HF 3426

as introduced - 85th Legislature (2007 - 2008) Posted on 12/15/2009 12:00am

A bill for an act
relating to commerce; establishing a consumer complaint resolution procedure
for insurance claims; imposing fees; proposing coding for new law in Minnesota
Statutes, chapter 72A.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

new text begin [72A.225] CONSUMER COMPLAINT RESOLUTION PROCEDURE.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin The terms used in this section have the meanings
defined in section 72A.201, subdivision 3, unless the terms used in this section are
otherwise defined in this subdivision, in which case the terms used in this section have
the meanings defined in this subdivision.
new text end

new text begin (a) An "unfair claims settlement practice" means a substantial and nontechnical
violation of section 72A.20, subdivision 12, clauses (1) to (17), or 72A.201, subdivisions
4 to 9, and 11 to 13, in the handling of a claim submitted by a complainant under an
insurance policy providing coverage to the complainant for personal, family, or household
purposes. A disagreement over the value of a claim, the liability of an insurer with respect
to a claim, or whether a claim is covered is not an unfair claims settlement practice.
new text end

new text begin (b) The "account" means the unfair claims settlement practice account established in
subdivision 7.
new text end

new text begin (c) A "complaint" means a written allegation of an unfair claims settlement practice
by an insurer filed by a complainant under this section.
new text end

new text begin (d) A "complainant" means an insured that has filed a complaint under this section.
new text end

new text begin (e) "Substantially corrects the circumstances" means that the insurer subject to the
complaint has remedied the facts and circumstances that provide the basis upon which
the unfair claims settlement practice is alleged or satisfies the insured's claim under the
insurance policy.
new text end

new text begin (f) An "insurer" means an insurance company licensed by the commissioner to
transact any line of insurance under section 60A.06 or chapter 67A other than life and
health insurance under section 60A.06, subdivision 1, clauses (4) and (5)(a). Insurer
includes the automobile insurance plan established by section 65B.01 and the FAIR plan
established by section 65A.31.
new text end

new text begin (g) A "person" means an individual, corporation, partnership, association, limited
liability company, other legal entity, or organization.
new text end

new text begin (h) An "insured" has the meaning given in section 72A.201, subdivision 3, clause
(8). Insured does not include any person that has received any assignment of rights
under an insurance policy nor any person claiming a third-party beneficiary status under
an insurance policy.
new text end

new text begin (i) The "commissioner" means the commissioner of commerce.
new text end

new text begin Subd. 2. new text end

new text begin Notice. new text end

new text begin An insurer shall include with the acknowledgment of each claim
required by section 72A.201, subdivision 4, clause (1), notification advising an insured
about the consumer complaint resolution procedure established by this section and the
commissioner's toll-free number and Web site address. The notice may be provided by
electronic or telephonic means. The commissioner shall provide insurers with sample
language that may be used by insurers for this purpose.
new text end

new text begin Subd. 3. new text end

new text begin Filing of a consumer complaint. new text end

new text begin An insured may file a complaint with
the commissioner alleging that an insurer committed an unfair claims settlement practice
with respect to a claim submitted to that insurer by the insured. The complaint shall be
filed as soon as practicable but in no event later than two years following the date of
loss under the insurance policy pursuant to which the insured submitted a claim that is
the basis for the alleged unfair claims settlement practice. The complaint shall be on a
form prescribed by the commissioner. If the complaint is deficient, the commissioner shall
contact the insured within 15 days of receipt of the complaint to obtain the information
necessary to consider the complaint.
new text end

new text begin Subd. 4. new text end

new text begin Informal resolution. new text end

new text begin Upon receipt of a complete complaint, the
commissioner shall provide the insurer against whom the complaint is filed with a copy
of the complaint. An insurer that receives a copy of a complaint from the commissioner
under this subdivision shall report to the commissioner on the disposition of the complaint
within 15 days of its disposition but no later than 60 days from receipt of notice of the
complaint from the commissioner. If the insurer against whom the complaint was filed
substantially corrects the circumstances that gave rise to the alleged violation or offers to
resolve the complaint in a manner considered to be reasonable by the commissioner within
60 days after receiving the complaint from the commissioner under this subdivision, the
commissioner shall consider the complaint resolved and take no further action against
the insurer or make a distribution under subdivision 8 with respect to the facts and
circumstances giving rise to the alleged violation.
new text end

new text begin Subd. 5. new text end

new text begin Investigation. new text end

new text begin If the complaint is not resolved within the 60-day period
described in subdivision 4, the commissioner may conduct an investigation to determine
whether the insurer has committed an unfair claims settlement practice. Any such
investigation shall be conducted under section 45.027. All working papers, recorded
information, and documents and copies thereof produced by, obtained by, or disclosed to
the commissioner or any other person in the course of an investigation made under this
section must be given confidential treatment and are not subject to subpoena and may not
be made public by the commissioner or any other person.
new text end

new text begin Subd. 6. new text end

new text begin Proceedings. new text end

new text begin If the commissioner, based upon any investigation
undertaken under subdivision 5, determines that the insurer has committed an unfair
claim settlement practice under section 72A.20, subdivision 12, with such frequency as
to constitute a general business practice or under section 72A.201, taking into account
the considerations in section 72A.201, subdivision 2, the commissioner may initiate
administrative action in accordance with the authority provided to the commissioner
under chapter 45 and this chapter and may make a distribution under subdivision
8. A determination by the commissioner that the actions of an insurer constitute a
general business practice, to the extent required, may only be based on the existence of
substantially similar violations in a number of separate transactions. Nothing in this
section limits the authority of the commissioner to otherwise investigate and take action
under the authority of the commissioner against an insurer under circumstances in which
the commissioner has reason to believe that the insurer has committed a violation of law.
new text end

new text begin Subd. 7. new text end

new text begin Unfair claims practice settlement account. new text end

new text begin There is hereby created a
special account in the general fund designated as the unfair claims settlement practice
account. Funds paid into this account shall be derived from the supplemental licensing
assessment authorized by subdivision 10. The money in the account shall only be
expended by the commissioner to compensate complainants as provided in subdivision 8.
new text end

new text begin Subd. 8. new text end

new text begin Distribution from unfair claims practice settlement account. new text end

new text begin If the
commissioner, based upon the investigation undertaken under subdivision 5, determines
that an insurer has committed an unfair claims settlement practice and the complainant has
suffered economic damages as a proximate result of such practice, the commissioner may
make a distribution to the complainant from the account to compensate the complainant
for such damages. The amount of a distribution to any complainant shall not exceed
$5,000 per unfair claims settlement practice violation and the total amount of a distribution
to any complainant shall not exceed $25,000. A distribution shall not include any amounts
to compensate a complainant for any noneconomic losses, attorney fees, whether incurred
in pursuing a complaint under this section or in any action with respect to the claim that
is the basis for an alleged unfair claims settlement practice, costs, statutory damages,
punitive damages, or any form of exemplary damages, nor shall a distribution include any
amount to compensate a complainant for any amount claimed under the terms of the
insurance policy that is the basis for the alleged unfair claims settlement practice.
new text end

new text begin Subd. 9. new text end

new text begin Administration. new text end

new text begin The consumer complaint resolution procedure established
in this section shall be administered solely by the commissioner. It is expressly understood
and intended that the provisions of this section do not create a private right of action for
any violation of Minnesota law, including a violation of section 72A.20, subdivision 12,
clauses (1) to (17), or 72A.201, subdivisions 4 to 9, or 11 to 13. No information regarding
proceedings under this section, nor any order of the commissioner or determination of the
commissioner made under this section, shall be admissible in any proceeding or action
relating to a claim made by a complainant for coverage under or other action related to
an insurance policy, whether in a court or in an administrative enforcement action under
Minnesota law.
new text end

new text begin Subd. 10. new text end

new text begin License fee supplemental assessment. new text end

new text begin Each insurer, other than an insurer
exclusively writing workers' compensation, medical professional, or other professional
liability insurance, shall pay, as a supplement to its licensing fee, an assessment to
the commissioner each year in the amount of $2,500, which shall be deposited by the
commissioner into the account. An insurer authorized under chapter 67A shall not be
subject to an assessment under this subdivision.
new text end

new text begin Subd. 11. new text end

new text begin Contested case proceeding. new text end

new text begin A complainant or insurer aggrieved by a
final action of the commissioner under this section may request review in a contested
case proceeding under chapter 14.
new text end