_________ Bill No. _______
Introduced By _______________________________________________________________________________
A Bill for an Act entitled: "An Act revising unfair claim settlement practices to include failure to reasonably pay a claim when a claimant may be forced to prematurely settle a claim because of pressure from creditors; requiring that attorney fees and costs be awarded to a claimant successfully bringing an unfair claim settlement action; and amending sections 33-18-201 and 33-18-242, MCA."
Be it enacted by the Legislature of the State of Montana:
Section 1. Section 33-18-201, MCA, is amended to read:
"33-18-201. Unfair claim settlement practices prohibited. (1) A
No person may not, with such a frequency as to
indicate that indicates a general business practice, do any of the following: (1)(a) misrepresent pertinent facts or insurance policy provisions relating to coverages at issue; (2)(b) fail to acknowledge and act reasonably promptly upon communications with respect to claims arising under
insurance policies; (3)(c) fail to adopt and implement reasonable standards for the prompt investigation of claims arising under insurance
policies; (4)(d) refuse to pay claims without conducting a reasonable investigation based upon all available information; (5)(e) fail to affirm or deny coverage of claims within a reasonable time after proof of loss statements have been
completed; (6)(f) neglect to attempt in good faith to effectuate prompt, fair, and equitable settlements of claims in which liability has
become reasonably clear; (7)(g) compel insureds an insured person to institute litigation to recover amounts due under an insurance policy by
offering substantially less than the amounts ultimately recovered in actions brought by such insureds the insured person; (8)(h) attempt to settle a claim for less than the amount to which a reasonable man person would have believed he the
person was entitled by reference to written or printed advertising material accompanying or made part of an application; (9)(i) attempt to settle claims on the basis of an application which that was altered without notice to or knowledge or
consent of the insured person; (10)(j) make claims payments to insureds insured persons or beneficiaries not accompanied by statements setting forth the
coverage under which the payments are being made; (11)(k) make known to insureds insured persons or claimants a policy of appealing from arbitration awards in favor of
insureds insured persons or claimants for the purpose of compelling them to accept settlements or compromises less than
the amount awarded in arbitration; (12)(l) delay the investigation or payment of claims by requiring an insured person, claimant, or physician of either to
submit a preliminary claim report and then requiring the subsequent submission of formal proof of loss forms, when both of
which submissions contain substantially the same information; (13)(m) fail to promptly settle claims, if liability has become reasonably clear, under one portion of the insurance policy
coverage in order to influence settlements under other portions of the insurance policy coverage; or (14)(n) fail to promptly provide a reasonable explanation of the basis in the insurance policy in relation to the facts or
applicable law for denial of a claim or for the offer of a compromise settlement; or
(o) fail to pay medical expenses, property damage claims, or claims for lost wages if:
(i) liability has become reasonably clear within a reasonable time after submission of verified claims for losses; and
(ii) the claimant would be compelled to settle the claim prematurely or for less than the full value of the claim because the claimant is subjected to economic pressure or duress by the claimant's creditors.
(2) Attorney fees and costs must be awarded to a claimant who successfully brings an action under this section."
Section 2. Section 33-18-242, MCA, is amended to read:
"33-18-242. Independent cause of action -- burden of proof. (1) An insured person or a third-party claimant has an
independent cause of action against an insurer for actual damages caused by the insurer's violation of
subsection (1), (4),
(5), (6), (9), or (13) of 33-18-201(1)(a), (1)(d), (1)(e), (1)(f), (1)(i), or (1)(m).
(2) In an action under this section, a plaintiff is not required to prove that the violations were of such frequency as to indicate a general business practice.
(3) An insured person who has suffered damages as a result of the handling of an insurance claim may bring an action against the insurer for breach of the insurance contract, for fraud, or pursuant to this section, but not under any other theory or cause of action. An insured person may not bring an action for bad faith in connection with the handling of an insurance claim.
(4) In an action under this section, the court or jury may award
such damages as were proximately caused by the violation
of subsection (1), (4), (5), (6), (9), or (13) of 33-18-201(1)(a), (1)(d), (1)(e), (1)(f), (1)(i), or (1)(m). Exemplary damages
may also be assessed in accordance with 27-1-221.
(5) An insurer may not be held liable under this section if the insurer had a reasonable basis in law or in fact for contesting
the claim or the amount of the claim
, whichever is in issue.
(6) (a) An insured person may file an action under this section, together with any other cause of action the insured person
has against the insurer. Actions may be bifurcated for trial
where when justice so requires.
(b) A third-party claimant may not file an action under this section until after the underlying claim has been settled or a judgment entered in favor of the claimant on the underlying claim.
(7) The period prescribed for commencement of an action under this section is:
(a) for an insured person, within 2 years from the date of the violation of 33-18-201; and
(b) for a third-party claimant, within 1 year from the date of the settlement of or the entry of judgment on the underlying claim.
(8) As used in this section, an insurer includes a person, firm, or corporation
utilizing using self-insurance to pay claims
made against them it."