Democratic Gov. Joe Manchin’s bill to eliminate third-party bad faith lawsuits survived its toughest test to date on March 17 when the Senate Judiciary Committee passed the bill out of committee over the strenuous objections of its chairman, Sen. Jeffrey Kessler.
Kessler, an attorney whose Moundsville, W.V., firm handles personal injury cases, and fellow Democratic Sen. Randy White of Webster County tried to offer three amendments to SB 418.
One would have allowed third party bad faith lawsuits, but only after the original lawsuit was settled.
A second amendment would have made it possible for the Insurance Commissioner to award damages to someone who made a bad faith complaint against an insurer while the third amendment would have required more disclosure of insurance company records.
All three amendments were defeated on voice votes.
For the past two weeks, the normally reserved Judiciary chair has been railing in state newspapers and on local radio stations about SB 418. His attacks primarily have focused on a recent report from Gov. Manchin’s office that indicated policyholders could see $50 million in savings if the SB 418 reforms were enacted.
“Lawmakers might as well rename the Capitol’s buildings after insurance companies – the Nationwide East Wing and the Allstate West Wing,” Sen. Kessler told the Charleston Gazette. “We’re selling our rights to a bunch of nameless, faceless folks walking around with bags of money. I’m opposed to selling our rights at any price.”
The issue of the $50 million savings also became part of the discussions during a Thursday morning public hearing of SB 418.
Trial attorneys complained about how much money the property/casualty industry made last year and how eliminating bad-faith lawsuits was the “consumer’s only weapon against a low-ball offer from insurance companies.”
Insurance agents argued that SB 418 was not just about insurance reforms, but “improving the business climate in West Virginia.”
Meanwhile, on March 17, the Charleston Gazette ran a story about a series of industry e-mails it acquired under the state’s Freedom of Information Act.
The e-mails were sent to Insurance Commissioner Jane Cline who had asked each company to estimate how much it might reduce its rates if SB 418 were enacted. The rate estimates were redacted because they are considered a trade secret.
Also on March 17, Charleston attorney John Skaggs filed a lawsuit against the Insurance Commission, arguing that he has been denied the information used by the regulators in compiling their report in February that called for elimination of third-party bad faith lawsuits.
“NAMIC is pleased the members of the Senate Judiciary Committee looked beyond the obvious stalling tactics of Senators Kessler and White and moved Senate Bill 481 out of committee,” David Reddick, National Association of Mutual Insurance Companies State Affairs manager said. “However, I am offended by the personal attacks that Sen. Kessler has launched against certain property insurers. If he wants to get personal, perhaps the senator should come clean with his Senate colleagues and tell them how much money his law firm made last year on bad faith lawsuits that it filed. It makes one wonder whether the senator’s statements are intended to protect his constituents, or his own pocketbook.”
SB 418 now goes before the Senate Finance Committee, where it is expected to pass, and then to the full Senate and House of Delegates, where opponents are likely to make one last stand in the House Judiciary Committee.
The Legislature is scheduled to adjourn on April 9.
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