West Virginia Moves To Reduce Lawsuits
By Arthur D. Postal,Washington Bureau Chief
NU Onlline News Service, Feb. 16, 4:28 p.m. EST?The National Association of Mutual Insurance Companies is voicing strong support for West Virginia Gov. Joseph Manchin's plan to introduce legislation as early as next week to reduce lawsuits by claimants in auto accidents who don't think insurers are paying them fast enough.[@@]
The bill being drafted would eliminate private third party cause of action lawsuits brought under the state's Unfair Trade Practices Act (UTPA).
"This step is long overdue," said David Reddick, NAMIC manager of state affairs. Mr. Reddick said NAMIC was "buoyed" by Gov. Manchin's recent actions, such as calling a special session two weeks ago that resulted in enactment of legislation that will eventually lead to privatization of the state's workers' compensation program.
Various reforms had reduced the fund's potential deficit to $3 billion, and under Gov. Manchin's plan, the state will sell up to $3 billion in bonds to wipe out the shortage, raise $230 million a year in new taxes or transferred revenue to retire the bonds, and convert Workers' Comp into a privately operated employers' mutual plan by the end of this year.
One issue spurring calls for litigation reform is the current West Virginia law that allows non-policyholders to sue an insurance company that allegedly fails to deal with their claims against a policyholder in good faith.
West Virginia is one of only five states that allow such right of action. Most states require claimants to appeal to the state Insurance departments if payments are delayed or settlements are deemed unfair. The other states are Florida, Kentucky, Massachusetts, Montana and New Mexico.
Insurers want the right to sue replaced with the right to complain to the state's insurance commissioner. Democrats, by the Speaker of the state House, have proposed a compromise of allowing bad-faith lawsuits only after the insurance commissioner has a chance to resolve the grievance.
"We hope the momentum for change demonstrated by lawmakers during the special session that ended two weeks ago will carry over into the current regular 60-day legislative session and result in much needed legal and insurance reforms," said Mr. Reddick.
In the past year, Mr. Reddick noted, both the U.S. Chamber of Commerce and the American Tort Reform Association have labeled West Virginia as one of the worst legal environments in the country.
"If West Virginia hopes to avoid any last place designation in these surveys this year, lawmakers
will need to change the joint and several liability statute, the collateral source rule, and end third-party bad faith lawsuits," Reddick said.
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