Oregon’s ‘Second Lawsuit’ Legislation Tabled

February 13, 2012

The Oregon House Judiciary Committee on Monday tabled HB 4136, a bill its detractors said would have imported “the legacy of bad faith litigation” from neighboring states into Oregon.

A handful of insurance trade associations urged the committee to reject the bill. The American Insurance Association (AIA), the National Association of Mutual Companies (NAMIC), the Northwest Insurance Council (NWIC) and the Property Casualty Insurers Association of America (PCI) are all opposed to HB 4136 because they say it would add more litigation in Oregon by providing a new form of tort litigation against insurers.

In short, the bill would allow lawsuits by first and third parties against insurance agents for the actions of an insurer.

According to its authors, the bill permits a prosecuting attorney to investigate and prosecute suit against an insurer or other person who conducts “prohibited insurance practices,” it allows a person to bring action against an insurer or other person who conducts these prohibited insurance practices and it directs the court to award attorney fees in certain circumstances.

“We appreciate the House Judiciary Committee taking a close look at the track record of California and Washington in order to understand that this bill is a bad idea for Oregon that could result in higher insurance costs, more fraud and clogged court houses,” Kenton Brine, PCI assistant vice president said in a statement.  “When California adopted a similar law auto accident lawsuits nearly doubled to more than 91,400 cases before the state supreme court struck down the second lawsuit rule.  Then legislators took a second swing at the ball by passing another law, which voters repealed by a three-to-one margin in a voter referendum.”

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