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Comp insurer loses in blaming competitors for hurt business

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Comp insurer loses in blaming competitors for hurt business

A Montana workers compensation insurer can't sue its competitors for unfair trade practices after it claimed other insurers spread “falsehoods” about the company to potential workers comp insurance buyers, the Montana Supreme Court has ruled.

Miles City, Montana-based Victory Insurance Co. Inc. began selling workers comp insurance in 2007, and in the next few years afterward, had “failed to meet ownership's expectations” for growth, according to court records. Company executives concluded that Victory's business was being harmed by a “barrage of falsehoods” being told about Victory by representatives of the Montana State Fund and other workers comp insurers doing business in Montana.

Victory filed a complaint against the Montana State Fund, the state's workers comp insurer, and other insurers in March 2011, alleging that the competitors violated Montana's Unfair Trade Practices Act by making derogatory comments about Victory to prospective workers comp customers. The insurer also alleged that the defendants “intentionally interfered” with Victory's “prospective economic advantage” by making negative comments about Victory to 51 employers shopping for workers comp insurance.

Defendants in the case, filed in Montana's 1st Judicial District Court in Helena include Portland, Oregon-based Liberty Northwest Insurance Corp., Payne Financial Group Inc. in Billings, Montana and Western States Insurance Agency Inc. in Missoula, Montana, as well as 100 John Doe defendants.

The defendants moved to dismiss Victory's unfair trade practices claims, and the district court granted that motion in September 2011, finding that the state law does not provide a private right of action by one insurer against another, court filings show.

The district court also granted a motion from the defendants in 2013 to dismiss claims of “intentional interference,” finding that the defendants showed they had business relationships with each of the 51 employers and did not intentionally interfere with Victory's ability to compete in the workers comp market, according to records. The court also found that Victory failed to establish that it had suffered damages from the defendants' comments to employers.

Victory appealed both dismissals to the Montana Supreme Court, which unanimously affirmed the lower court rulings on Tuesday. The high court noted that defendants in the case provided details of their interactions with prospective or current workers comp policyholders that showed the companies did not interfere in Victory's dealings.

For instance, evidence from one policyholder showed that it chose not to buy comp through Victory after deciding the insurer was “too new and unknown, and appeared to have lesser financial reserves than” the company wanted, records show. Therefore, the court concluded that the defendants did not engage in conduct that interfered with Victory's business, the ruling reads.

Additionally, the high court said that Victory failed to show that it suffered quantifiable damages from the defendants' business dealings.

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