REMINDERS....

New Mandatory Automobile Liability Insurance Limits Effective January 1, 2006

The new limits apply to either new policies written with effective dates on or after January 1, 2006, or to policies which are renewed with effective dates on or after January 1, 2006. The new limits are $25,000, for bodily injury or death of one person, $50,000, for bodily injury or death of two or more persons, and $25,000, for injury or destruction of property of others. Additional or temporary vehicles added to existing policies after January 1, 2006, may be written at the old limits until the policy comes up for renewal.

Workers’ Compensation Maximum Benefit Increase Effective January 1, 2006

The Employment Security Commission has provided the Mississippi Workers’ Compensation Commission with the state average weekly wage figure which, according to the 1988 amendments to the Workers’ Compensation Act, is to be used in determining maximum limitations on compensation for disability and death claims as of January 1, 2006.

The Employment Security Commission state average weekly wage figure for the applicable period was $546.83 causing the maximum weekly benefit under the Act to be $364.57 for all claims arising on or after January 1, 2006. There is no change in the limitation as to the number of weeks (450) benefits can be paid, but the overall limitation for claims arising during the calendar year 2006 will be $164,056.50.

New 11^th Circuit Mandatory Mediation Rule

On January 27, 2006, the Supreme Court approved Rule 1 for the 11^th Circuit Court District of Mississippi, which requires all civil matters, with the exception of medical malpractice cases, to be submitted to mediation prior to the parties obtaining a trial date form the Court. The parties may submit a written request to the Court outlining that mediation would be futile in support of a variance from the Rule. The Rule became effective on February 2, 2006.

MISSISSIPPI

PRODUCTS LIABILITY

Floyd Williams, Jr. v. Donald Benett, Individually and d/b/a Krosstown Trade & Pawn Shop, No. 2002-CA-00754-SCT (Miss. January 19, 2006)

Floyd Williams, Plaintiff, accidentally dropped his handgun, which was in the “fire” position, as he was getting out of the vehicle. The gun discharged, striking Williams in the right leg. Williams filed an action against one of the previous sellers of the gun, Donald Bennett, d/b/a Krosstown Trade & Pawn Shop, hereafter “Krosstown” alleging the handgun was designed, manufactured and distributed to the public while the gun was in a defective condition. Williams also alleged that the gun was unreasonably dangerous and that Krosstown was negligent for failing to instruct Williams on proper use and dangers associated with the handgun. Lastly, Williams alleged Krosstown should have sold a handgun which “would not discharge when dropped.”

The trial judge granted Krosstown’s summary judgment motion finding that Williams had failed to offer expert testimony and supporting documentation that the handgun was defectively designed and there existed feasible design alternatives. Mississippi’s product liability statute requires a plaintiff to show the inherent characteristic of the handgun that caused the harm can be eliminated without “substantially compromising the product’s usefulness.”

Williams filed a motion to reconsider and offered expert testimony of the design defect. The trial judge denied the motion, reaffirmed the grant of summary judgment, but found that the appellate courts could best address the defective design issue as implicated under Mississippi’s statutory scheme.

Mississippi’s products liability statute protects a seller, such as Krosstown, from suit under the statute if the seller places a product in the stream of commerce without knowledge of the danger “that caused the damage for which recovery is sought.” This is generally known as the “innocent seller” doctrine. In other words, the statute requires the danger presented by the product’s design to be foreseeable by the seller and it is the Plaintiff’s duty to prove foreseeability. If Krosstown had reason to know the handgun was designed in a manner that allowed it to discharge when dropped and failed to warn Williams of that danger, then the “innocent seller” doctrine would likely not operate to protect Krosstown.

Even if Krosstown knew of the danger, to succeed under the products liability statute, Williams was additionally required to show three things: (1) the handgun failed to properly function; (2) a feasible design alternative existed “at the time of sale”; and (3) the feasible design alternative would have “to a reasonable probability” prevented the harm. The purpose behind this proof requirement is premised on the idea that liability should attach to a seller or manufacturer only when the harm is reasonable preventable.

 A plaintiff, such as Williams, must show foreseeability and present expert testimony as to the above three elements to get before a jury the design defect claim. This is a statutory obligation.

Williams failed to show Krosstown had knowledge or should have had knowledge of the dangerous condition of the gun and failed to show a feasible design alternative. Particularly, Williams expert failed to offer proof that a feasible design alternative could have prevented the harm. The Court affirmed the grant of summary judgment for Krosstown.     

WORKER’S COMPENSATION

Melissa Franks v. Foam Craft and Mississippi Manufacturers’ Association Workers’ Compensation Group, No. 2004-WC-02363-COA (Miss. January 17, 2006)

This appeal arises from a petition to controvert a workers’ compensation claim filed by Melissa Franks. An administrative law judge held that petitioner, Melissa Franks, failed to meet her initial burden of proof that her injury was work related.

On June 4, 2001, Melissa Franks worked a full eight hour shift at her job at Foam Craft which included stacking bags of inserts. The next morning, Franks awoke with pain in her back and asked a relative to inform her employer that she could not work. Franks first visited her family physician, Dr. Grayden Tubb, on June 6, 2001, two days after her alleged work injury. Tubb’s notes from the first visit state that the pain started three or four days prior to the doctor visit and Franks related that the injury was not work related. Although she continued to receive treatment from Dr. Tubb, she never advised Tubb that she sustained a work injury. The first notation of a work related injury was in a nurse’s note on August 7, 2001, her fourth visit to Tubb after Franks admittedly had tried to go back to work on light duty but was told that she could not return to work until she was released to full duty. Dr. Laura Gray was the only other physician who treated Franks. Dr. Gray examined Franks once prior to administering an MRI which revealed disc herniation. Dr. Gray never set forth an opinion linking Franks’ injury to her activities at work.

Franks’ supervisor at Foam Craft testified that Franks’ did not report a work-related injury to him during the week of June 4, 2001, and upon return to work on June 7, 2001, she stated that she did not know how she had injured her back. He also testified that Franks did not claim that her injury was work-related until after she had retained an attorney.

In light of this evidence, the Workers’ Compensation Commission affirmed the administrative law judge and the Lee County Circuit Court affirmed the Commission’s ruling. The Court of Appeals, finding no error, affirmed the decision of the Circuit Court holding that the Commission is the ultimate finder of fact. Vance v. Twin River Homes, Inc., 641 So. 2d 1176, 1180 (Miss. 1994). The Court of Appeals noted the findings of the Commission are binding when the Commission’s decision is supported by substantial evidence, and the court will not overturn the Commission’s findings of fact unless they were arbitrary and capricious. Guardian Fiberglass, Inc. v. LeSuer, 751 So. 2d 1201, 1204 (Miss. Ct. App. 1999). The Court of Appeals further noted that the initial burden of proof is on the claimant to show that she has suffered a loss of wage-earning capacity as the result of a work-related injury. Hedge v. Leggett & Platt, Inc., 641 So.2d 9, 12 (Miss. 1994). Unless common knowledge suffices, medical evidence must prove not only the existence of a disability but also its casual connection to the employment. Howard Industries, Inc., v. Robinson, 846 So. 2d 245 (Miss. Ct. App. 2002). Here, the Commission, and the Court of Appeals determined Franks did not present medical evidence linking her injury to her employment.

PREMISES LIABILITY

Barbara Jean Goff and Henry Goff v. James E. Coe, O.D., Individually and Premier Eye Clinic, P.A., A Mississippi Corporation, No. 2004-CA-02281-COA (Miss. January 17, 2006)

This appeal arises from a personal injury action, with a derivative action for loss of consortium filed by Mr. And Mrs. Henry Goff against Dr. Coe and Premiere Eye Clinic. On April 26, 2001, Goff visited Premier to have her eyes examined and to obtain eyeglasses. During the visit, Goff fell while attempting to sit on a rolling stool provided in the preexamination screening room causing her to fall to the floor and suffer injuries. The trial judge granted Defendants’ motion for summary judgment and the Goffs appealed.

The court noted that it must first look to whether the injured party, at the time of the injury, was an invitee, licensee or trespasser. After determining the status of the injured party, the Court must next determine what duty was owed to that party by the premises owner/business operator. Estate of White ex rel White v. Rainbow Casino-Vicksburg P’ship, 910 So. 2d 713 (Miss. Ct. App. 2005). Here, it was undisputed that Goff was a business invitee. “The owner or operator of a business premises owes a duty to an invitee to exercise reasonable care to keep the premises in a reasonably safe condition and, if the operator is aware of a dangerous condition, which is not readily apparent to the invitee, he is under a duty to warn the invitee of such condition.” When a dangerous condition is caused by the premises owner’s or business owner’s own negligence, it is not required that a plaintiff show that the owner/operator had knowledge of such condition. Jerry Lee’s Grocery, Inc. v. Thompson, 528 So. 2d 293 (Miss. 1988). Revisiting previously decided Mississippi law the Court noted that in Tharp v. Bunge, 641 So. 2d 20, 25 (Miss. 1994), the Mississippi Supreme Court abolished the “open and obvious” defense to premises liability, applying instead a true comparative negligence standard holding that “the party in the best position to eliminate a dangerous condition should be burdened with that responsibility”. Further, in Vaughn v. Ambrosino, 883 So. 2d 1167, 1170-71 (Miss. 2004), the court reaffirmed the holding of Tharp but went on to clarify that “an invitee may not recover for failure to warn of an open and obvious danger”.

The pertinent evidence presented to the trial Court was that (a) on the Goff’s visit to Premier, Barbara Goff was provided a stool to sit on in the preexamination screening room; (b) the stool had no handles, had rollers on the bottom and was otherwise an ordinary stool; (c) Goff’s short stature and obesity gave her difficulty in sitting on the stool; (d) no one warned Goff about sitting on the stool or assisted her in sitting on the stool; and (e) the stool allegedly “scooted” out from under her when she attempted to sit on it, allegedly causing her to fall to the floor and receive injuries. In light of this evidence and applying the applicable law, the Court held that there was no evidence that the stool was defective or unreasonably dangerous. Nor was there any evidence that some other unreasonably dangerous condition existed which caused the stool to move from underneath Goff when she attempted to sit on it. Thus, finding no error, the Court affirmed the trial court’s grant of summary judgment. The Court also noted that a premises owner or business operator is not the insurer of a business invitee’s safety. See Caruso v. Picayune Pizza, Inc. 598 So. 2d 770, 773 (Miss. 1992).

FEDERAL COURT ABSTENTION

Susie Pierce Stewart v. Western Heritage Insurance Company, No. 05-60405 (5^th Cir. (MS) 2006)

This case involved a ruling on whether the United States District Court for the Southern District of Mississippi erred in staying its federal lawsuit pending the outcome of a related state court proceeding. The Fifth Circuit Court of Appeals ultimately holds that the lower court did in fact err, and therefore reverses and remands.

The Plaintiffs in a previously filed Mississippi state court suit claimed that Boardwalk Lounge, Inc. was responsible for the wrongful death of Ryan Yates. Susie Pierce Stewart was Boardwalk’s sole shareholder, officer, and registered agent. Boardwalk was insured by Western Heritage Insurance Company, which denied any liability to defend the wrongful death action. After Plaintiffs took a default judgment of $1.4 million, Boardwalk and Ms. Stewart filed bankruptcy.

Ms. Stewart then filed suit in the U.S. District Court for the Southern District of Mississippi against Western alleging breach of contract amounting to bad faith. The case proceeded in federal court through the entry of a case management order, motion for summary judgment, expiration of discovery deadline, and the setting of a trial date.

During the pendency of the federal lawsuit, the Bankruptcy Trustee for Boardwalk filed a separate state court suit in the Circuit Court of Hinds County, Mississippi, which mirrored the federal suit except that it added claims against Ms. Stewart and Western for breach of fiduciary duty, as well as claims against Phillip Dunn (an insurance agent). Western removed the case on grounds of improper joinder, and the Trustee moved to remand.

After the filing of the state court action, Ms. Stewart attempted to voluntarily dismiss the federal court action, but Western opposed. Ms. Stewart moved to join Dunn (the insurance agent) as a party to the federal suit, while Western moved to join Boardwalk’s Trustee as a necessary party. The Judge granted Western’s motion to join Boardwalk’s Trustee. The court set a hearing on all pending motions, and at the hearing the court stayed the federal case pending a ruling on the remand motion in the Trustee’s action. It is from this decision that appeal was taken.

The district court’s decision regarding whether or not to enter a permanent stay is governed by Colorado River Water Conservatory District v. United States, 424 U.S. 800, 813 (1976), which applies in parallel suits with the same parties and issues. In the Colorado River case, the court noted that a federal district court may abstain from a case only under “exceptional circumstances.” Colorado River, 424 U.S. at 813. The Supreme Court identified the following six (6) factors to weigh in deciding whether “exceptional circumstances” exist:

(1) assumption by either court of jurisdiction over a res, (2) relative inconvenience of the forums, (3) avoidance of piecemeal litigation, (4) the order in which jurisdiction was obtained by the concurrent forums, (5) to what extent federal law provides the rules of decision on the merits, and (6) the adequacy of the state proceedings in protecting the rights of the party invoking federal jurisdiction.”

Kelly Inv., Inc. v. Continental Common Corp., 315 F.3d 494, 497 (5^th Cir. 2002). See also Wilton v. Seven Falls Co., 515 U.S. 277, 285-286 (1995). The Supreme Court further stated that these factors are to be carefully balanced, on a case-by-case basis, “with the balance heavily weighted in favor of the exercise of jurisdiction.” Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 469 U.S. 1, 16 (1983).

The district court in the present case did not apply the Colorado River test when it stayed the case, so those factors were reviewed and weighed for the first time on appeal.

After review of the required factors, the Fifth Circuit determined that the only factor in this case which weighed in favor of upholding the stay was the piecemeal litigation factor. All other factors either favored the exercise of federal jurisdiction or were considered neutral. Therefore the 5^th Circuit determined the district court abused its discretion in staying the action, and reversed the lower court’s ruling and remanded the case for further proceedings.

Mississippi Supreme Court Adopts “Wrongful Conduct Rule”

Price v. The Purdue Pharma Co., et al., No. 2003-CA-02101-SCT(February 2, 2006)

In an en banc decision, Justice Carlson wrote the Opinion of the Court for the first time adopting the “wrongful conduct rule” in Mississippi which prevents a plaintiff from suing care givers, pharmacies, and pharmaceutical companies and laboratories for addiction to a controlled substance obtained through the plaintiff’s own fraud, deception and subterfuge.

The case arose from a civil suit involving the drug OxyContin, a Schedule II narcotic containing oxycodone. It is commonly used a strong pain medication. Under Mississippi law any attempt to acquire the drug fraudulently or dishonestly is a crime. Price filed suit against the defendants alleging negligence, products liability, malicious conduct, fraud and malpractice, claiming that the drug was addictive in nature and caused him injury. Defendants moved for summary judgment on the basis that Price’s claims could not stand as they arose from his own wrongdoing. The facts showed that Price was seeing several different doctors for sickle cell anemia and related pain, obtaining different prescriptions for OxyContin and using different pharmacies to fill the various prescriptions. The trial court granted the motions for summary judgment on the principle that a plaintiff cannot recover in tor for injuries suffered if the plaintiff’s own illegal conduct was the proximate cause of those injuries. See Meador v. Hotel Grover, 9 So. 2d 782, 786 (Miss. 1942); Capps v. Postal Telgraphcable Co. 19 So.2d 491 (Miss. 1944).

The Mississippi Supreme Court determined that Price’s claim was rooted in his own transgression and that his “wrongdoing coincides with his claim on a level beyond the mere question of when it took place.... His violation of the law is not merely a condition, but instead an integral and essential part of his case and the contributing cause of his alleged injury.” (Emphasis of the Court). In so stating the Court adopted the “wrongful conduct rule” and affirmed the trial court’s grant of summary judgment to the defendants.

OTHER JURISDICTIONS

REMOVAL

Crockett v. R. J. Reynolds Tobacco Company, et al., 2006 WL 75242 (5^th Cir. (TX) 2006)

The plaintiffs’ filed a wrongful death suit against tobacco companies, a doctor and a medical group in Texas state court, seeking damages for the cancer-related death of Veronica Crockett. The tobacco companies removed the case to federal court even though there was no diversity jurisdiction as both the plaintiffs’ and the healthcare defendants were Texas citizens and the action was brought in Texas. The tobacco companies argued that the healthcare defendants were fraudulently joined to defeat diversity jurisdiction. The district court concluded that there was no fraudulent joinder and remanded the case.

The tobacco defendants successfully moved to sever the claims against the healthcare defendants and removed the case again, immediately moving for judgment on the pleadings. Plaintiffs moved to remand on the basis that diversity had not been created by a “voluntary act” of the plaintiffs. The district court granted the tobacco defendants’ motion on the merits and denied the remand as moot. Plaintiffs appeal from the district court’s adverse ruling claiming the court lacked subject matter jurisdiction. As the Plaintiffs did not appeal the district court’s ruling on the merits, the Court of Appeals for the Fifth Circuit reviewed the question of whether the district court had removal jurisdiction de novo.

The tobacco defendants argued that the district court had removal jurisdiction pursuant to 28 USC §1446(b), as the order severing the Plaintiffs’ claims against the healthcare defendant created complete diversity and qualified as an “order or other paper from which it may first be ascertained that the case is one which.... has become removable.” Id. at *2 (from 28 USC § 1446(b)).

The Plaintiffs asserted that 28 USC §1446(b) was not intended to abrogate, “the judicially-created ‘voluntary-involuntary’ rule whereby ‘an action nonremovable when commenced may became removable thereafter only by the voluntary act of the plaintiff.’” Id. (quoting Weems v. Louis Dreyfus, Corp., 380 F.2d 545 (5^th Cir 1967)) . Because Plaintiffs objected to the severance, they claimed that removal was improper under the voluntary-involuntary rule.

The tobacco defendants argued that the voluntary-involuntary rule was inapplicable because the healthcare defendants were not properly-joined parties. The Court of Appeals for the Fifth Circuit recognized as a long established exception to the voluntary-involuntary rule, the fraudulent joinder of parties for the purpose of defeating diversity jurisdiction. However, the court went further in extending the exception to encompass improperly joined parties. The Court found that the state court’s severance order was tantamount to a finding of improper joinder which the Plaintiffs did not appeal. Because the fraudulent joinder exception to the voluntary-involuntary rule was designed to prevent plaintiffs from blocking removal, the Court felt that extending the exception to include improperly joined parties was beneficial to that purpose. The Court of Appeals for the Fifth Circuit held that the district court had subject matter jurisdiction and affirmed the court’s order granting the tobacco defendant’s motion for judgment on the pleadings, denying as moot Plaintiffs’ motion to remand and dismissing all claims with prejudice.

SUMMARY JUDGMENT

STATUTE OF LIMITATIONS

Fidelity & Guaranty Insurance Underwriters, Inc. v. Janice Sullivan, United States District Court, Northern District, Eastern Division, Civil Action No.: 1:04CV115-D-D (January 11, 2006)

Fidelity & Guaranty Insurance Underwriters, Inc. (“Fidelity”) issued an automobile insurance policy to Janice Sullivan (“Sullivan”), which also provided uninsured motorist coverage. On August 8, 2000, Sullivan was involved in an automobile accident with an uninsured motorist. Sullivan notified Fidelity of the accident and advised at that time that the other driver was uninsured. On August 1, 2003, Sullivan filed a lawsuit against the tortfeasor as a result of the accident. However, Fidelity was not a named defendant in that suit. Ultimately, Sullivan obtained a default judgment in the amount of $750,000.00 against the tortfeasor. Sullivan’s counsel then contacted Fidelity on February 19, 2004 and demanded that it pay $600,000.00 to satisfy Fidelity’s obligation under the uninsured motorist provision of the policy.

On April 29, 2004, Fidelity filed its Complaint for Declaratory Judgment in federal court asking that it determine that under the positive law of Mississippi and under the terms of the policy there is no coverage for Sullivan’s uninsured motorist claim. Fidelity eventually filed its Motion for Summary Judgment based on the fact that Sullivan did not file suit against Fidelity and failed to comply with Miss. Code Ann. § 83-1-105 by not serving Fidelity with a copy of the process served upon the tortfeasor. Additionally, Fidelity was not required or obligated by any law, rule or statute to intervene or otherwise make an appearance in the lawsuit filed by Sullivan against the tortfeasor, nor was it obligated to intervene to have the default judgment set aside. In addition, Fidelity claimed that Sullivan’s claim was barred by the statute of limitations. Fidelity argued that the statute of limitations begins to run against a claim for uninsured motorist benefits when the insured knew or reasonably should have known that the tortfeasor was uninsured.

In this case, by Sullivan’s own admission, she knew of the tortfeasor’s uninsured motorist status on the day of the accident (August 8, 2000). Fidelity relied on Bolden v. Brooks, 2005 WL 1164197 (5^th Cir. 2005), wherein the Fifth Circuit correctly acknowledged that the statute of limitations begins to run against a claim for uninsured motorist benefits when the insured knows or reasonably should know that the tortfeasor was uninsured. Based on these arguments, Fidelity’s summary judgment was granted.

Notice of Flood Exclusions

House Bills 982 and 1319; Senate Bill 2014

In the aftermath of Hurricane Katrina, three pieces of legislation were introduced in the Mississippi Senate and House of Representatives that would have required certain provisions be included within the language of homeowner’s policies written in Mississippi. HB 982, HB 1319 and SB 2014 all required in some form notice to all persons applying for a homeowner’s policy that the homeowner’s policy does not provide flood coverage. However, the introduced legislation will not make it to the governor’s desk this legislative cycle. All three bills are now dead.

HB 982, as passed the House, required the insurance agent to inform that the homeowner’s policy did not include flood coverage and further required the agent to receive from the customer a verification page signed by the homeowner acknowledging same. In addition, HB 982 would have required any policy that permits a deductible for windstorm damage use the term “windstorm deductible.”

HB 982 was amended in the Senate Insurance Committee. The amended language in HB 982 incorporated the language of SB 2014, which died in committee on February 28, 2006, and would have required, for polices of fire insurance that excludes flood coverage, written notice on a form approved by the Insurance Commissioner that: (1) explicitly stated flood coverage wass excluded; (2) stated that information about flood coverage is available from the agent or the National Flood Insurance Program; and (3) advised that contents coverage is available for the flood policy for an additional premium. The Senate version does not require a verification signature by the insured. This legislation, authored by Senate Insurance Committee Chairman, Dean Kirby, R-Pearl, has been before the House Select Committee on Hurricane Recovery since February 9, 2006 but no action has been taken to date.

The deviation between HB 982 and SB 2014 had been the focus of discussion between Senate Insurance Committee Chairman, Dean Kirby, R-Pearl and Mississippi Attorney General Jim Hood. Attorney General Hood desired an acknowledgment by signature of the insured that the insured had been informed by the insurance agent that flood coverage was excluded from the homeowner’s policy but Senator Kirby has consistently positioned that such requirement would not be feasible in today’s climate where many insurance transactions are consummated over the internet. In practice, as Senator Kirby has stated, his proposal would require insurance companies to highlight on the homeowner policy that the coverage does not include flood coverage.

HB 1319, as passed the House, required notice provided to the customer for both flood and earthquake exclusions. HB 1319 required other measures taken by insurance companies such as renewed notice and acknowledgment to and by the customer every three years. This legislation was placed before the Senate Insurance Committee February 15, 2006 and died on February 28.

Premium Increases for Reinstating Motor Vehicle Coverage for Military Personnel on Active Duty Constitute Unfair Trade Practices Under Mississippi’s Consumer Protection Act

SB 2332 as sent to the Governor, amending M.C.A. 75-24-5, prohibits an insurer from charging an increased premium for re-instating coverage on a motor vehicle policy if the cause for the previous suspension or termination of coverage and subsequenct re-instatement is solely due to the fact that an active member of the military was removed from the state on active duty.

The legislation was approved by the governor on March 1, 2006.

Notice of Cancellation, Reduction in Coverage or Non-Renewal of Coverage Must be Delivered by Insurer to the Named Creditor Loss Payee

SB 2006, returned from the House Insurance Committee for concurrence on February 21, 2006, amending M.C.A. 83-5-28; 83-11-5 and 83-11-7 requires notice to any named creditor loss payee by the insurer in cases where there is a cancellation, reduction in coverage or non-renewal of coverage.

The difference in the House and Senate versions was in each chamber’s respective amendment to M.C.A. 83-5-28. In cases where there is cancellation due to non-payment of the premium, notice to the insured is not required as otherwise provided in the statute. However, in cases where there is a creditor loss payee named and there is pending cancellation due to non-payment of premiums, the Senate version required a 30 day notice as to the creditor loss payee and the House version required only 10 days notice. The Senate concurred in the amended form received from the House requiring only 10 days notice to insurance companies. The enrolled bill was signed in each chamber on March 20 and is due from the governor on March 27.

Insurers Must Pay on a Timely Basis

HB 1321, as passed the House would have required insurers to pay on a “timely basis” claims or face imposition of interest at a rate of 12% anum from the date the award given the insured is entered. “Timely Basis”, under the proposed legislation, means “payment of a claim within ninety (90) days after the insurer receives actual notice of a claim from the insured, individual or entity directly entitled to benefits under its insured’s contract of insurance or third party tort claimant.”

There are exceptions given the insurer where the insurer has in good faith attempted but failed to determine who is entitled to payment, in situations where there is no one legally able to give a valid release for payment, and where the insured or third party claimant purposefully acts to cause the insurer to delay payment.

This legislation died in the Senate Insurance Committee on February 28.

The Insurance Commissioner is Authorized to Establish a Non-Binding, Non-Adversarial Alternative Dispute Resolution Procedure for Personal Lines Insurance Claims

SB 2381, approved by the governor on March 1 authorizes the insurance commissioner to make use of all insurance laws and regulations to establish an alternative dispute resolution procedure “for the effective, fair and timely handling of personal lines insurance claims.”