Minn. ‘Good Faith’ Insurance Bill Spurs Fight at Capitol

May 2, 2007

A bruising battle between insurance companies and trial lawyers in Minnesota over a one-page bill that would expand the rights of people to sue insurers continues to provoke heated debates.

The legislation would make insurance companies liable for damages if they fail to act in “good faith” by delaying or denying a claim without a reasonable basis.

Trial lawyers cast it as a way to make insurance companies live up to the policies they sell. They argue that Minnesota law provides no legal remedy for people who are wronged when their insurance company acts in bad faith or fails to settle claims in a timely manner.

The insurance industry counters that it will increase premiums, encourage fraudulent claims and line the pockets of trial lawyers.

“It would allow policyholders to ‘set up’ insurance carriers,” Dale Thornsjo, a Minneapolis attorney who has represented the insurance industry, testified at a recent hearing on the bill.

“I think they (insurance firms) are far more concerned about their profits than they are concerned about individual premiums,” said Mike Bryant, of the Minnesota Trial Lawyers Association.

A couple of bills are in play. One that cleared the House would allow a plaintiff’s lawyers to name insurance companies as defendants in lawsuits. A Senate version awaiting a vote does not permit naming the insurance company.

Currently, state law prohibits naming insurers in courtrooms because it is believed it might prejudice a jury against a “deep pocket” defendant, possibly resulting in higher awards.

The fight hasn’t been confined to the halls of the Capitol.

The insurance industry is funding a populist-sounding group _ the Minnesotans Against Fraud and Higher Insurance Costs _ to generate grass-roots opposition to the bill.

Organizers say they’re running a $750,000 campaign, with full-page newspaper ads, targeted mailings and radio ads urging people to contact their elected officials.

The trial lawyers trade association has spent loads of money on lobbying and campaign contributions to the House and Senate DFL caucuses.

House and Senate DFL leadership are all co-authors on the bill, and leaders have made it clear to their caucuses that passage of the measure is a priority.

The insurance industry has put its faith _ and money _ behind Republican lawmakers; GOP Gov. Tim Pawlenty has registered strong objections, particularly to the naming of insurance companies in lawsuits, and has threatened a veto.

Was this article valuable?

Here are more articles you may enjoy.