<a id="pl.1.3"></a><var>1.3</var>insurance claims practices;proposing coding for new law in Minnesota Statutes, <br/>
<a id="pl.1.4"></a><var>1.4</var>chapter 604.<br/>
<a id="pl.1.5"></a><var>1.5</var>BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:<br/>
<br/>
<a id="bill.0.1.0"></a><a id="pl.1.6"></a><var>1.6</var>    Section 1. <b>[604.18] INSURANCE STANDARD OF CONDUCT.</b><br/>
<a id="pl.1.7"></a><var>1.7</var>    Subdivision 1. <b>Definitions.</b> (a) For purposes of this section, the terms defined in this <br/>
<a id="pl.1.8"></a><var>1.8</var>subdivision have the meanings given them.<br/>
<a id="pl.1.9"></a><var>1.9</var>    (b) "Insurance policy" means a written agreement between an insured and an insurer, <br/>
<a id="pl.1.10"></a><var>1.10</var>which obligates an insurer to pay proceeds directly to the insured. Insurance policy does <br/>
<a id="pl.1.11"></a><var>1.11</var>not include provisions of a liability insurance policy obligating an insurer to defend the <br/>
<a id="pl.1.12"></a><var>1.12</var>insured, reimburse an insured's defense expenses, provide for any other type of defense <br/>
<a id="pl.1.13"></a><var>1.13</var>obligation, or provide indemnification for judgments or settlements. Insurance  policy also <br/>
<a id="pl.1.14"></a><var>1.14</var>does not include coverage for workers' compensation  insurance under chapter 176; a <br/>
<a id="pl.1.15"></a><var>1.15</var>written agreement of a health carrier, as defined in section 62A.011; a contract issued by a <br/>
<a id="pl.1.16"></a><var>1.16</var>nonprofit health service plan corporation regulated under chapter 62C that provides only <br/>
<a id="pl.1.17"></a><var>1.17</var>dental coverage; or a written agreement authorized under section 60A.06, subdivision 1, <br/>
<a id="pl.1.18"></a><var>1.18</var>clauses (4) and (6).<br/>
<a id="pl.1.19"></a><var>1.19</var>    (c) "Insured" means a person asserting a right to payment under an insurance policy <br/>
<a id="pl.1.20"></a><var>1.20</var>insuring that person, that arises out of the occurrence of a contingency or loss covered <br/>
<a id="pl.1.21"></a><var>1.21</var>by the policy. A person does not become an insured for purposes of this section if the <br/>
<a id="pl.1.22"></a><var>1.22</var>insurance policy in question contained an anti-assignment clause and the person was <br/>
<a id="pl.1.23"></a><var>1.23</var>assigned rights from another insured.<br/>
<a id="pl.2.1"></a><var>2.1</var>    (d) "Insurer" means every insurer, corporation, business trust, or association engaged <br/>
<a id="pl.2.2"></a><var>2.2</var>in insurance as a principal licensed or authorized to transact insurance under section <br/>
<a id="pl.2.3"></a><var>2.3</var>60A.06, 60A.206, or 60A.209, but for purposes of this section an insurer does not include <br/>
<a id="pl.2.4"></a><var>2.4</var>a political subdivision providing self-insurance or a pool of political subdivisions under <br/>
<a id="pl.2.5"></a><var>2.5</var>section 471.981, subdivision 3, or a township mutual fire insurance company or farm <br/>
<a id="pl.2.6"></a><var>2.6</var>mutual fire insurance company operating under chapter 67A. The term does not include <br/>
<a id="pl.2.7"></a><var>2.7</var>the Joint Underwriting Association operating under chapter 62F or 62I.<br/>
<a id="pl.2.8"></a><var>2.8</var>    Subd. 2. <b> Liability.</b> (a) The court may award as taxable costs to an insured amounts <br/>
<a id="pl.2.9"></a><var>2.9</var>as provided in subdivision 3 if the insured can show:<br/>
<a id="pl.2.10"></a><var>2.10</var>    (1) the absence by an insurer of a reasonable basis for denying the benefits of the <br/>
<a id="pl.2.11"></a><var>2.11</var>insurance  policy; and<br/>
<a id="pl.2.12"></a><var>2.12</var>    (2) that the insurer knew of the lack of a reasonable basis for denying the benefits of <br/>
<a id="pl.2.13"></a><var>2.13</var>the insurance policy or acted in reckless disregard of the lack of a reasonable basis for <br/>
<a id="pl.2.14"></a><var>2.14</var>denying the benefits of the insurance policy.<br/>
<a id="pl.2.15"></a><var>2.15</var>    (b) In addition to taxable costs under this section, an insured is entitled from the <br/>
<a id="pl.2.16"></a><var>2.16</var>insurer to the  amount of actual damages incurred by the insured as determined by a fact <br/>
<a id="pl.2.17"></a><var>2.17</var>finder, after appropriate reductions made by a judge under section 65B.51, subdivision 1, <br/>
<a id="pl.2.18"></a><var>2.18</var>or section 548.36.<br/>
<a id="pl.2.19"></a><var>2.19</var>    (c) A violation of this section shall not be the basis for any claim or award under <br/>
<a id="pl.2.20"></a><var>2.20</var>chapter  325D or 325F.<br/>
<a id="pl.2.21"></a><var>2.21</var>    (d) A disagreement between an insurer and an insured as to the value or amount of <br/>
<a id="pl.2.22"></a><var>2.22</var>proceeds owed to an insured when there is an ongoing arson investigation or an ongoing <br/>
<a id="pl.2.23"></a><var>2.23</var>fraud investigation does not justify an award of taxable costs under this section.<br/>
<a id="pl.2.24"></a><var>2.24</var>    Subd. 3. <b>Remedies.</b> (a) In addition to pre- and post-judgment interest and costs <br/>
<a id="pl.2.25"></a><var>2.25</var>and disbursements allowed under section 549.09 and the net award of actual damages <br/>
<a id="pl.2.26"></a><var>2.26</var>described in subdivision 2, paragraph (b), an insured may be awarded, as  taxable costs <br/>
<a id="pl.2.27"></a><var>2.27</var>under this section for an insurer's violation of subdivision 2, a penalty in the discretion <br/>
<a id="pl.2.28"></a><var>2.28</var>of the court as follows:<br/>
<a id="pl.2.29"></a><var>2.29</var>    (1) an amount equal to one-half of the proceeds awarded, which are in excess of <br/>
<a id="pl.2.30"></a><var>2.30</var>an amount offered by the insurer prior to ten days before jury selection begins, but in <br/>
<a id="pl.2.31"></a><var>2.31</var>no case to exceed $100,000; and<br/>
<a id="pl.2.32"></a><var>2.32</var>    (2) reasonable attorney fees actually incurred to establish the insurer's violation <br/>
<a id="pl.2.33"></a><var>2.33</var>of this section. Attorney fees shall only be awarded if the fees sought are separately <br/>
<a id="pl.2.34"></a><var>2.34</var>accounted for by the insured's attorney, are not duplicative of the fees the insured's <br/>
<a id="pl.2.35"></a><var>2.35</var>attorney  otherwise expended in pursuit of proceeds to an insured under the insurance <br/>
<a id="pl.3.1"></a><var>3.1</var>policy, and shall not exceed an amount equal to the penalty in clause (1), and in no case <br/>
<a id="pl.3.2"></a><var>3.2</var>may an award of attorney fees exceed $40,000.<br/>
<a id="pl.3.3"></a><var>3.3</var>    (b) An insured may not also recover punitive or exemplary damages, nor attorney <br/>
<a id="pl.3.4"></a><var>3.4</var>fees under section 8.31, for a violation of this section.<br/>
<a id="pl.3.5"></a><var>3.5</var>    Subd. 4. <b>Claim for taxable costs.</b> (a) Upon commencement of a civil action by <br/>
<a id="pl.3.6"></a><var>3.6</var>an insured against an insurer, the complaint must not seek a recovery under this section. <br/>
<a id="pl.3.7"></a><var>3.7</var>Instead, after filing the action, a party may make a motion to amend the pleadings to <br/>
<a id="pl.3.8"></a><var>3.8</var>claim recovery under this section. The motion must allege the applicable legal basis <br/>
<a id="pl.3.9"></a><var>3.9</var>under this section and must be accompanied by one or more affidavits showing the <br/>
<a id="pl.3.10"></a><var>3.10</var>factual basis for the motion. The motion may  be opposed by the submission of one or <br/>
<a id="pl.3.11"></a><var>3.11</var>more affidavits. At the hearing, if the court finds prima facie evidence in support of the <br/>
<a id="pl.3.12"></a><var>3.12</var>motion, the court may grant the moving party permission to amend its pleadings to assert a <br/>
<a id="pl.3.13"></a><var>3.13</var>claim under this section.<br/>
<a id="pl.3.14"></a><var>3.14</var>    (b) An award of taxable costs under this section shall be determined by the court in a <br/>
<a id="pl.3.15"></a><var>3.15</var>proceeding subsequent to any determination by a fact finder of the amount an insured is <br/>
<a id="pl.3.16"></a><var>3.16</var>entitled to under the insurance policy, and shall be governed by the procedures set forth in <br/>
<a id="pl.3.17"></a><var>3.17</var>Minnesota General Rules of Practice, Rule 119.<br/>
<a id="pl.3.18"></a><var>3.18</var>    (c) An award of taxable costs under this section is not available in any claim that is <br/>
<a id="pl.3.19"></a><var>3.19</var>submitted by the insurer and insured to binding arbitration or appraisal.<br/>
<a id="pl.3.20"></a><var>3.20</var>    (d) The following are not admissible in any proceeding that seeks taxable costs <br/>
<a id="pl.3.21"></a><var>3.21</var>under this  section:<br/>
<a id="pl.3.22"></a><var>3.22</var>    (1) findings or determinations made in arbitration proceedings conducted under <br/>
<a id="pl.3.23"></a><var>3.23</var>section 65B.525 or any administrative rules promulgated thereunder;<br/>
<a id="pl.3.24"></a><var>3.24</var>    (2) allegations involving, or results of, investigations, examinations, or <br/>
<a id="pl.3.25"></a><var>3.25</var>administrative proceedings conducted by the Department of Commerce;<br/>
<a id="pl.3.26"></a><var>3.26</var>    (3) administrative bulletins or other informal guidance published or disseminated by <br/>
<a id="pl.3.27"></a><var>3.27</var>the Department of Commerce; and<br/>
<a id="pl.3.28"></a><var>3.28</var>    (4) provisions under chapters 59A to 79A and all rules promulgated thereunder <br/>
<a id="pl.3.29"></a><var>3.29</var>are not admissible as standards of conduct.<br/>
<a id="pl.3.30"></a><var>3.30</var>    Subd. 5. <b>Insurance producers; liability limited. </b> A licensed insurance producer <br/>
<a id="pl.3.31"></a><var>3.31</var>is not liable under this section for errors, acts, or omissions attributed to the insurer that <br/>
<a id="pl.3.32"></a><var>3.32</var>appointed the producer to transact business on its behalf, except to the extent the producer <br/>
<a id="pl.3.33"></a><var>3.33</var>has caused or contributed to the error, act, or omission.<br/>
<a id="pl.3.34"></a><var>3.34</var>    Subd. 6. <b>Expiration.</b> This section expires upon a determination by the <br/>
<a id="pl.3.35"></a><var>3.35</var>commissioner of commerce that: (1) average insurance premiums for lines of insurance <br/>
<a id="pl.3.36"></a><var>3.36</var>affected by this act have increased by more than 20 percentage points above the percentage <br/>
<a id="pl.4.1"></a><var>4.1</var>increase in the Consumer Price Index for all urban consumers in any 12-month period; <br/>
<a id="pl.4.2"></a><var>4.2</var>and (2) at least 20 percentage points of the increase is attributable to this section. The <br/>
<a id="pl.4.3"></a><var>4.3</var>commissioner of commerce shall make a determination on whether this criterion has been <br/>
<a id="pl.4.4"></a><var>4.4</var>met at least once each year. The expiration applies to all causes of action as to which a <br/>
<a id="pl.4.5"></a><var>4.5</var>court judgment has not been entered as of the date of the determination.<br/>
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<a id="bill.0.2.0"></a><a id="pl.4.6"></a><var>4.6</var>    Sec. 2. <b>EFFECTIVE DATE.</b><br/>
<a id="pl.4.7"></a><var>4.7</var>    Section 1 is effective August 1, 2008, and applies to causes of action for conduct <br/>
<a id="pl.4.8"></a><var>4.8</var>which occurs on or after that date.<br/>