Tire Sidewall problems of the 2006 Toyota Prius

I was driving to a place a short distance from my home when I heard a noise and the car veered to the right. I pulled over immediately and got out of the car. The tire on the right front was blown out at the sidewall and I saw two holes at the inside of the sidewall one above the other. The rim was also destroyed.

With only 12k miles on this car the side wall of the goodyear integrity tire bubbled way out. Tire had to be replaced and the dealer would not do it under warranty. They said I must have hit something but I did not.