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Insurance and tort reform bills receive hearings

On January 28, the Senate Small Business, Insurance and Industry Committee held a hearing on SB 617 sponsored by Sen. Rupp (R).  This bill establishes rights of insurer to present reservation of rights to insured without breaching insurance contract, to defend against loss prior to garnishment, and to refuse to enter contracts to limit recovery.  The sponsor explained reservation of rights and how settlements can be higher than the coverage which can cause higher premiums. He noted that the bill puts Missouri in line with 48 other states.

Testifying in support was the Missouri Insurance Coalition, Associated Industries of Missouri, various insurance companies and the Missouri Organization of Defense Lawyers.  Supporters noted there is a need for tort reform in Missouri and this issue is a major part of tort reform. They said large unreasonable judgments against insurance companies are paid by policyholders and damages should be capped at the policy limits unless there is evidence of bad faith. They noted there needs to be a right to intervention which is not allowed now. They pointed out that a declaratory judgment action is not a viable alternative because it takes too much time. They stated that an insurance company has to have the opportunity to look at coverage and then provide a defense under reservation of rights.

Testifying in opposition was the Missouri Association of Trial Attorneys and a private attorney. Opponents believe the bill allows insurance companies to deny claims. They claimed small businesses, doctors, hospitals and consumers are harmed by the insurance companies that delay and deny coverage.

A similar hearing was held in the House Insurance Committee on HB 1344, also a reservation of rights bill.

Also in the Senate Small Business, Insurance and Industry Committee, the Committee held a hearing on SJR 25 sponsored by Sen. Lager (R). This joint resolution grants the General Assembly the power to limit by statute jury awards of non-economic damages. The sponsor noted that this simply allows the legislature to place caps on awards. Testifying in support was Washington University Physicians, Associated Industries of Missouri, Missouri Society of Anesthesiologists, and the Missouri Insurance Coalition. Supporters noted that this is a very good first step to repealing the caps. As expected, the only opposition to the bill came from the Missouri Association of Trial Attorneys who testified the bill erodes the constitutional right to trial by jury by taking away the right of the jury to assess damages.

A similar hearing was held on two House bills that would also re-establish the cap on non-economic damage awards: HB 1173 and HJR 45.  The hearing on the two bills was continued into next week, but Associated Industries of Missouri and several groups representing healthcare providers testified the bills were necessary because of large anticipated increases in medical malpractice insurance resulting from the loss of the caps on non-economic damages.

Information for this article was provided by Trent Watson, lobbyist for Associated Industries of Missouri.

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