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Legislation giving consumers a stronger case to
sue their insurance companies over denied claims cleared the
Minnesota House on Thursday.

      The House voted 81-51 for the so-called "good faith" bill,
after adopting changes to make it more like the Senate version
approved last week. Dubbed "bad faith" by opponents, the proposal
has drawn legislators, lobbyists and lawyers into a high-stakes,
fine-print debate over consumer rights and insurance premiums.

      The bill would make it easier for policyholders to sue home and
auto insurers over delayed or denied claims. They would have to
show that the claim was reasonable and the insurer knew it or acted
recklessly - in other words, a failure to act "in good faith."

      In such cases, a court could force the insurance company to pay
attorneys' fees and other costs.

      Rep. Joe Atkins, the bill's House sponsor, said the policy would
force insurers to settle reasonable claims up front, instead of
opening with a low offer and making the policyholder choose between
taking it or spending their own money to sue for more. He said it
would reduce lawsuits and shouldn't affect premiums.

      "It shouldn't be too much to ask that insurance companies live
up to the same standard that an 11-year-old playing soccer has,"
said Atkins, DFL-Inver Grove Heights.

      Several Republicans predicted the bill would do the exact
opposite - unleash lawsuits and push up premiums as insurers spread
out the cost of more litigation and higher settlements.
 
     "I'm wondering if we're trying to fix something that doesn't
need to be fixed at the cost of our consumers," said Rep. Sarah
Anderson, R-Plymouth.

      The House voted to suspend the good faith policy if premiums
rose more than 20 percent in a year.

      Rep. Steve Smith, R-Mound, said claims that rates would go up
were "just flat-out wrong." Smith offered the compromise version
that passed. It would cap attorneys' fees at $40,000 and other
costs at $100,000.

      Lobbyist Mark Kulda of the Insurance Federation of Minnesota
said his group is still studying the bill that passed the House. He
wants to make sure the provisions apply only to the person insured
under a policy and doesn't open the door to third-party lawsuits
from those injured by policyholders.

      He said the current bill is unnecessary, but better than earlier
versions.

      "This one's getting closer to something the industry could
agree with," Kulda said.

      Gov. Tim Pawlenty's spokesman, Brian McClung, said Pawlenty
wants the Senate bill to come out of a conference committee.

      Negotiations will happen next in a House-Senate conference
committee to be named.

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Legislation giving consumers a stronger case to
sue their insurance companies over denied claims cleared the
Minnesota House on Thursday.


`Good faith' bill easing insurance lawsuits clears Minn. House

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