Minnesota Considers Bill That Would Allow Recovery of Interest, Attorney Fees

Minnesota lawmakers are considering a bill that would allow for recovery of interest and attorney fees for breach of an insurance policy.

If passed, SF 528 would allow “an insured who prevails in any claim against an insurer based on the insurer’s breach or repudiation of, or failure to fulfill, a duty to provide services or make payments is entitled to recover 1) 7 percent per annum interest on monetary amounts due under the insurance policy, calculated from the date the request for payment of those benefits was made to the insurer; and 2) reasonable attorney fees … in addition to other attorney fees allowable under law or an insurance policy,” according to the bill text.

The bill is unnecessary and costly legislation that would boost attorney benefits over consumer interests and open the door to excessive litigation, according to the Property Casualty Insurers Association of America (PCI).

The Senate Commerce Committee had substituted more reasonable language endorsed by the Minnesota Chamber of Commerce into the bill and removed the language allowing attorneys’ fees, but the Senate Judiciary Committee reversed that action and added the allowance for attorneys’ fees back into the bill, PCI said.

“This legislation simply layers on the ability to collect extra-contractual damages, attorneys’ fees and interest,” said Ann Weber, PCI vice president, regional manager and counsel. “The insurance industry is already operating under the regulations of the ‘bad faith’ bill that was signed into law last year. This measure is extremely one sided in favoring plaintiffs and is another example of trial lawyer attempts to expand their ability to bring lawsuits on disputed insurance claims.”

PCI said it will be working to help members of the Minnesota Senate better understand the consequences associated with the bill. “This bill brings ‘bad faith’ legislation to a whole new level,” said Weber. “It adds even more incentives for attorneys to bring secondary lawsuits, and consumers would end up paying the price.”

The bill has passed the Senate Commerce and Judiciary Committees, and its companion bill, HF 417, has passed the House. If approved, it would become effective Aug. 1, 2009.

Sources: Minnesota Legislature, PCI

Topics Legislation Minnesota