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Minnesota Legislature

Office of the Revisor of Statutes

SF 2822

4th Engrossment - 85th Legislature (2007 - 2008) Posted on 12/15/2009 12:00am

KEY: stricken = removed, old language.
underscored = added, new language.

Current Version - 4th Engrossment

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A bill for an act
relating to insurance; providing for penalties and recovery of attorney fees for
certain insurance claims practices; proposing coding for new law in Minnesota
Statutes, chapter 604.

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

Section 1.

new text begin [604.18] INSURANCE STANDARD OF CONDUCT.
new text end

new text begin Subdivision 1. new text end

new text begin Terms. new text end

new text begin For purposes of this section, the following terms have the
meanings given them.
new text end

new text begin (a) "Insurance policy" means a written agreement between an insured and an
insurer that obligates an insurer to pay proceeds directly to an insured. Insurance policy
does not include provisions of a written agreement obligating an insurer to defend an
insured, reimburse an insured's defense expenses, provide for any other type of defense
obligation, or provide indemnification for judgments or settlements. Insurance policy
does not include:
new text end

new text begin (1) coverage for workers' compensation insurance under chapter 176;
new text end

new text begin (2) a written agreement of a health carrier, as defined in section 62A.011;
new text end

new text begin (3) a contract issued by a nonprofit health service plan corporation regulated under
chapter 62C that provides only dental coverage;
new text end

new text begin (4) a written agreement authorized under section 60A.06, subdivision 1, clause (4)
or (6), or 64B.16, subdivision 1; or
new text end

new text begin (5) a written agreement issued pursuant to section 67A.191.
new text end

new text begin (b) "Insured" means a person who, or an entity which, qualifies as an insured under
the terms of an insurance policy on which a claim for coverage is made. An insured
does not include any person or entity claiming a third-party beneficiary status under an
insurance policy.
new text end

new text begin (c) "Insurer" means every insurer, corporation, business trust, or association engaged
in insurance as a principal licensed or authorized to transact insurance under section
60A.06, but for purposes of this section an insurer does not include a political subdivision
providing self-insurance or a pool of political subdivisions under section 471.981,
subdivision 3. The term does not include the Joint Underwriting Association operating
under chapter 62F or 62I.
new text end

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 against an
insurer amounts as provided in subdivision 3 if the insured can show:
new text end

new text begin (1) the absence of a reasonable basis for denying the benefits of the insurance
policy; and
new text end

new text begin (2) that the insurer knew of the lack of a reasonable basis for denying the benefits of
the insurance policy or acted in reckless disregard of the lack of a reasonable basis for
denying the benefits of the insurance policy.
new text end

new text begin (b) A violation of this section shall not be the basis for any claim or award under
chapter 325D or 325F.
new text end

new text begin (c) An insurer does not violate this subdivision by conducting or cooperating with a
timely investigation into arson or fraud.
new text end

new text begin Subd. 3. new text end

new text begin Damages and costs. new text end

new text begin (a) In addition to prejudgment and postjudgment
interest and costs and disbursements allowed under law, the court may award an insured
the following taxable costs for a violation of subdivision 2:
new text end

new text begin (1) an amount equal to one-half of the proceeds awarded that are in excess of
an amount offered by the insurer at least ten days before the trial begins or $250,000,
whichever is less; and
new text end

new text begin (2) reasonable attorney fees actually incurred to establish the insurer's violation
of this section.
new text end

new text begin Attorney fees may be awarded only if the fees sought are separately accounted for
by the insured's attorney and are not duplicative of the fees for the insured's attorney
otherwise expended in pursuit of proceeds for the insured under the insurance policy.
Attorney fees must not exceed $100,000.
new text end

new text begin (b) An insured may not also recover punitive or exemplary damages or attorney fees
under section 8.31 for a violation of this section.
new text end

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
an insured against an insurer, the complaint must not seek a recovery under this section.
After filing the suit, a party may make a motion to amend the pleadings to claim recovery
of taxable costs under this section. The motion must allege the applicable legal basis
under this section for awarding taxable costs under this section, and must be accompanied
by one or more affidavits showing the factual basis for the motion. The motion may be
opposed by the submission of one or more affidavits showing there is no factual basis
for the motion. At the hearing, if the court finds prima facie evidence in support of the
motion, the court may grant the moving party permission to amend the pleadings to claim
taxable costs under this section.
new text end

new text begin (b) An award of taxable costs under this section shall be determined by the court in a
proceeding subsequent to any determination by a fact finder of the amount an insured is
entitled to under the insurance policy, and shall be governed by the procedures set forth in
Minnesota General Rules of Practice, Rule 119.
new text end

new text begin (c) An award of taxable costs under this section is not available in any claim that is
resolved or confirmed by arbitration or appraisal.
new text end

new text begin (d) The following are not admissible in any proceeding that seeks taxable costs
under this section:
new text end

new text begin (1) findings or determinations made in arbitration proceedings conducted under
section 65B.525 or rules adopted under that section;
new text end

new text begin (2) allegations involving, or results of, investigations, examinations, or
administrative proceedings conducted by the Department of Commerce;
new text end

new text begin (3) administrative bulletins or other informal guidance published or disseminated by
the Department of Commerce; and
new text end

new text begin (4) provisions under chapters 59A to 79A and rules adopted under those sections
are not admissible as standards of conduct.
new text end

new text begin (e) A claim for taxable costs under this section may not be assigned. This paragraph
does not affect the assignment of rights not established in this section.
new text end

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
is not liable under this section for errors, acts, or omissions attributed to the insurer that
appointed the producer to transact business on its behalf, except to the extent the producer
has caused or contributed to the error, act, or omission.
new text end

Sec. 2. new text beginEFFECTIVE DATE.
new text end

new text begin Section 1 is effective August 1, 2008, and applies to causes of action for conduct
that occurs on or after that date.
new text end