Medical Malpractice Bill Rejected By House Judiciary Committee

A couple of postings ago we discussed Senate Bill (SB) 164. The bill would have increased the cap on non-economic damages caused by medical negligence from $366,250 to $468,010. It would also have recategorized physical impairment and disfigurement as non-economic damages but would have left the existing total cap of $1,000,000 in place. The bill is now effectively dead. The House Judiciary Committee voted on April 29th to strike down the bill 7-2.

The Insurance Accountability Act of 2008
After some debate in the House on April 29, 2008, House Bill (HB) 1407, also known as The Insurance Accountability Act of 2008, was given preliminary approval. The bill is also sponsored by House Speaker Andrew Romanoff, D-Denver. The bill's counterpart in the Senate is sponsored by Senate Majority Leader Ken Gordon, D-Denver. The purpose of the bill is to address the problem consumers have with insurance carriers that perpetuate a cycle of delays, denials, and appeals, so that they can get through the insurance claim process with quickly and painlessly.

HB 1407 helps consumers with the following provisions:

• Increases the penalties that the insurance commissioner may impose for the violation of any law, rule, or order of the commissioner.
• Prohibits an insurer from unreasonably delaying or denying a claim for payment of benefits by a claimant.
• Creates a cause of action for a claimant who is unreasonably denied insurance benefits.
• Allows the claimant to recover two times the actual damages sustained.

The penalty that the insurance commissioner currently is able to impose for insurance company violations is $1,000 for every act in violation of any law, rule or prior lawful order of the commissioner. The penalty cannot exceed an aggregate of $10,000. If the company knew or reasonably should have known its actions to be in violation of existing statute, the limit is $10,000 per act and an aggregate of $150,000 for any six-month period. The bill would revise the law to increase the limits to $3,000 for unknowing individual acts ($30,000 aggregate), and if the insurer knowingly violates the law, the penalty's limit is increased to $30,000 per act with a $750,000 annual limit.

The new bill also adds language to the current statute that prohibits “a person engaged in the business of insurance” from unreasonably delaying or denying payment of a claim. The bill also increases the penalty for violation of the prompt payment provision from 10% of the claim to 20%. The 20% penalty will also now apply to claims that are found to be unreasonable pursuant to a civil action.

The bill also creates a new private cause of action for consumers who are victims of insurance companies who violate the “no unreasonable delays” provisions. Such consumers can seek a remedy by filing suit in a Colorado District Court to recover “reasonable attorney fees and court costs and two times the covered benefit.”

The modifications made by HB 1407 add some teeth to existing state law to keep insurance companies from disregarding the needs of their clients. The increased penalties are modest but should make insurance carriers pay more attention to claims filed by Colorado consumers. Individual claimants are not the only people affected by these unreasonable delays. Many times a delay in payment must be absorbed by the medical professional providing treatment.

Thank you for reading our blog. If you feel that your insurance carrier is denied a claim in bad faith or is unreasonably delaying a decision or payment, you should contact an experienced attorney. If you have a question or comment, please reply to this blog or send us an e-mail.