Two bills expected to be heard this week by the South Dakota legislature would favor attorney interests over consumers by changing important policies that control consumers’ insurance costs, according to the Property Casualty Insurers Association of America (PCI).
SB 84 would amend South Dakota’s contributory negligence statute to remove the term “slight” from the provision. Currently, South Dakota’s comparative negligence law is unique in that an injured party can recover damages if his or her negligence is “slight” in comparison with the negligence of the defendant. According to the current statute, determination of “slight” is a question for the jury and made without disclosing any determination of the percentage of the plaintiff’s fault by special interrogatory or finding of fact.
If the term “slight” is removed from the provision and replaced than “less than” as proposed by SB 84, a plaintiff would be able to recover damages if his or her own negligence is less than that of the defendant, and the damages would be reduced by the percentage of the plaintiff’s fault.
“This is an unnecessary bill that would create too much gray area and simply add frivolous lawsuits and costs to the system,” said Kelly Campbell, PCI vice president. “More restrictive negligence standards-not fewer restrictions-are what’s needed to improve tort liability systems.”
According to a PCI analysis, on average, individuals in states with more limitations in their ability to recover damages have a lower personal auto bodily injury liability insured loss cost than individuals in states with fewer limitations.
“South Dakota currently has a relatively sound tort liability environment, and the current negligence standard is working effectively in helping to keep insured losses down and average auto premiums low compared to other states,” said Campbell. “Holding costs down for all of South Dakota’s citizens should be the most significant consideration,” said Campbell.
South Dakota’s current average annual liability premium of $285 is 40 percent lower than the national average of $475 and the third lowest average in the nation.
SB 169, introduced in the Senate Commerce Committee, proposes to amend current statute regarding subrogation to eliminate the lright of insurers to obtain reimbursement for the benefits they have already paid on behalf of their customers.
According to the bill text, “no insurer under this chapter is entitled to participate in any recovery from any tortfeasor on account of bodily injury or death or damage to property unless and until its insured has first been made whole.”
SB 169 would prevent insurers from recovering any amount unless and until the insured individual receives full compensation for all damages arising from his or her claim against the person who caused the injury, known as the “make whole” doctrine. “The ‘make whole’ provision is an enormous loophole in this proposed legislation,” Campbell explained. “It means that any time a settlement does not provide the full amount claimed by the individual, which happens in nearly every case, the insurer could not recover any amount paid in medical expenses.”
Reimbursement and subrogation serve important cost containment and public policy goals, PCI said. Subrogation is rooted in the premise that a person who sustains an injury or incurs damage should not be allowed to profit from his or her loss. In court, individuals routinely seek and are awarded damages for medical expenses that their health plan has already paid. “Double recoveries” needlessly burden the system. In addition, reimbursement appropriately allocates the costs of an accident to the person who caused the accident and deters negligent behavior.
“Insurers routinely use subrogation or reimbursement to recover medical expenses paid on behalf of their customers when that customer was injured due to the fault or negligence of another,” said Kelly Campbell, PCI vice president. “Without the ability to subrogate appropriately, insurers’ costs would increase and customers’ premiums could rise dramatically.”
Sources: South Dakota Legislature, PCI
Topics Carriers
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