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“Good Faith” Legislation Gains Ground

April 2, 2008

St. Paul, MN - A bill requiring insurance companies to show "good faith" in settling claims is finding some believers at the State Capitol. House measure author Representative Joe Atkins says it's designed to make sure insurance companies keep their end of the bargain they've made with policy holders.

"It says that an insurance company, when they make a denial, they must have a 'good faith' reason for doing that. If they don't, and that person has to pursue litigation, then he can get legal fees and court costs reimbursed. "

He says it gives insurance policy holders more legal grounds to act against a provider that won't pay a valid claim.

Atkins notes every other state has passed some form of "good faith" legislation.

"Unfortunately, in Minnesota we have not. The reason it's needed is because, right now, there is no disincentive for an insurance company to make a bad-faith denial. They can literally do it and get away with it. So, as a result, it sometimes happens, and it puts people through hell."

As to concerns that the "good faith" requirement will lead to higher insurance rates, he says that hasn't happened in other states that have such laws.

Joe Crumley with the Minnesota Association for Justice says fears that "good faith" will lead to more lawsuits are equally unfounded.

"The reason it won't bring more claims is that, as a result of the insurance company treating people better, there will be fewer people who have to hire a lawyer. This bill is all about getting rid of frivolous defenses by insurance companies. "

Crumley notes that most insurance companies pay valid claims and do operate in good faith. He says this legislation is aimed at the few that don't.

Jim Wishner/Don Mathisen, Public News Service - MN