New Hampshire Statutes Governing Insurance Claim Practices
description
Transcript of New Hampshire Statutes Governing Insurance Claim Practices
New Hampshire Statutes Governing
Insurance Claim Practices
Presented by:Michael W. Wallenius
Getman, Schulthess & Steere, PAThree Executive Park Drive Ste 9
Bedford, NH 03110603-634-4300
Insurance Claim Practices StatutesOverview
RSA 417 – Unfair Insurance & Claims Settlement Practices
RSA 400-A – Insurance Department Powers
RSA 358-A – N.H. Consumer Protection Act
The Dumas line of Cases
RSA 417
Prohibits Unfair Practices (RSA 417:3)
Lists Specific Practices that are Unfair Penalty Imposed
Procedure for Identifying Unenumerated Unfair Practices Cease & Desist Order
RSA 417:4
RSA 417 specifically includes Adjusters as those governed by its
provisions
RSA 417
Enumerates Both:
Unfair Insurance Practices; and
Unfair Claims Settlement Practices
Enumerated Unfair Insurance Practices
Examples:
Misrepresentation in Sale of Coverage False Information in Advertising Falsifying Information about Insurer’s
Financial Condition Unfair Discrimination Offering Policies Prohibition on Political Contributions RSA 417:14
Enumerated Unfair Claims Settlement Practices
Must be
“committed without just cause and not merely inadvertently or accidently.”
RSA 417:4, XV (a) (1) – (14)
14 Enumerated Unfair Claims Settlement Practices
2 of them really are aimed at the company as not the adjuster
Enumerated Unfair Claims Settlement Practices
Knowingly misrepresenting pertinent facts or policy provisions relating to coverage at issue to a claimant or an insured;
RSA 417:4, XV (a) (1)
Failing to acknowledge and act promptly upon communications with respect to claims arising under insurance policies
RSA 417:4, XV (a) (2)
Enumerated Unfair Claims Settlement Practices
Not attempting in good faith to effectuate prompt, fair and equitable settlements or compromises of claims in which liability has become reasonably clear
RSA 417:4, XV (a) (4)
Enumerated Unfair Claims Settlement Practices
Compelling claimants to institute litigation to recover amounts due under insurance policies by offering substantially less than the amounts ultimately recovered in actions brought by them
RSA 417:4, XV (a) (5)
Enumerated Unfair Claims Settlement Practices
Adopting or making known to insureds or claimants a policy of appealing from arbitration awards in favor of insureds or claimants for the purpose of compelling them to accept settlements or compromises less than the amount awarded in arbitration
RSA 417:4, XV (a) (6)
Enumerated Unfair Claims Settlement Practices
Attempting settlement or compromise of a claim on the basis of an application which was altered without notice to, or knowledge or consent of the insured
RSA 417:4, XV (a) (7)
Enumerated Unfair Claims Settlement Practices
Attempting to settle or compromise a claim for less than the amount which the insured had been led to believe the insured was entitled to by written or printed advertising material accompanying or made part of an application
RSA 417:4, XV (a) (8)
Enumerated Unfair Claims Settlement Practices
Attempting to delay the investigation or payment of claims by requiring an insured and the insured's physician to submit a preliminary claim report and then requiring the subsequent submission of formal proof of loss forms, both of which submissions contain substantially the same information
RSA 417:4, XV (a) (9)
Enumerated Unfair Claims Settlement Practices
Making any claim payment not accompanied by a statement setting forth the benefits included within the claim payment
RSA 417:4, XV (a) (10)
Enumerated Unfair Claims Settlement Practices
Failing to affirm or deny coverage of claims within a reasonable time after proof of loss forms have been submitted
RSA 417:4, XV (a) (11)
Enumerated Unfair Claims Settlement Practices
Refusing payment of a claim solely on the basis of an insured's request to do so without making an independent evaluation of the insured's liability based upon all available information
RSA 417:4, XV (a) (12)
Enumerated Unfair Claims Settlement Practices
Knowingly underestimating the value of any claim by an insurer or by an adjuster representing the insurer
RSA 417:4, XV (a) (14)
Enumerated Unfair Claims Settlement Practices
Prohibited Practices for Auto Glass Repairs – RSA
417:4, XX
Substantially the Same as Reg. 1002 Can’t steer business Cannot coerce claimant to use a specific
repairer Claimant allowed to use own repair
shop but must pay increased cost Where there is a dispute with the shop
as to cost of repair, Insurance must provide name of a ready and willing repairer
Enumerated PracticesPenalty
Loss of license
$2,500 fine per violation; OR
Pay consumer actual economic loss up to $2,500 per violation→Consumer must waive right to sue.
UNDEFINED UNFAIR PRACTICES
RSA 417:12, I
Insurance Department Has reason to believe A practice is unfair and deceptive
UNDEFINED UNFAIR PRACTICES
RSA 417:12, I – Procedure:
Show cause hearing scheduled Which includes Insurance
Departments plan of action To be resulted by the insurer
UNDEFINED UNFAIR PRACTICES
RSA 417:12, II - Department determines the practice is unfair or deceptive then:
Issues a cease and desist order Subject to appeal to N.H. Supreme
Court
UNDEFINED UNFAIR PRACTICES
Violation of Cease & Desist Order – RSA 417:13. Loss of license $2,500 fine per violation
Private Right of Action RSA 417:19
Insurance Department as Gatekeeper (1)
If Insurance Department finds no violation No suit may be filed
If Insurance Department takes no action or a complaint after 120 days no suit may be filed
Private Right of Action RSA 417:21
Insurance Department as Gatekeeper (2)
Finding of violation by Insurance Department Prima Facia evidence of a violation for
civil suit
But not if finding is the result of a consent agreement judgment entered into by the Insurer.
Private Right of Action RSA 417:21
Double Recovery Prohibited
If same behavior constitutes a tort, breach of contract and a violation of RSA Chapter 417 a finding of a statutory violation does not permit additional damages on top of tort or contract damages
Private Right of Action RSA 417:20
A Plaintiff who Prevails in Civil Suit for Violation of RSA Chapter 417, in Addition to Damages is Entitled to:
Reasonable Attorney Fees; and Costs of Suit
STATUTORY AUTHORITY OF INSURANCE DEPARTMENT
RSA 400-A
Broad Powers to Enforce Insurance Laws Specifically granted Reasonably implied
STATUTORY AUTHORITY OF INSURANCE DEPARTMENT
RSA 400-A
Conduct hearings and issue orders to enforce laws
Issue regulations→violation = loss of license or $2,500 fine
Investigate to promote efficient administration of insurance laws→10 days to respond to Insurance Department
request for information Can file suits to enforce laws.
Privileges Under RSA 400-A:16
Documents Produced by Order of theInsurance Department cannot be
subject to: Subpoena Civil Discovery Admission in Evidence in a Civil Case A Right-to-Know Statute Request
Privileges Under RSA 400-A:16Additionally:
No Insurance Department Employee can be forced to testify in a civil matter about document contents; and
Production of documents does not result in a waiver of privilege or confidentiality
Exceptions to Privilege RuleRSA 400-A:16,10
Insurance Department can use documents to enforce rules and take legal action
Provided confidentiality is protected the Department can share documents with: State, Fed & International Regulatory
Agencies State, Fed and International Law
Enforcement National Association of Insurance
Commissioners
Exceptions to Privilege RuleRSA 400-A:16,10
Can disclose documents to complaining party If it will help explain Departments
response to a complaint Provided disclosure does not interfere
with civil , criminal or administrative proceedings
Can disclose statistics about number and nature of complaints filed with the Department
HEARINGS & APPEALRSA 400-a
Hearing may be held for any purpose within scope of insurance law
Mandatory when required by statute Mandatory upon written request of a
person aggrieved by an act or impending act
Request Deadline: 30 days after person knew or should have known of the act in question
HEARINGS & APPEALRSA 400-a
Application for hearing must: State why applicant is aggrieved State the Basis for Requested Relief
Statute or regulation
HEARINGS & APPEALRSA 400-a
Hearing to be held in 30 days if Department finds application is Timely Made in Good Faith Applicant would be aggrieved if his
grounds are established Failure to hold hearing in 30 days =
denied of relief
HEARINGS & APPEALRSA 400-a
Appeal to NH Supreme Court after Motion for Rehearing denied.
RSA Chapter 541
Consumer Service Division
Established by Reg Ins 102.08 Attempts to mediate disputes
between insured and carriers Before matter is in litigation
N.H. Consumer Protection Act
Under Bell v. Liberty Mutual RSA Chapter
258-A does not apply to insurance carriers
because already subject to extensive regulations.
No multiple damages No shifting of costs or attorneys fees
Bad Faith Failure to Settle Within Policy Limits
Dumas Line of Cases
Bad Faith Failure to Settle Within Policy Limits
A. Bad Faith Claims Based on Contract:
Under New Hampshire law, every party to a contract has
an implied obligation of good faith and fair dealing. If an
insured believes that the insurance company has failed to
settle or pay a claim covered under the insurance policy,
that insured may bring a first-party claim against the
insurance carrier for breach of the insurance contract.
Bursey v. Clement, 118 N.H. 412(1979); Jarvis v. Prudential Ins. Co., 122 N.H. 648
(1982).
Bad Faith Failure to Settle Within Policy Limits
An insurer's bad faith refusal to settle or pay a claim
pursuant to its contractual obligations does not give rise to
a tort action. Accordingly, if an insurer refused to settle or
pay a claim, even if acting in bad faith, the plaintiff will not,
for example, be able to recover for emotional distress.
Recovery in such instances is limited to the policy limits,
interest, and any unavoidable consequential damages the
plaintiff can prove.
A. B. C. Builders, Inc. v. American Mutual Ins. Co., 139 N.H. 745 (1995);
Lawton v. Great Southwest Fire Ins. Co., 118 N.H. 607, 613-614 (1978).
Bad Faith Failure to Settle Within Policy Limits
1. In General:
Under New Hampshire law, a party may sue an insurance carrier for
failure to settle a claim against that party within the policy limits. New
Hampshire has specifically adopted a negligence standard-defined as
how a "reasonable person might act under the same circumstances."
An insurance carrier, therefore, has a duty to exercise due care in
ascertaining all of the facts of the case, both as to liability and damages
and in appraising the risk to the insured of being obliged to pay any
portion of a verdict in excess of policy limits.
Gelinas v. Metropolitan Prop. & Liability Inc. Co., 131 N.H. 154, 161 (1988);
Dumas v. Hartford Accident & Indemnity Co., 94 N.H. 484 (1947).
Bad Faith Failure to Settle Within Policy Limits
2. A Question of Fact:
Whether an insurance company has acted in
good faith is a question of fact.
Gelinas v. Metro. Prop. & Liability Ins. Co., 131 N.H. 154, 160 (1988);
Lawton v. Greatsouthwest Fire Ins. Co., 118, N.H. 607, 612-13 (1978).
Bad Faith Failure to Settle Within Policy Limits
3. Duty to Avoid Placing Insured Needlessly at Risk:
An insurance company should not shy away from defending cases it
believes it reasonably has a basis for defending. The insurer has a
reasonable right to try its case in court. It cannot, however, be "unduly
venturesome at the expense of the insured." The insurance company
must exercise the same caution that the ordinary person of average
prudence would employ under the circumstances. Stated otherwise,
"the duty an insurance company owes to its insured is to use reasonable judgment in deciding whether to run the risk of
an award in excess of [the policy limits.]“
Dumas v. Hartford Accident & Indemnity Co., 94 N.H. 484, 489 (1947);
Dumas v. State Farm Mutual Automobile Ins. Co., 111 N. H. 43, 46-49 (1971).
Bad Faith Failure to Settle Within Policy Limits
4.No Strict Liability for Failure to Settle
The New Hampshire Supreme Court has expressly
rejected the idea of holding an insurance carrier
strictly liable for failing to settle within the policy
limits.
Dumas v. State Farm Mutual Automobile Ins. Co., 111 N.H. 43, 46-49 (1971).
Bad Faith Failure to Settle Within Policy Limits
5. The Insurance Company's Conflict
When the settlement value of a case approaches the policy limits, the risk to the insurance company in taking the case to trial increases. Accordingly, insurance carriers must give more weight to the insured's interest as the settlement value of the claim approaches the policy limits.
Dumas v. State Farm Mutual Automobile Ins. Co., 111 N.H. 43, 48 (1971).
Bad Faith Failure to Settle Within Policy Limits
6. Bad Faith Claims By Third Parties
A third-party has no direct cause of action against the insurance company for negligent failure to settle.Duncan v. Lumbermen’s Mutual Cas. Co. 91 N.H. 349, 349 (1941)
However, tort claims are freely assignable, so third parties can
take assignments of any cause of action the insured might
have against the insurer.
Dumas v. State Farm Mutual Automobile Ins. Co., 111 N.H. 43, 48 (1971).
Bad Faith Failure to Settle Within Policy Limits
7. Duty of Primary Carrier to Excess Carrier
A primary carrier owes no duty of care to and excess
carrier to settle a claim within the policy limits. However,
an excess carrier may pursue a Dumas claim against the
primary carrier based on an assignment clause in its policy.
A Dumas action based on such assignment is not barred
By the fact that the actual insured would suffer no financial
loss.
Allstate Ins. Co. v. Reserve Ins. Co., 116 N.H. 806, 808 (1977).
Malicious or “Bad Faith” Defense
New Hampshire recognizes the tort of malicious defense.
A defendant may be found liable for malicious defense if, in
defending a claim, he or she Acts without a credible basis in fact; Knowing the defense lacks merit; Primarily for a purpose other than securing the
proper adjudication of the claim; The previous proceeding terminated in favor of
the party bringing the malicious defense action; and
Injury or damages have been sustained.Aranson v. Schroeder, 140 N.H 359 (1995).
New Hampshire Statutes Governing Insurance Claim
Practices
The End
Getman, Schulthess & Steere, PAThree Executive Park Drive Ste 9
Bedford, NH 03110603-634-4300