Washington State Human Rights Commission

Announce Comprehensive Settlement of Insurance Discrimination Lawsuit Involving Western World Insurance Company

TACOMA-The Fair Housing Center of Washington (Fair Housing Center), a Tacoma-based nonprofit agency dedicated to ending illegal discrimination in housing, and the Fair Housing Council of Oregon, a nonprofit fair housing agency promoting equal access to housing in the state of Oregon, have settled a lawsuit involving alleged discrimination on the basis of disability in the provision of homeowners insurance. The settlement in Nevels v. Western World Insurance Company, filed in the U.S. District Court for the Western District of Washington, provides $2.0 million in monetary relief and ends nearly four years of litigation and administrative complaints alleging violations of the federal Fair Housing Act.

Other plaintiffs included four adult family home operators from Washington and Oregon whose property and/or liability insurance had been cancelled or non-renewed. The plaintiffs were represented by the Washington, D.C.-based civil rights law firm, Relman & Associates (www.relmanlaw.com) and by Jesse Wing of the Seattle-based firm, MacDonald, Hoague & Bayless (www.mhb.com).

According to Lauren Walker, executive director of the Fair Housing Center, the lawsuit exposed and ended the company’s practice of terminating and refusing to renew insurance coverage for adult family homes serving people with mental illnesses. “We were surprised how blatant the discrimination was,” she said, after finding more than 150 notices terminating or non-renewing insurance coverage. “Some notices even agreed to continue coverage if the operators agreed to get rid of their residents with mental illnesses.”

Western World admitted that it cancelled the insurance policies because the plaintiffs provided care for individuals with mental disabilities, but claimed in court papers that the Fair Housing Act did not apply to the kind of insurance policies it offered. The federal court soundly rejected that view, issuing a preliminary decision in the case on December 10, 2004 [Nevels v. Western World Insurance Company, 359 F.Supp.2d 1110 (W.D. Wash. 2004)]. John P. Relman, plaintiffs’ lead counsel, remarked on the importance of this published decision for other victims of insurance discrimination around the country. “We believe that insurance discrimination on the basis of disability is widespread, and this well-reasoned opinion will put insurance companies on notice that federal courts will not permit these business practices to continue.”

As part of the settlement, the plaintiffs and Western World agreed to establish a Settlement Fund for the benefit of all other adult family home operators in Washington and Oregon who received a Notice of Cancellation/Non-Renewal of insurance coverage from Western World between January 1, 2002, and May 7, 2004 that made reference to mental illness or a mental illness designation associated with the insured’s adult residential care facility license. “Most of us know someone suffering from mental illness,” local counsel Jesse Wing explained. “The lawsuit put a stop to the company’s cancellation of insurance based on mental disability touching the lives of many people in Washington and Oregon.” Importantly, Western World also agreed to comply with the Fair Housing Act in the future, provide disability rights education and training to all of its supervisory employees and officers engaged in underwriting or pricing insurance to congregate living providers and to establish procedures designed to track and report all claims of discrimination under the Fair Housing Act by its insureds or applicants. "The Fair Housing Act protects people with disabilities from those who would deny them housing opportunities," said Kim Kendrick, HUD's Assistant Secretary for Fair Housing and Equal Opportunity. "Denying a person homeowners insurance coverage on the basis of that person's disability is against the law. It is important to educate insurance companies about the rights of people with disabilities to make sure they are treated equally."

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