SF 2822
1st Unofficial Engrossment - 85th Legislature (2007 - 2008)
Posted on 12/15/2009 12:00 a.m.
KEY: stricken = removed, old language.
underscored = added, new language.
Line numbers
1.1A bill for an act
1.2relating to insurance; providing for penalties and attorney fees for certain
1.3insurance claims practices;proposing coding for new law in Minnesota Statutes,
1.4chapter 604.
1.5BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.6 Section 1. new text begin [604.18] INSURANCE STANDARD OF CONDUCT.new text end
1.7 new text begin Subdivision 1.new text end new text begin Definitions.new text end new text begin (a) For purposes of this section, the terms defined in this new text end
1.8new text begin subdivision have the meanings given them.new text end
1.9 new text begin (b) "Insurance policy" means a written agreement between an insured and an insurer, new text end
1.10new text begin which obligates an insurer to pay proceeds directly to the insured. Insurance policy does new text end
1.11new text begin not include provisions of a liability insurance policy obligating an insurer to defend the new text end
1.12new text begin insured, reimburse an insured's defense expenses, provide for any other type of defense new text end
1.13new text begin obligation, or provide indemnification for judgments or settlements. Insurance policy also new text end
1.14new text begin does not include coverage for workers' compensation insurance under chapter 176; a new text end
1.15new text begin written agreement of a health carrier, as defined in section 62A.011; a contract issued by a new text end
1.16new text begin nonprofit health service plan corporation regulated under chapter 62C that provides only new text end
1.17new text begin dental coverage; or a written agreement authorized under section 60A.06, subdivision 1, new text end
1.18new text begin clauses (4) and (6).new text end
1.19 new text begin (c) "Insured" means a person asserting a right to payment under an insurance policy new text end
1.20new text begin insuring that person, that arises out of the occurrence of a contingency or loss covered new text end
1.21new text begin by the policy. A person does not become an insured for purposes of this section if the new text end
1.22new text begin insurance policy in question contained an anti-assignment clause and the person was new text end
1.23new text begin assigned rights from another insured.new text end
2.1 new text begin (d) "Insurer" means every insurer, corporation, business trust, or association engaged new text end
2.2new text begin in insurance as a principal licensed or authorized to transact insurance under section new text end
2.3new text begin 60A.06, 60A.206, or 60A.209, but for purposes of this section an insurer does not include new text end
2.4new text begin a political subdivision providing self-insurance or a pool of political subdivisions under new text end
2.5new text begin section 471.981, subdivision 3, or a township mutual fire insurance company or farm new text end
2.6new text begin mutual fire insurance company operating under chapter 67A. The term does not include new text end
2.7new text begin the Joint Underwriting Association operating under chapter 62F or 62I.new text end
2.8 new text begin Subd. 2.new text end new text begin Liability.new text end new text begin (a) The court may award as taxable costs to an insured amounts new text end
2.9new text begin as provided in subdivision 3 if the insured can show:new text end
2.10 new text begin (1) the absence by an insurer of a reasonable basis for denying the benefits of the new text end
2.11new text begin insurance policy; andnew text end
2.12 new text begin (2) that the insurer knew of the lack of a reasonable basis for denying the benefits of new text end
2.13new text begin the insurance policy or acted in reckless disregard of the lack of a reasonable basis for new text end
2.14new text begin denying the benefits of the insurance policy.new text end
2.15 new text begin (b) In addition to taxable costs under this section, an insured is entitled from the new text end
2.16new text begin insurer to the amount of actual damages incurred by the insured as determined by a fact new text end
2.17new text begin finder, after appropriate reductions made by a judge under section 65B.51, subdivision 1, new text end
2.18new text begin or section 548.36.new text end
2.19 new text begin (c) A violation of this section shall not be the basis for any claim or award under new text end
2.20new text begin chapter 325D or 325F.new text end
2.21 new text begin (d) A disagreement between an insurer and an insured as to the value or amount of new text end
2.22new text begin proceeds owed to an insured when there is an ongoing arson investigation or an ongoing new text end
2.23new text begin fraud investigation does not justify an award of taxable costs under this section.new text end
2.24 new text begin Subd. 3.new text end new text begin Remedies.new text end new text begin (a) In addition to pre- and post-judgment interest and costs new text end
2.25new text begin and disbursements allowed under section 549.09 and the net award of actual damages new text end
2.26new text begin described in subdivision 2, paragraph (b), an insured may be awarded, as taxable costs new text end
2.27new text begin under this section for an insurer's violation of subdivision 2, a penalty in the discretion new text end
2.28new text begin of the court as follows:new text end
2.29 new text begin (1) an amount equal to one-half of the proceeds awarded, which are in excess of new text end
2.30new text begin an amount offered by the insurer prior to ten days before jury selection begins, but in new text end
2.31new text begin no case to exceed $100,000; andnew text end
2.32 new text begin (2) reasonable attorney fees actually incurred to establish the insurer's violation new text end
2.33new text begin of this section. Attorney fees shall only be awarded if the fees sought are separately new text end
2.34new text begin accounted for by the insured's attorney, are not duplicative of the fees the insured's new text end
2.35new text begin attorney otherwise expended in pursuit of proceeds to an insured under the insurance new text end
3.1new text begin policy, and shall not exceed an amount equal to the penalty in clause (1), and in no case new text end
3.2new text begin may an award of attorney fees exceed $40,000.new text end
3.3 new text begin (b) An insured may not also recover punitive or exemplary damages, nor attorney new text end
3.4new text begin fees under section 8.31, for a violation of this section.new text end
3.5 new text begin Subd. 4.new text end new text begin Claim for taxable costs.new text end new text begin (a) Upon commencement of a civil action by new text end
3.6new text begin an insured against an insurer, the complaint must not seek a recovery under this section. new text end
3.7new text begin Instead, after filing the action, a party may make a motion to amend the pleadings to new text end
3.8new text begin claim recovery under this section. The motion must allege the applicable legal basis new text end
3.9new text begin under this section and must be accompanied by one or more affidavits showing the new text end
3.10new text begin factual basis for the motion. The motion may be opposed by the submission of one or new text end
3.11new text begin more affidavits. At the hearing, if the court finds prima facie evidence in support of the new text end
3.12new text begin motion, the court may grant the moving party permission to amend its pleadings to assert a new text end
3.13new text begin claim under this section.new text end
3.14 new text begin (b) An award of taxable costs under this section shall be determined by the court in a new text end
3.15new text begin proceeding subsequent to any determination by a fact finder of the amount an insured is new text end
3.16new text begin entitled to under the insurance policy, and shall be governed by the procedures set forth in new text end
3.17new text begin Minnesota General Rules of Practice, Rule 119.new text end
3.18 new text begin (c) An award of taxable costs under this section is not available in any claim that is new text end
3.19new text begin submitted by the insurer and insured to binding arbitration or appraisal.new text end
3.20 new text begin (d) The following are not admissible in any proceeding that seeks taxable costs new text end
3.21new text begin under this section:new text end
3.22 new text begin (1) findings or determinations made in arbitration proceedings conducted under new text end
3.23new text begin section 65B.525 or any administrative rules promulgated thereunder;new text end
3.24 new text begin (2) allegations involving, or results of, investigations, examinations, or new text end
3.25new text begin administrative proceedings conducted by the Department of Commerce;new text end
3.26 new text begin (3) administrative bulletins or other informal guidance published or disseminated by new text end
3.27new text begin the Department of Commerce; andnew text end
3.28 new text begin (4) provisions under chapters 59A to 79A and all rules promulgated thereunder new text end
3.29new text begin are not admissible as standards of conduct.new text end
3.30 new text begin Subd. 5.new text end new text begin Insurance producers; liability limited. new text end new text begin A licensed insurance producer new text end
3.31new text begin is not liable under this section for errors, acts, or omissions attributed to the insurer that new text end
3.32new text begin appointed the producer to transact business on its behalf, except to the extent the producer new text end
3.33new text begin has caused or contributed to the error, act, or omission.new text end
3.34 new text begin Subd. 6.new text end new text begin Expiration.new text end new text begin This section expires upon a determination by the new text end
3.35new text begin commissioner of commerce that: (1) average insurance premiums for lines of insurance new text end
3.36new text begin affected by this act have increased by more than 20 percentage points above the percentage new text end
4.1new text begin increase in the Consumer Price Index for all urban consumers in any 12-month period; new text end
4.2new text begin and (2) at least 20 percentage points of the increase is attributable to this section. The new text end
4.3new text begin commissioner of commerce shall make a determination on whether this criterion has been new text end
4.4new text begin met at least once each year. The expiration applies to all causes of action as to which a new text end
4.5new text begin court judgment has not been entered as of the date of the determination.new text end
4.6 Sec. 2. new text begin EFFECTIVE DATE.new text end
4.7 new text begin Section 1 is effective August 1, 2008, and applies to causes of action for conduct new text end
4.8new text begin which occurs on or after that date.new text end