make a sizable portion of their revenues from non -emergency
visits and procedures.4 COVID -19 has made these visits and procedures fo r the most part
impossible.5 The American Hospital Association has reported that hospitals are losing more than
$50 billion per month.6 Recovery could take years.7
4. TVC is a Washington state -based healthcare provider whose business has dropped
precipitous ly because of COVID -19. As soon as the scope of these losses started to become
clear —and after it had confirmed the presence of COVID -19 at many of its clinics —TVC tendered
a claim under its “all risk” insurance policy to its Rhode Island -based insurer, D efendant Affiliated
FM Insurance Company (“AFM”).
5. Even though the policy provides for business interruption and other applicable
coverages, AFM responded by trying to deny and/or limit TVC’s claim in a way that is directly at
3 See, e.g., Evan Bush, Washington hospitals, community health centers face a new crisis: red ink , SEATTLE
TIMES (May 4, 2020), available at https://www.seattletimes.com/seattle -news/health/washington -hospitals -
community -health -centers -face-a-new-crisis -red-ink/.
4 See, e.g., Todd Frankel & Tony Romm, Historic financial decline hits doctor s, dentists and hospitals —
despite covid -19 — threatening overall economy , WASH. POST (May 4, 2020), available at
https://www.washingt onpost.com/business/2020/05/04/financial -distress -among -doctors -hospitals -despite -covid -19-
weighs -heavily -economy/ ; Dennis Thompson, COVID -19 Leaves U.S. Hospitals in Financial Crisis , WEBMD. COM
(May 6, 2020), available at https://www.webmd.com/lung/news/20200506/covid -19-leaves -us-hospitals -in-financial -
crisis#1 ; Jeff Lagasse, U.S. hospitals are suffering financial damage due to COVID -19 pandem ic, Kaufman Hall finds ,
HEALTHCARE FINANCE NEWS.COM (April 21, 2020), available at https://www.healthcarefinancenew s.com/news/us -
hospitals -are-suffering -financial -damage -due-covid -19-pandemic -kaufman -hall-finds .
5 See Robyn Bainbridge, U.S. hospitals losing around $50 billion a month due to Covid -19, INT’L TRAVEL &
HEALTH INS. J. (May 4, 2 020), available at https://www.itij.com/latest/news/us -hospitals -losing -around -50-billion -
month -due-covid -19.
6 See Hospitals and Health Systems Face Unprecedented Financial Press ures Due to COVID -19, AM. HOSP.
ASSOC . (May 2020), available at https://www.aha.org/system/files/media/file/2020/05/ aha-covid19 -financial -impact -
0520 -FINAL.pdf .
7 See Christina Farr, U.S. hospitals are losing millions of dollars per day in the midst of the Covid -19 pandemic
— and recovery may take years , CNBC. COM (May 5, 2020), available at https://www.cnbc.com/2020/05/05/hospitals -
losing -millions -of-dollars -per-day-in-covid -19-pandemic.html . Case 3:20-cv-05605-BJR Document 1 Filed 06/23/20 Page 2 of 19
COMPLAINT FOR: (1) DECLARATORY RELIEF;
(2) BREACH OF CONTRACT; (3) ANTICIPATORY
REPUDIATION OF CONTRACT; (4) INSURANCE
BAD FAITH; AND (5) VIOLATIONS OF
CONSUMER PROTECT ION ACT - 3 STEIN, SUDWEEKS & STEIN, PLLC
2701 FIRST AVE., SUITE 430
SEATTLE, WA 98121
PHONE 206.388.0660 FAX 206.286.2660
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odds with the plain language of the very policy it drafted and its duties as an insurer. In addition,
AFM has unreasonably delayed in making a coverage determination.
6. AFM’s bad -faith conduct forced TVC to bring this lawsuit. TVC is asking this
Court to require AFM to honor its poli cy and cover the losses that TVC has incurred because of
COVID -19.
II. THE PARTIES
7. TVC was founded 80 years ago and is a professional association of physicians that
is locally owned and governed, operating eight medical clinics in the Vancouver, Washington -area.
TVC is a Washington corporation with its principal place of business at 700 NE 87th Avenue,
Vancouver, Washington, 98664.
8. AFM is a Rhode Island corporation with its principal place of business at 270
Central Avenue, Johnston, Rhode Island, 02919.
III. JURISDICTION AND VENUE
9. This Court has jurisdiction over this action under 28 U.S.C. § 1332 because there is
complete diversity of citizenship as to the parties and the amount in controversy exceeds $75,000,
exclusive of interests and costs. As set forth be low, TVC has suffered property damage and
business interruption losses in an amount that it will prove at trial but that it believes exceed
$20,000,000. These losses are ongoing and could increase substantially depending on the length
and ultimate severit y of the COVID -19 outbreak and the government response.
10. Venue is proper under 28 U.S.C. § 1391 because TVC’s principal place of business
is in the Western District of Washington and a substantial portion of the events and omissions
giving rise to TVC’s cl aim and losses occurred within the Western District of Washington.
///
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/// Case 3:20-cv-05605-BJR Document 1 Filed 06/23/20 Page 3 of 19
COMPLAINT FOR: (1) DECLARATORY RELIEF;
(2) BREACH OF CONTRACT; (3) ANTICIPATORY
REPUDIATION OF CONTRACT; (4) INSURANCE
BAD FAITH; AND (5) VIOLATIONS OF
CONSUMER PROTECT ION ACT - 4 STEIN, SUDWEEKS & STEIN, PLLC
2701 FIRST AVE., SUITE 430
SEATTLE, WA 98121
PHONE 206.388.0660 FAX 206.286.2660
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IV. FACTUAL BACKGROUND
A. AFM’s Policy Provide s TVC with Up to $300 Million in Coverage, including for
Business Interruption Los ses
11. AFM sold an insurance policy to TVC (the “ Policy”) pro viding coverage against
“ALL RISKS OF PHYSICAL LOSS OR DAMAGE, except as hereinafter excluded.” A true and
correct copy of the Policy is attached hereto as Exhibit “A.” The Policy term is January 1, 2020 to
January 1, 2021.
12. Pursuant to the “ Communicable Disease – Property Damage” coverage, the Policy
expressly covers, among other things, the reasonable and necessary costs incurred by TVC for the:
“a) Cleanup, removal and disposal of such presence of communicable disease8 from insured
property . . .”
13. The term “ communicable disease ” is defined in the Policy to mean a disease which
is: “. . . Transmissible from human to human by direct or indirect contact with an affected
individual or the individual’s discharges.” In a letter to TVC dated Mar ch 31, 2020, AFM
admitted that COVID -19 is a communicable disease as defined in the AFM policy.
14. As set forth above, AFM’s coverage grant specifically provides that the Policy only
covers “PHYSICAL LOSS OR DAMAGE.” If, as AFM admits, the Policy provides c overage for
loss or damage caused by communicable disease , it must follow that communicable disease
(including COVID -19) causes physical loss or damage to property.
15. Furthermore, by providing for the “[c]leanup, removal and disposal of . . .
communicable disease ,” the Policy explicitly recognizes that communicable disease physically
damages property. Because the Policy specifically covers remediation of the damage caused by
communicable disease , the physical damage to property caused by communicable dise ase is
“phys ical damage of the type insured” under the Policy.
8 Terms defined in the Policy are signified by the use of bold typeface. Unless otherwi se stated, the use of
bold typeface signifies the use of a specifically defined Policy term. Case 3:20-cv-05605-BJR Document 1 Filed 06/23/20 Page 4 of 19
COMPLAINT FOR: (1) DECLARATORY RELIEF;
(2) BREACH OF CONTRACT; (3) ANTICIPATORY
REPUDIATION OF CONTRACT; (4) INSURANCE
BAD FAITH; AND (5) VIOLATIONS OF
CONSUMER PROTECT ION ACT - 5 STEIN, SUDWEEKS & STEIN, PLLC
2701 FIRST AVE., SUITE 430
SEATTLE, WA 98121
PHONE 206.388.0660 FAX 206.286.2660
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16. The terms “ physical ,” “loss” or “damage ” are not defined in the Policy. Undefined
terms in a policy are to be interpreted in accord with the understanding of the average purchaser of
insurance , and the te rms are to be given their plain, ordinary and popular meaning, which should
be determined by reference to dictionary definitions. See Kut Suen Liu v. Essex Ins. Co ., 185
Wash.2d 703, 713 (2016); Queen Anne Park Homeowners Ass ’n v. State Farm Fi re & Cas. Co .,
183 Wash .2d 485, 490 -91 (2015). An average purchaser of insurance would understand the phrase
“physical loss or damage” to include property damage and business interruption losses resulting
from the COVID -19 pandemic.
17. With respect to Busine ss Interrupt ion Coverage the Policy’s coverage grant
provides: “This Policy insures Business Interruption loss, as provided in the Business Interruption
Coverage, as a direct result of physical loss or damage of the type insured . . .” As set forth above,
loss or dam age resulting from COVID -19 constitutes physical loss or damage of the type insured.
Because the Policy is an all -risk policy, unless there is a specific exclusion that bars coverage,
there is coverage for TVC’s business interruption losses.
18. The All Ris k Coverage form of the Policy initially contained an exclusion that
provided that the Policy excluded: “Interruption of business, except to the extent provided in this
Policy.” However, this general exclusion of “[i]nterruption of business” co verage was e liminated
by the WASHINGTON AMENDATORY ENDORSEMENT . Because the general exclusion
for business interruption was removed from the Policy, contrary to AFM’s position, business
interruption coverage is not limited solely to the specific coverage extensions i n the business
interruption section of the Policy. Rather, under the all -risk coverage grants of the Policy, business
interruption is a covered peril unless there is a specific exclusion that bars coverage.
19. AFM’s position is that business inte rruption cov erage resulting from COVID -19 is
only possible under the Policy’s communicable disease coverage extension because the Policy
contains a “ contamination ” exclusion and the term “virus” falls within the definition of Case 3:20-cv-05605-BJR Document 1 Filed 06/23/20 Page 5 of 19
COMPLAINT FOR: (1) DECLARATORY RELIEF;
(2) BREACH OF CONTRACT; (3) ANTICIPATORY
REPUDIATION OF CONTRACT; (4) INSURANCE
BAD FAITH; AND (5) VIOLATIONS OF
CONSUMER PROTECT ION ACT - 6 STEIN, SUDWEEKS & STEIN, PLLC
2701 FIRST AVE., SUITE 430
SEATTLE, WA 98121
PHONE 206.388.0660 FAX 206.286.2660
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“contamination .”9 However, th e Policy’s WASHINGTON AMENDATORY
ENDORSEMENT provides that loss or damage resulting from contamination is excluded only if
contamination “[d]irectly and solely results in the loss or damage” or “[i]nitiates a sequence of
events that results in loss or dam age.” AFM’s contamination exclusion does not bar coverage for
TVC’s business interruption losses because contamination , a condition of property due to the
actual or suspected presence of a virus, did not directly and solely cause TVC’s loss. Nor did
contamination “i nitiate a sequence” of events that caused TVC’s business interruption losses.
Rather, the initiating cause of TVC’s losses was a communicable disease as that term is defined in
the Policy.10
20. Even if the contamination exclusion was applicable to TVC’s cla im, there would
still be coverage under the concurrent peril doctrine. Under Washington law if an excluded peril
(contamination ) combines with a covered peril ( communicable disease , business interruption ,
decontamination, or any other covered peril) the cl aim is covered as a matter of law. See Sunwood
Condo. Ass'n v. Travelers Cas. Ins. Co. of Am., 2017 U.S. Dist. LEXIS 189892 , at * 25 (W.D.
Wash. Nov. 16, 2017)
21. Even if the contamination exclusion was applicable to TVC’s claim, the
WASHINGTON AM ENDATORY ENDO RSEMENT adds a resulting loss provision that is
applicable to the contamination exclusion that provides: “. . . if loss or damage not excluded
results, then that resulting loss or damage is covered.” As business interruption, communicable
9 The Policy provides that “ contamination means any condition of property due to the actual or suspected
presence of any foreign subs tance, impurity, pollutant, h azardous material, poison, toxin, pathogen or pathogenic
organism, bacteria, virus, disease causing or illness causing agent, fungus, mold or mildew.”
10 According to the World Health Organization: “People can catch COVID -19 fr om others who have the virus.
The disease spreads primarily from person to person through small droplets from the nose or mouth, which are
expelled when a person with COVID -19 coughs, sneezes, or speaks. These droplets are relatively heavy, do not travel
far and quickly sink 1 to the ground. People can catch COVID -19 if they breathe in these droplets from a person
infected with the virus. These droplets can land on objects and surfaces around the person such as tables, doorknobs
and handrails. People can a lso become infected by touchi ng these objects or surfaces, then touching their eyes, nose or
mouth.” Q&A on Coronaviruses (COVID -19), WHO. INT (April 17, 2020), available at
https://www.who.int/emergencies/diseases/novel -coronavirus -2019/question -and-answers -hub/q -a-detail/q -a-
coronaviruses . Case 3:20-cv-05605-BJR Document 1 Filed 06/23/20 Page 6 of 19
COMPLAINT FOR: (1) DECLARATORY RELIEF;
(2) BREACH OF CONTRACT; (3) ANTICIPATORY
REPUDIATION OF CONTRACT; (4) INSURANCE
BAD FAITH; AND (5) VIOLATIONS OF
CONSUMER PROTECT ION ACT - 7 STEIN, SUDWEEKS & STEIN, PLLC
2701 FIRST AVE., SUITE 430
SEATTLE, WA 98121
PHONE 206.388.0660 FAX 206.286.2660
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disease, and/or decontamination are covered loss or damage under the Policy, TVC’s claim is
covered under this resulting loss provision.
22. In addition to the coverage for TVC’s business interruption losses under the “all
risk” coverage grant in the Business Int erruption sec tion of the Policy, the Policy contains at least
five applicable specific coverage extensions to its Business Interruption coverage.
23. The first is a “Civil or Military Authority” extension covering loss that TVC incurs
“if an order of civil or military auth ority prohibits access to a location provided such order is the
direct result of physical damage of the type insured at a location or within five (5) statute miles of
it.”
24. The second is a “Communicable Disease” extension covering loss that TV C incurs
if any of its clinics has the “actual” presence of communicable disease and access to the clinic is
“limited, restricted or prohibited” by an “order of an authorized government agency regulating
such presence” of communicable disease . Under this extension, co verage applies “[i]f a
described location owned, leased or rented by the Insured has the actual not suspected presence of
communicable disease and access to such described location is limited, restricted or prohibited
by: a) An order of an aut horized gover nmental agency regulating such presence of communicable
disease ; or b) A decision of an Officer of the Insured as a result of such presence of
communicable disease .”
25. The third is an “Ingress/Egress” extension covering loss that TVC incurs when
“ingress to or egress from a [TVC location] is physically prevented, either partially or totally, as a
direct result of physical loss or damage of the type insured to property of the type insured . . .”
26. The fourth is an “Attraction Property” extension co vering loss t hat TVC incurs
“directly resulting from physical loss or damage of the type insured to property of the type insured
that attracts business” to a TVC clinic.
27. The fifth is a “Protection and Preservation of Property” extension covering loss that Case 3:20-cv-05605-BJR Document 1 Filed 06/23/20 Page 7 of 19
COMPLAINT FOR: (1) DECLARATORY RELIEF;
(2) BREACH OF CONTRACT; (3) ANTICIPATORY
REPUDIATION OF CONTRACT; (4) INSURANCE
BAD FAITH; AND (5) VIOLATIONS OF
CONSUMER PROTECT ION ACT - 8 STEIN, SUDWEEKS & STEIN, PLLC
2701 FIRST AVE., SUITE 430
SEATTLE, WA 98121
PHONE 206.388.0660 FAX 206.286.2660
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TVC incurs “ for a period of time not exceed 48 hours prior to and 48 hours after [TVC] first
tak[es] responsible action for the temporary protection and preservation of property insured by this
Policy provided such action is necessary to prevent immediate ly impending insured physical loss
or damage to such insured property.”
28. In addition to providing coverage under the provisions identified above, the Policy
covers other applicable losses. For example, the Policy’s “Decontamination Costs” provision
covers the cost of TVC decontaminating its clinics to satisfy any law or ordinance regulating the
contamination if the contamination is a “direct result of insured physical damage” and “there is in
force at the time of the loss any law or ordinance” regulating t he contaminat ion.
29. TVC has paid AFM significant premiums to obtain these coverages.
B. COVID -19 is a Communicable Disease that Has Spread Throughout Washington
State, including Where TVC’s Clinics are Located
30. COVID -19 is a communicable disease that can be spread from person -to-person and
on contaminated surfaces.11
31. Washington state has been at the forefront of the COVID -19 outbreak in the United
States, with the first confirmed case and death.12 Through June 16, 2020, Washington has had
more 25,000 COVID -19 cases and m ore than 1,200 deaths.13 There has been an outbreak of cases
in the Vancouver, Washington area, where TVC’s clinics are located.14
11 See Modes of transmission of virus causing COVID -19: implications for IPC precaution recommendations ,
WHO. INT (Mar. 29, 2020), available at https://www.who.int/news -room/commentar ies/detail/modes -of-transmiss ion-
of-virus -causing -covid -19-implications -for-ipc-precaution -recommendations ; Coronavirus Disease 2019 – How It
Spreads , CDC. GOV (June 1, 2020), available at https://www.cdc.gov/coronavirus/2019 -ncov/prevent -getting -
sick/how -covid -spreads.html ; Bill Chappell & Allison Aubrey, CDC Advice On Surface Spread Of COVID -19 'Has
Not Changed,' Agency Says , NPR. ORG (May 22, 2020), avail able at https://www.npr.org/sections/coronavirus -live-
updates/2020/05/22/861193550/advice -on-surface -spread-of-covid -19-has-not-chang ed-cdc-says.
12 See Hallie Golden, Why Washington state is at the center of the US coronavirus outbreak , THE GUARDIAN
(Mar. 14, 2020), available at https ://www.theguardian.com/world/2020/mar/14/coronavirus -washington -state-us-
outbreak .
13 See 2019 Novel Coronavirus Outbreak (Covid -19) - Current Status in Washington State , DOH. WA.GOV (last
accessed June 16, 2020), available at https://www.doh.wa.gov/Emergencies/Coronavirus
14 See Craig Brown, Clark County coronavirus cases jump to 76, with one new death reported , THE COLUMBIAN
(Mar. 27, 2020), available at https://www.columbian.com/news/2020/mar/27/clark -county -coronavirus -cases -jump -to-Case 3:20-cv-05605-BJR Document 1 Filed 06/23/20 Page 8 of 19
COMPLAINT FOR: (1) DECLARATORY RELIEF;
(2) BREACH OF CONTRACT; (3) ANTICIPATORY
REPUDIATION OF CONTRACT; (4) INSURANCE
BAD FAITH; AND (5) VIOLATIONS OF
CONSUMER PROTECT ION ACT - 9 STEIN, SUDWEEKS & STEIN, PLLC
2701 FIRST AVE., SUITE 430
SEATTLE, WA 98121
PHONE 206.388.0660 FAX 206.286.2660
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C. Government Officials Have Issued Orders Limiting Business Activity, including by
Halting Non -Urgent Medical Procedures in Washington
32. Federal, state and local officials have issued various orders limiting business and
other activities in response to COVID -19, including the following:
a. President Trump issued a proclamation declaring a national emergency because of
COVID -19 on March 13, 2020.15
b. Washington Governor Jay Inslee proclaimed a State of Emergency relating to
COVID -19 on February 29, 2020, and issued a “stay at home” proclamation on
March 23, 2020. In doing so, Governor Inslee, noted that COVID -19 had “bro adly
spread” through Washington, “continues to threaten the life and health of our
people as well as the economy of Washington State,” and “remains a public disaster
affecting life, health, property or the public peace.”16
c. Governor Inslee also issued a pr oclamation o n March 19, 2020 restricting non -
urgent medical procedures.17
D. TVC Confirms the Presence of COVID -19 in at Least Five of its Clinics
33. TVC first confirmed the presence of COVID -19 in one of its clinics on March 6,
2020.
76-with-one-new-death -reported/ ; Troy Brynelson, How An Outbreak Showed Clark County Was Ready to Reopen ,
OPB. COM (June 9, 2020), available at https://www.opb.org/news/article/washing ton-state-clark -county -covid -19-
coronavirus -outbreak -readiness -reopening/ .
15 Donald Trump, Proclamation on Declaring a National Emergency Concerning the Novel Coronavirus
Disease (COVID -19) Outbreak , WHITEHOUSE .GOV (Mar. 13, 2020), available at
https://www.whitehouse.gov/presidential -actions/proclamation -declaring -national -emergency -concerning -nove l-
coronavirus -disease -covid -19-outbreak/
16 Jay Inslee, Proclamation By The Governor Amending Proclamation 20 -05 – 20-25 – Stay Home – Stay
Healthy , OFFICE OF THE GOVERNOR (Mar. 23, 2020), available at
https://www.governor.wa.gov/sites/default/files/proclamations/20 -25%20Coronovirus%20Stay%20Safe -
Stay%20Healthy%20%28 tmp%29%20%28002%29.pdf?utm_me dium=email&utm_source=govdelivery
17 Jay Inslee, Proclamation By The Governor Amending Proclamation 20 -05 – 20-24 – Restrictions on Non
Urgent Medical Procedures , OFFICE OF THE GOVERNOR (Mar. 19, 2020), available at
https://www.governor.wa.gov/sites/default/files/20 -24%20COVID -19%20non -
urgent%20medical%20proce dures%20%28tmp%29.pdf?utm_med ium=email&utm_source=govdelivery Case 3:20-cv-05605-BJR Document 1 Filed 06/23/20 Page 9 of 19
COMPLAINT FOR: (1) DECLARATORY RELIEF;
(2) BREACH OF CONTRACT; (3) ANTICIPATORY
REPUDIATION OF CONTRACT; (4) INSURANCE
BAD FAITH; AND (5) VIOLATIONS OF
CONSUMER PROTECT ION ACT - 10 STEIN, SUDWEEKS & STEIN, PLLC
2701 FIRST AVE., SUITE 430
SEATTLE, WA 98121
PHONE 206.388.0660 FAX 206.286.2660
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34. Through May 26, 2020, TV C has confir med the presence of COVID -19 in at least
five of its clinics, with at least 196 confirmed COVID -19 cases. These five clinics are: the 87th
Avenue Clinic (700 NE 87th Ave, Vancouver, WA 98664); the Columbia Tech Center Clinic (501
SE 172nd Ave, Vancouver, WA 98684); the Ridgefield Clinic (5515 Pioneer Street, Ridgefield,
WA 98642); the Salmon Creek Clinic (2525 NE 139th Street, Vancouver, WA 98686); and the
Battle Ground Clinic (2005 W Main Street, Battle Ground, WA 98604).
35. TVC is informed and believes, a nd based thereon alleges, that based on the
confirmed presence of COVID -19 in these clinics, and the large number of infections throughout
Washington and in the Vancouver, Washington -area, that there also has been the presence of
COVID -19 in or close to its other medical clinics: the Vancouver Plaza Neighborhood (7809 NE
Vancouver Plaza Dr, Suite 110, Vancouver, WA 98662), the Washougal Clinic (291 C Street,
Suite 110, Washougal, WA 98671), and the Heron Gate (Vision Center) (2 South 56th Place, Suite
205, Ridgefield, WA 98642).
36. The Policy identifies on its Location Schedule each of the foregoing clinics.
E. COVID -19 and the Related Government Orders Have Interrupted TVC’s Business,
Causing it to Suffer Substantial Losses
37. COVID -19 and the re lated govern ment orders have interrupted TVC’s business,
causing it to suffer substantial losses.
38. Although it is still assessing the scope of its losses, compared to the same time last
year, between March and June of 2020 TVC’s revenue has dropped by at least approx imately
$20,000,000 at its clinics. These losses are ongoing and could increase substantially depending on
the length and ultimate severity of the COVID -19 outbreak and the government response.
39. TVC also has incurred significant additional expe nses relatin g to COVID -19,
including by having to purchase a massive amount of Personal Protective Equipment, and by
implementing and undertaking extensive cleaning, safety and other related protocols to try to Case 3:20-cv-05605-BJR Document 1 Filed 06/23/20 Page 10 of 19
COMPLAINT FOR: (1) DECLARATORY RELIEF;
(2) BREACH OF CONTRACT; (3) ANTICIPATORY
REPUDIATION OF CONTRACT; (4) INSURANCE
BAD FAITH; AND (5) VIOLATIONS OF
CONSUMER PROTECT ION ACT - 11 STEIN, SUDWEEKS & STEIN, PLLC
2701 FIRST AVE., SUITE 430
SEATTLE, WA 98121
PHONE 206.388.0660 FAX 206.286.2660
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ensure the safety of its providers and patien ts. These e xpenses exceed $500,000 and will continue
to be incurred for the foreseeable future.
F. TVC Tendered its Claim, Triggering Multiple Coverages Under the Policy
40. On March 17, 2020, TVC, through its insurance broker, tendered a claim to AFM
for “[l ]osses due t o communicable disease COVID -19.” A true and correct copy of TVC’ tender is
attached as Exhibit “B.” TVC did not limit its claim to a particular coverage provision but instead
sought coverage on all applicable property and business interruptio n coverage o ptions. After
tendering its claim, TVC continued to provide AFM with information relating to its claim,
informing AFM that it had confirmed the presence of COVID -19 in at least five of its locations.
41. By tendering its claim, TVC triggered mult iple coverag es under the Policy,
including: “all risk” coverage; Business Interruption coverage; Extra Expense coverage;
Communicable Disease extension; Civil or Military Authority extension; Ingress/Egress extension;
Attraction Property extension; Protect ion and Pres ervation of Property extension; and
Decontamination coverage. Each of these coverages is detailed above.
G. AFM Handled TVC’s Claim Improperly and in Bad Faith
42. In its March 30 and April 1, 2020 letters responding to TVC’s claim (true and
correct copies of which are attached hereto as Exhibits “C” and “D,” respectively), AFM made
clear that it is trying to bar and/or limit TVC’s claim in at least three improper ways:
a. First, AFM divided TVC’s claim into two separate claims, one involving clini cs
that had confirmed the presence of COVID -19 and another involving clinics that
did not. TVC is informed and believes, and based thereon alleges, that AFM split
TVC’s claim to try to avoid having to cover losses stemming from TVC clinics that
had not ye t confir med the presence of COVID -19.
b. Second, AFM wrote that TVC’s claim relating to its clinics that had not yet
confirmed the presence of COVID -19 concerned “financial loss due to the number Case 3:20-cv-05605-BJR Document 1 Filed 06/23/20 Page 11 of 19
COMPLAINT FOR: (1) DECLARATORY RELIEF;
(2) BREACH OF CONTRACT; (3) ANTICIPATORY
REPUDIATION OF CONTRACT; (4) INSURANCE
BAD FAITH; AND (5) VIOLATIONS OF
CONSUMER PROTECT ION ACT - 12 STEIN, SUDWEEKS & STEIN, PLLC
2701 FIRST AVE., SUITE 430
SEATTLE, WA 98121
PHONE 206.388.0660 FAX 206.286.2660
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of patient visits.” TVC is informed and believes, and based th ereon al leges, that
AFM characterized TVC’s losses stemming from these clinics in this manner to
avoid having to provide coverage for them.
c. Third, AFM wrote that TVC’s claim relating to the clinics that had confirmed the
presence of COVID -19 (what AFM ref erred to as “Communicable Disease
Response and Interruption by Communicable Disease”) would be subject to a
“$100,000 Property Damage and $100,000 Time Element annual aggregate limit.”
TVC is informed and believes, and based thereon alleges, that AFM used this
language to try to pigeonhole TVC’s losses stemming from these clinics into low -
limit coverage provisions.
43. By focusing solely on the communicable disease coverages in its acknowledgement
letter, AFM sent a clear message that it was not prepared to co nsider T VC’s significant losses
under any of the Policy’s other coverages, despite these losses being covered under these
coverages. AFM also failed to inform TVC of the coverage provided by its Policy in violation of
Washington Administrative Code (“WAC ”) 284-30-330(1) (“Misrepresenting pertinent facts or
insurance policy provisions.”) and WAC 284 -30-330(13) ( “Failing to promptly provide a
reasonable explanation of the basis in the insurance policy in relation to the facts or applicable law
for denial of a claim or for the offer of a compromise se ttlement .”).
44. Then, after sending its April 1, 2020 response, AFM engaged in delay tactics. AFM
did not respond to the additional information that TVC provided. Nor did it render a coverage
determination in a tim ely manner. AFM instead engaged in unreaso nable delay in violation of
Washington law. See, e.g., WAC 284-30-370 (“ Every insurer must complete its investigation of a
claim within thirty days after notification of claim, unless the investigation cannot reas onably b e
completed within that time. ”).
45. AFM’s bad -faith conduct forced TVC to retain counsel, which sent AFM a letter Case 3:20-cv-05605-BJR Document 1 Filed 06/23/20 Page 12 of 19
COMPLAINT FOR: (1) DECLARATORY RELIEF;
(2) BREACH OF CONTRACT; (3) ANTICIPATORY
REPUDIATION OF CONTRACT; (4) INSURANCE
BAD FAITH; AND (5) VIOLATIONS OF
CONSUMER PROTECT ION ACT - 13 STEIN, SUDWEEKS & STEIN, PLLC
2701 FIRST AVE., SUITE 430
SEATTLE, WA 98121
PHONE 206.388.0660 FAX 206.286.2660
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dated June 11, 2020 explaining why AFM’s attempts to deny and/or limit TVC’s claim were
improper. In the letter, TVC’s counsel advised AFM tha t it needed to issue a coverage
determination by June 22, 2020, otherwise TVC would file a lawsuit. A true and correct copy of
this letter is attached as Exhibit “E.” AFM did not issue a coverage determination by June 22,
2020 but instead engaged in furt her delay.
H. AFM’s Bad -Faith Handling of TVC’s Claim is Part of a Systematic Practice it Has
Implemented to Try to Deny and/or Limit COVID -19 Claims
46. A copy of AFM’s “Talking Points” relating to COVID -19 claims has become
publicly available. A tr ue and c orrect copy of AFM’s Talking Points is attached hereto as Exhibit
“F.”
47. TVC is informed and believes, and based thereon alleges, that AFM’s systematic
practice in dealing with COVID -19 claims is outlined in its “Talking Points,” which were prepared
for AFM claim adjusters to use to ensure that they reach the same conclusion for all COVID -19
claims. These Talking Points demonstrate that AFM’s handling of TVC’s claim is part of a larger
pattern and practice that AFM has implemented to try to deny and/ or limit COVID -19 claims. For
example, AFM’s Talking Points:
a. state that the “Civil or Military Authority” and “Ingress/Egress” Business
Interruption coverage extensions do not apply even though government orders
implemented because of the COVID -19 pandemi c necess arily have prohibited
and/or limited access to policyholder locations, including AFM’s clinics;
b. state that the “presence of a communicable disease does not constitute physical
damage” even though the Policy itself recognizes that a “ communicable disease ”
constitutes physical damages; and
c. coach adjusters to steer policyholders toward low -limit coverage provisions (as
AFM has tried to do with TVC). Case 3:20-cv-05605-BJR Document 1 Filed 06/23/20 Page 13 of 19
COMPLAINT FOR: (1) DECLARATORY RELIEF;
(2) BREACH OF CONTRACT; (3) ANTICIPATORY
REPUDIATION OF CONTRACT; (4) INSURANCE
BAD FAITH; AND (5) VIOLATIONS OF
CONSUMER PROTECT ION ACT - 14 STEIN, SUDWEEKS & STEIN, PLLC
2701 FIRST AVE., SUITE 430
SEATTLE, WA 98121
PHONE 206.388.0660 FAX 206.286.2660
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48. Even AFM’s Talking Points recognize, however, that it “offers some of the
broadest property coverage availab le,” and that the critical factor in determining if coverage
applies is the “actual” presence of COVID -19 at a policyholder’s location. As addressed above,
even though TVC has confirmed the presence of COVID -19 in at least five of its locations, A FM
still fails to acknowledge that its Policy cover’s TVC’s claim.
FIRST CLAIM – FOR DECLARATORY RELIEF THAT THE POLICY PROVIDES
COVERAGE
49. TVC repeats and realleges the allegations in the preceding paragraphs.
50. TVC seeks the Court’s declaration of the parti es’ rights and duties under the Policy
pursuant to 28 U.S.C. § 2201(a). An actual controversy exists between TVC and AFM concerning
the availability of coverage under the Policy for TVC’s claim.
51. The controversy between TVC and AFM is ripe for judicial r eview, including for at
least the following reasons:
a. TVC tendered its claim to AFM on March 17, 2020, AFM has acknowledged
receipt of the claim, and AFM has had more than sufficient time to make a coverage
determination but has unreasonably delayed in doin g so in violation of WAC 2 84-
30-370.
b. AFM has failed to timely pay TVC for the covered losses that it has incurred.
c. AFM’s communications with TVC show that it has already divided TVC’s claim
and, further, that it has done so in a manner designed to limit cove rage for losses
incurred at the clinics that have confirmed the presence of COVID -19 and to deny
coverage for losses incurred at the clinics that have not yet confirmed the presence
of COVID -19.
52. TVC seeks a declaration from the Court that:
a. TVC’s claim triggered coverage under the Policy, including coverage under the Case 3:20-cv-05605-BJR Document 1 Filed 06/23/20 Page 14 of 19
COMPLAINT FOR: (1) DECLARATORY RELIEF;
(2) BREACH OF CONTRACT; (3) ANTICIPATORY
REPUDIATION OF CONTRACT; (4) INSURANCE
BAD FAITH; AND (5) VIOLATIONS OF
CONSUMER PROTECT ION ACT - 15 STEIN, SUDWEEKS & STEIN, PLLC
2701 FIRST AVE., SUITE 430
SEATTLE, WA 98121
PHONE 206.388.0660 FAX 206.286.2660
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Policy provisions described above;
b. No exclusions in the Policy apply to bar or limit coverage for TVC’s claim; and
c. The Policy covers TVC’s claim.
SECOND CLAIM – FOR BREACH OF CONTRACT
53. TVC repeats and realleges the allegations in the preceding paragraphs.
54. The Policy is a valid and enforceable contract between TVC and AFM.
55. In the Policy, AFM agreed to cover TVC’s clinics against all risks of physical loss
or damage not otherwise excluded, including coverage for Business Interruption, Extra Expense,
Communicable Disease, Civil or Military Authority extension, Ingress/Egress Attraction Property,
Protection and Preservation of Property, and Decontamination.
56. There are no exclusions in the Polic y that bar coverage.
57. TVC has complied and is ready to comply with all applicable Policy provisions,
including by paying premiums and providing timely notice of its claim.
58. AFM has breached the Policy in material ways described above, including by
failing to timely pay TVC for covered losses that it has incurred.
59. TVC has suffered and continues to suffer damages as a result of AFM’s breach of
the Policy in an amount to be determined at trial, including pre -judgment interest.
60. As a direct and proximate result of AFM’s breach of its contractual duties, TVC has
been forced to incur attorneys’ fees, expert costs, investigation costs and other expenses in order to
prosecute this action, the sole purpose of which is to obtain the benefits of TVC’s insurance
contrac ts.
THIRD CLAIM – FOR ANTICIPATORY REPUDIATION OF CONTRACT
61. TVC repeats and realleges the allegations in the preceding paragraphs.
62. The Policy is a valid and enforceable contract between TVC and AFM.
63. In the Policy, AFM agreed to cover TVC’s clinics aga inst al l risks of physical loss Case 3:20-cv-05605-BJR Document 1 Filed 06/23/20 Page 15 of 19
COMPLAINT FOR: (1) DECLARATORY RELIEF;
(2) BREACH OF CONTRACT; (3) ANTICIPATORY
REPUDIATION OF CONTRACT; (4) INSURANCE
BAD FAITH; AND (5) VIOLATIONS OF
CONSUMER PROTECT ION ACT - 16 STEIN, SUDWEEKS & STEIN, PLLC
2701 FIRST AVE., SUITE 430
SEATTLE, WA 98121
PHONE 206.388.0660 FAX 206.286.2660
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or damage not otherwise excluded, including coverage for Business Interruption, Extra Expense,
Communicable Disease, Civil or Military Authority extension, Ingress/Egress Attraction Property,
Protection and Preservation of P roperty , and Decontamination.
64. There are no exclusions in the Policy that bar coverage.
65. TVC has complied and is ready to comply with all of its obligations under the
Policy, including by paying premiums and providing timely notice of its claim.
66. Even thoug h TVC h as complied and is ready to comply with its obligations under
the Policy, AFM informed TVC that it was dividing TVC’s claim into two separate claims (one
involving clinics that had confirmed the presence of COVID -19; the other involving clinics that
did no t), shoehorning the “first” claim into a low -limit coverage provision, and characterizing the
“second” claim in a way that would result in a denial of coverage.
67. AFM’s statements to this effect were positive and unequivocal expressions that
AFM was repudia ting and would not fully and completely perform is obligations under the Policy .
68. AFM has failed to timely pay TVC for covered losses that it has incurred. AFM
also has failed to set forth any reason as to why it has not reached a coverage determina tion on a
claim that was tendered to it on March 17, 2020.
69. As a result of AFM’s conduct, TVC has suffered and continues to suffer damages in
an amount to be determined at trial, including prejudgment interest.
70. As a direct and proximate result of AFM’s breach of i ts contractual duties, TVC has
been forced to incur attorneys’ fees, expert costs, investigation costs and other expenses in order to
prosecute this action, the sole purpose of which is to obtain the benefits of TVC’s insurance
contracts .
FOU RTH CLAIM – FOR INSURANCE BAD FAITH
71. An insurer owes its insured an independent duty of good faith under Washington
law, including to deal fairly with the insured and to not engage in any action that demonstrates a Case 3:20-cv-05605-BJR Document 1 Filed 06/23/20 Page 16 of 19
COMPLAINT FOR: (1) DECLARATORY RELIEF;
(2) BREACH OF CONTRACT; (3) ANTICIPATORY
REPUDIATION OF CONTRACT; (4) INSURANCE
BAD FAITH; AND (5) VIOLATIONS OF
CONSUMER PROTECT ION ACT - 17 STEIN, SUDWEEKS & STEIN, PLLC
2701 FIRST AVE., SUITE 430
SEATTLE, WA 98121
PHONE 206.388.0660 FAX 206.286.2660
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greater concern for its own financial inte rest than the insured’s financial risk. See, e.g., Revised
Code of Washington (“RCW”) 48.01.030 (“The business of insurance is one affected by the public
interest, requiring that all persons be actuated by good faith, abstain from deception, and practice
honesty and equ ity in all insurance matters. Upon the insurer, the insured, their providers, and their
representatives rests the duty of preserving inviolate the integrity of insurance. ”).
72. The duty of good faith requires an insurer to conduct a reasonable investigation
before refusing to pay a claim submitted by its insured. An insurer must also have a reasonable
justification before refusing to pay a claim. An insurer who refuses to pay a claim, without
conducting a reasonable investigation or without h aving a reason able justification, fails to act in
good faith.
73. A violation of one or more of the Washington claim -handling standards set forth
below is a breach of the duty of good faith, an unfair method of competition, an unfair or deceptive
act or practi ce in the busi ness of insurance, and a breach of the insurance contract. AFM’s conduct
violated Washington claim -handling standards, which:
a. require it to fully disclose all pertinent coverages;
b. prohibit misrepresentations regarding relevant facts or covera ge;
c. prohibit t he practice of refusing to pay claims without conducting a reasonable
investigation;
d. require AFM to provide a reasonable explanation of the relevant facts, law, and
policy language and how its policy language supported a denial of TVC’s clai m;
and
e. requir e a prompt and fair claims evaluation that does not put the insurer’s interest
ahead of its insured.
74. AFM has failed to comply with the duty of good faith it owes TVC for the reasons
identified above. AFM’s actions and omissions were unreason able, unfounde d, and frivolous Case 3:20-cv-05605-BJR Document 1 Filed 06/23/20 Page 17 of 19
COMPLAINT FOR: (1) DECLARATORY RELIEF;
(2) BREACH OF CONTRACT; (3) ANTICIPATORY
REPUDIATION OF CONTRACT; (4) INSURANCE
BAD FAITH; AND (5) VIOLATIONS OF
CONSUMER PROTECT ION ACT - 18 STEIN, SUDWEEKS & STEIN, PLLC
2701 FIRST AVE., SUITE 430
SEATTLE, WA 98121
PHONE 206.388.0660 FAX 206.286.2660
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under the circumstances and constitute a breach of AFM’s duty of good faith.
75. As a direct and proximate result of AFM’s conduct , TVC has been damaged in an
amount to be proven at trial.
FIFTH CLAIM – FOR VIOLATIONS OF TH E CONSUMER PROTECTI ON ACT
76. TVC repeats and realleges the allegations in the preceding paragraphs.
77. AFM’s violation of the claims -handling procedures set forth in WAC 284 -30-370
are a per se violation of the Washington Consumer Protection Act (“CPA”), RCW 19. 86.010, et
seq.
78. TVC is a consumer who is informed and believes, and based thereon alleges, that
AFM’s conduct was deceptive, impacted the public, and had the capacity to deceive .
79. As a result of AFM’s violations, TVC has suffered and is continuing to suffe r
damages, and is e ntitled to an award of damages in an amount to be determined at trial, along with
CPA penalties of up to $25,000 per violation and attorneys’ fees under the CPA.
PRAYER FOR RELIEF
TVC prays for judgment against AFM as follows:
1. For d eclaratory relief, incl uding:
a. TVC’s claim triggered various coverage provisions in the Policy;
b. No exclusions in the Policy apply to bar or limit coverage for TVC’s claim;
c. The Policy covers TVC’s claim; and
d. AFM owes money damages for TVC’s covered claim.
2. For money damages agai nst AFM in an amount to be proven at trial but in excess of
$75,000;
3. For pre - and post -judgment interest as provided by law;
4. For an award of attorneys’ fees and costs;
5. For penalties and attorneys’ fees under the CPA; and Case 3:20-cv-05605-BJR Document 1 Filed 06/23/20 Page 18 of 19
COMPLAINT FOR: (1) DECLARATORY RELIEF;
(2) BREACH OF CONTRACT; (3) ANTICIPATORY
REPUDIATION OF CONTRACT; (4) INSURANCE
BAD FAITH; AND (5) VIOLATIONS OF
CONSUMER PROTECT ION ACT - 19 STEIN, SUDWEEKS & STEIN, PLLC
2701 FIRST AVE., SUITE 430
SEATTLE, WA 98121
PHONE 206.388.0660 FAX 206.286.2660
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6. For such other and further relie f as the Court deems just and proper.
JURY TRIAL DEMANDED
TVC demands trial by jury on all issues so triable.
Dates the 23rd day of June, 2020.
STEIN, SUDWEEKS & STEIN, PLLC
/s/ Jerry H. Stein
/s/ Justin D. Sudweeks
/s/ Daniel J. Stein
Jerry H. Stein, WSBA #27721
Justin D. Sudweeks, WSBA #28755
Daniel J. Stein, WSBA #48739
2701 First Avenue, Suite 430
Seattle, WA 98121
Telephone: (206) 388 -0660
Facsimile: (206) 286 -2660
Email: [email protected] om
Email: [email protected]
Email: [email protected]
Attorneys for Plaintiff
GREENBERG GLUSKER FIELDS CLAMAN
& MACHTINGER LLP
/s/ Steven A. Stein
Steven A. Stein, Pro Hac Vice Pending
2049 Century Park East, 26th Floor
Los Angeles, CA 90067 -3101
Telephone: (310) 553 -3610
Facsimile: (310) 553 -0687
Email: [email protected]
Co-Counsel for Plaintiff
Case 3:20-cv-05605-BJR Document 1 Filed 06/23/20 Page 19 of 19