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Introduced Version House Bill 3327 History

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hb3327 intr
H. B. 3327


(By Delegate R. Thompson, Staton, Walters, H. White, Moore, Ellem, DeLong, Caputo and Beane)

[Introduced March 25, 2005; referred to the

Committee on Banking and Insurance then the Judiciary.]




A BILL to amend and reenact §23-4-2 of the Code of West Virginia, 1931, as amended; to amend and reenact §33-2-16 and §33-2-17 of said code; to amend said code by adding thereto a new section, designated §33-11-4a; to amend and reenact §33-11-6 of said code; and to amend and reenact §33-20-4 of said code; and to amend said code by adding thereto a new section, designated §55-7-23, all relating generally to the regulation of insurance; providing that the Director of Consumer Advocacy shall be appointed by the Governor; expanding the authority of the Office of Consumer Advocacy; eliminating a cause of action for unfair claims settlement practices by third parties; establishing procedures for the filing, investigation and processing of administrative complaints by third-party claimants; providing for penalties for engaging in unfair claims settlement practices; and establishing that certain insurers shall submit rate filings biannually.

Be it enacted by the Legislature of West Virginia:

That §23-4-2 of the Code of West Virginia, 1931, as amended, be amended and reenacted; that §33-2-16 and §33-2-17 of said code be amended and reenacted; that said code be amended by adding thereto a new section, designated §33-11-4a; that §33-11-6 of said code be amended and reenacted; that §33-20-4 of said code be amended and reenacted; and that said code be amended by adding thereto a new section, designated §55-7-23, all to read as follows:

CHAPTER 23. WORKERS' COMPENSATION.

ARTICLE 4. DISABILITY AND DEATH BENEFITS.

§23-4-2. Disbursement where injury is self-inflicted or intentionally caused by employer; legislative declarations and findings; "deliberate intention" defined.

(a) Notwithstanding anything contained in this chapter, no employee or dependent of any employee is entitled to receive any sum from the workers' compensation fund, from a self-insured employer, or otherwise under the provisions of this chapter, on account of any personal injury to or death to any employee caused by a self-inflicted injury or the intoxication of the employee. Upon the occurrence of an injury which the employee asserts, or which reasonably appears to have, occurred in the course of and resulting from the employee's employment, the employer may require the employee to undergo a blood test for the purpose of determining the existence or nonexistence of evidence of intoxication pursuant to rules for the administration of the test promulgated by the board of managers: Provided, That the employer must have a reasonable and good faith objective suspicion of the employee's intoxication and may only test for the purpose of determinating whether the person is intoxicated.
(b) For the purpose of this chapter, the commission may cooperate with the office of miners' health, safety and training and the State Division of Labor in promoting general safety programs and in formulating rules to govern hazardous employments.
(c) If injury or death result to any employee from the deliberate intention of his or her employer to produce the injury or death, the employee, the widow, widower, child or dependent of the employee has the privilege to take under this chapter and has a cause of action against the employer, as if this chapter had not been enacted, for any excess of damages over the amount received or receivable over the amount received or receivable in a claim for benefits under this chapter, whether filed or not.
(d) (1) It is declared that enactment of this chapter and the establishment of the Workers' Compensation System in this chapter was and is intended to remove from the common law tort system all disputes between or among employers and employees regarding the compensation to be received for injury or death to an employee except as expressly provided in this chapter and to establish a system which compensates even though the injury or death of an employee may be caused by his or her own fault or the fault of a coemployee; that the immunity established in sections six and six-a, article two of this chapter is an essential aspect of this Workers' Compensation System; that the intent of the Legislature in providing immunity from common lawsuit was and is to protect those immunized from litigation outside the Workers' Compensation System except as expressly provided in this chapter; that, in enacting the immunity provisions of this chapter, the Legislature intended to create a legislative standard for loss of that immunity of more narrow application and containing more specific mandatory elements than the Common Law Tort System concept and standard of willful, wanton and reckless misconduct; and that it was and is the legislative intent to promote prompt judicial resolution of the question of whether a suit prosecuted under the asserted authority of this section is or is not prohibited by the immunity granted under this chapter.
(2) The immunity from suit provided under this section six and under section six-a, article two of this chapter may be lost only if the employer or person against whom liability is asserted acted with "deliberate intention". This requirement may be satisfied only if:
(i) It is proved that the employer or person against whom liability is asserted acted with a consciously, subjectively and deliberately formed intention to produce the specific result of injury or death to an employee. This standard requires a showing of an actual, specific intent and may not be satisfied by allegation or proof of: (A) Conduct which produces a result that was not specifically intended; (B) conduct which constitutes negligence, no matter how gross or aggravated; or (C) willful, wanton or reckless misconduct; or
(ii) The trier of fact determines, either through specific findings of fact made by the court in a trial without a jury, or through special interrogatories to the jury in a jury trial, that all of the following facts are proven:
(A) That a specific unsafe working condition existed in the workplace which presented a high degree of risk and a strong probability of serious injury or death;
(B) That the employer, prior to the injury, had a subjective realization and an appreciation of the existence of actual knowledge of the specific unsafe working condition and of the high degree of risk and the strong probability of serious injury or death presented by the specific unsafe working condition;
(C) That the specific unsafe working condition was a violation of a state or federal safety statute, rule or regulation, whether cited or not, or of a commonly accepted and well-known safety standard within the industry or business of the employer, as demonstrated by competent evidence of written standards or guidelines which reflect a consensus safety standard in the industry or business, which statute, rule, regulation or standard was specifically applicable to the particular work and working condition involved, as contrasted with a statute, rule or regulation or standard generally requiring safe workplaces, equipment or working conditions;
(D) That notwithstanding the existence of the facts set forth in subparagraphs (A) through (C), inclusive, of this paragraph, the employer nevertheless intentionally thereafter exposed an employee to the specific unsafe working condition; intentionally; and
(E) That the employee exposed suffered serious compensable injury or compensable death, as defined in section one, article four, chapter twenty-three of this code, whether a claim for benefits under this chapter is filed or not, as a direct and proximate result of the specific unsafe working condition.
(iii) In cases alleging liability under the provisions of paragraph (ii) of this subdivision:
(A) No punitive or exemplary damages shall be awarded to the employee or other plaintiff;
(B) Notwithstanding any other provision of law or rule to the contrary, and consistent with the legislative findings of intent to promote prompt judicial resolution of issues of immunity from litigation under this chapter, the court shall dismiss the action upon motion for summary judgment if it finds, pursuant to rule 56 of the rules of civil procedure that one or more of the facts required to be proved by the provisions of subparagraphs (A) through (E), inclusive, paragraph (ii) of this subdivision do not exist, and the court shall dismiss the action upon a timely motion for a directed verdict against the plaintiff if after considering all the evidence and every inference legitimately and reasonably raised thereby most favorably to the plaintiff, the court determines that there is not sufficient evidence to find each and every one of the facts required to be proven by the provisions of subparagraphs (A) through (E), inclusive, paragraph (ii) of this subdivision; and
(C) The provisions of this paragraph and of each subparagraph thereof are severable from the provisions of each other subparagraph, subsection, section, article or chapter of this code so that if any provision of a subparagraph of this paragraph is held void, the remaining provisions of this act and this code remain valid.
(e) The reenactment of this section in the regular session of the Legislature during the year one thousand nine hundred eighty-three does not in any way affect the right of any person to bring an action with respect to or upon any cause of action which arose or accrued prior to the effective date of the reenactment.
(e) It is the intent of the Legislature that the enactment of this section during the two thousand five legislative session shall be effective to all injuries which occurred on or after the effective date.
CHAPTER 33. INSURANCE.

ARTICLE 2. INSURANCE COMMISSIONER.
§33-2-16. Office of Consumer Advocacy established; director of consumer advocacy; promulgation of rules and regulations.

(a) There is hereby created within the agency of the Insurance Commissioner the Office of Consumer Advocacy. The position of Director of the Office of Consumer Advocacy shall be is a full-time position. and The director shall be appointed by the commissioner Governor for a term of four years to coincide with the term of the Governor and may be discharged only for failure to carry out the duties of the office or for other good and sufficient cause: Provided, That the current Director of Consumer Advocacy or other appointee of the Commissioner shall continue in the position until the Governor appoints a new Director.
(b) The Insurance Commissioner shall provide office space, equipment and supplies for the office.
(c) The Director shall may promulgate rules pursuant to article three, chapter twenty-nine-a of this code, in order to effect the purposes of this section, section seventeen and section eighteen of this article.
(d) On or before the first day of each regular session of the Legislature, the Director shall file with the Governor, the clerk of the Senate and the clerk of the House of Delegates, a report detailing the actions taken by the division in the preceding calendar year.
§33-2-17. Authority of Office of Consumer Advocacy; retroactive effect of authority prohibited.

(a) In addition to the authority established under the rules promulgated by the Director, the Office of Consumer Advocacy is authorized to:
(1) Institute, intervene in, or otherwise participate in, as an advocate for the public interest and the interests of insurance consumers, proceedings in state and federal courts, before administrative agencies, or before the Health Care Cost Review Authority, concerning applications or proceedings before the Health Care Cost Review Authority or the review of any act, failure to act, or order of the Health Care Cost Review Authority;
(2) At the request of one or more policyholders, or whenever the public interest is served, to advocate the interests of those policyholders in proceedings arising out of any filing made with the Insurance Commissioner by any insurance company or relating to any complaint alleging an unfair or deceptive act or practice in the business of insurance;
(3) Institute, intervene in, or otherwise participate in, as an advocate for the public interest and the interests of insurance consumers, proceedings in state and federal courts, before administrative agencies, or before the Insurance Commissioner, concerning applications or proceedings before the Commissioner or the review of any act, failure to act, or order of the Insurance Commissioner;
(4) Review and compile information, data and studies of the reasonable and customary rate schedules of health care providers and health insurers, for the purposes of reviewing, establishing, investigating, or supporting any policy regarding health care insurance rates;
(5) Exercise all the same rights and powers regarding examination and cross-examination of witnesses, presentation of evidence, rights of appeal and other matters as any party in interest appearing before the Insurance Commissioner or the Health Care Cost Review Authority;
(6) Hire consultants, experts, lawyers, actuaries, economists, statisticians, accountants, clerks, stenographers, support staff, assistants, and other personnel necessary to carry out the provisions of this section and sections sixteen and eighteen of this article, which personnel shall be paid from special revenue funds appropriated for the use of the office;
(7) Contract for the services of technically qualified persons in the area of insurance matters to assist in the preparation and presentation of matters before the courts, the Insurance Commissioner, administrative agencies, or the Health Care Cost Review Authority, which persons shall be paid from special revenue funds appropriated for the use of the office;
(8) Make recommendations to the Legislature concerning legislation to assist the office in the performance of its duties;
(9) Communicate and exchange data and information with other federal or state agencies, divisions, departments, or officers, and with other interested parties including, but not limited to, health care providers, insurance companies, consumers or other interested parties; and
(10) Perform other duties to effect the purposes of the office.
(b) The provisions of this section do not apply to any filing made by an insurance company, or act or order performed or issued by the Commissioner, or complaint filed by a policyholder with the Commissioner prior to the thirtieth day of June, one thousand nine hundred ninety-one. All proceedings and orders in connection with these prior matters shall be governed by the law in effect at the time of the filing, or performance or issuance of the act or order.
(c) The scope of authority granted under this section and section sixteen of this article is restricted to matters related to health care costs and health insurance policies, subscriber contracts issued by organizations under article twenty-four of this chapter, health care corporations under article twenty-five of this chapter, health maintenance organizations under article twenty-five-a of this chapter, contracts supplemental to health insurance policies, and other matters related to health insurance issues identified by rules of the commissioner promulgated under section one of this article and chapter twenty-nine-a of this code.
ARTICLE 11. UNFAIR TRADE PRACTICES.
§33-11-4a. Complaints by third party claimants; elimination of private cause of action.

Prior to the effective date of this bill, an insurer may elect an alternative method of resolution of third-party complaints and, if so elected, the following provisions apply to all third-party claims and actions against an insurer for a violation of this article: Provided, That the insurer files for, and obtains, approval for reduced rates which the Commissioner shall determine reflect appropriate adjustments for the savings in the cost of litigation and damage exposure under current law with respect to each such coverage:
(1) A cause of action by a third-party for a violation of this article does not arise and a complaint may not be filed until the underlying action or claim is resolved and all appeals are exhausted.
(2) A complaint alleging a third-party cause of action under the provisions of this article shall contain specific factual allegations setting forth the violations of this article which constitute a general business practice. Any third-party complaint failing to specifically allege each fact necessary to support a prima facie cause of action shall be dismissed by the court.
(3) Notwithstanding any provision of the law to the contrary, the standard of proof in actions alleging a third-party cause of action shall be clear and convincing evidence.
(4) For a violation of this article to be such or to be sufficient significance to support a finding of bad faith:
(A) It must be a violation of a substantive statute, rule or regulation rather than a merely procedural statute, rule or regulation; and
(B) It must be sufficiently related as to time and type of behavior to the act allegedly committed against the plaintiff as to constitute pattern of practice if committed on two or more occasions.
(5) Unless reversed on appeal, a judgment in favor of a defendant in any civil action extinguishes all related claims and actions for violation of the provisions of this article.
(6) The settlement of any claim or action may include settlement of all potential third-party claims or actions which are related thereto or which may arise therefrom. A release given in consideration for settlement of a claim or action may include a release of any and all persons who may be potentially liable for violations of this article arising out of or related to the underlying claim or action which was settled and released.
§33-11-6. Violations, cease and desist and penalty orders and modifications thereof.

If, after notice and hearing, the Commissioner determines that any person has engaged in or is engaging in any method of competition, act or practice in violation of the provisions of this article or any rules or regulations promulgated by the Commissioner thereunder, the Commissioner shall issue an order directing such person to cease and desist from engaging in such method of competition, act or practice, and in addition thereto, the Commissioner may at his or her discretion order any one or more of the following:
(a) Require the payment to the State of West Virginia of a penalty in a sum not exceeding one thousand dollars for each and every act or violation, but not to exceed an aggregate penalty of ten thousand dollars, unless the person knew or reasonably should have known he or she was in violation of this article, in which case the penalty shall be not more than five thousand dollars for each and every act or violation, but not to exceed an aggregate penalty of fifty one hundred thousand dollars in any six-month period.
(b) In the event the act involves an intentional violation of subdivision (9), section four of this article, and even though it has not been established that the person engaged in a general business practice, require the payment to the State of West Virginia of a penalty in a sum not to exceed ten thousand dollars.
(c) Require the payment to the State of West Virginia of a penalty in a sum not exceeding two hundred fifty thousand dollars if the Commissioner finds that the insurer committed or performed such unfair claims settlement practices with such frequency as to indicate a general business practice.
(b) (d) Revoke or suspend the license of such person if he or she knew, or reasonably should have known, that he or she was in violation of this article.
(e) Any person aggrieved by an order of the Commission under this article may seek judicial review of such order as is provided in section fourteen, article two of this chapter.
(c) (f) No order of the Commissioner pursuant to this article or order of court to enforce it, or holding of a hearing, shall in any manner relieve or absolve any person affected by such order or hearing from any other liability, penalty or forfeiture under law.
ARTICLE 20. RATES AND RATING ORGANIZATIONS.

§33-20-4. Rate filings.
(a) On or before the first day of July, two thousand five, the Commissioner shall promulgate legislative rules pursuant to article three, chapter twenty-nine-a of this code establishing procedures whereby each insurer providing five percent or more of insurance coverage in this state for private passenger automobile insurance and property insurance obtained for personal or family needs shall biannually submit rate filings required under this section: Provided, That the requirements under this subsection shall terminate on the first day of July, two thousand nine.
(a) (b) (1) Every insurer shall file with the Commissioner every manual of classifications, territorial rate areas established pursuant to subdivision (2), subsection (c), section three of this article, rules and rates, every rating plan and every modification of any of the foregoing which it proposes to use for casualty insurance to which this article applies.
(2) Every insurer shall file with the Commissioner, except as to inland marine risks which by general custom of the business are not written according to manual rates or rating plans, every manual, minimum, class rate, rating schedule or rating plan and every other rating rule and every modification of any of the foregoing which it proposes to use for fire and marine insurance to which this article applies. Specific inland marine rates on risks specially rated, made by a rating organization, shall be filed with the Commissioner.
(b) (c) Every such filing shall state the proposed effective date thereof and shall indicate the character and extent of the coverage contemplated. When a filing is not accompanied by the information upon which the insurer supports such filing, and the Commissioner does not have sufficient information to determine whether such filing meets the requirements of this article, he or she shall require such insurer to furnish the information upon which it supports such filing and in such event the waiting period shall commence as of the date such information is furnished. The information furnished in support of a filing may include: (1) The experience or judgment of the insurer or rating organization making the filing; (2) the experience or judgment of the insurer or rating organization in the territorial rate areas established by subdivision (2), subsection (c), section three of this article; (3) its interpretation of any statistical data it relies upon; (4) the experience of other insurers or rating organizations; or (5) any other relevant factors. A filing and any supporting information shall be open to public inspection as soon as the filing is received by the Commissioner. Any interested party may file a brief with the Commissioner supporting his or her position concerning the filing. Any person or organization may file with the Commissioner a signed statement declaring and supporting his or her or its position concerning the filing. Upon receipt of such statement prior to the effective date of the filing, the Commissioner shall mail or deliver a copy of such statement to the filer, which may file such reply as it may desire to make. This section shall not be applicable to any memorandum or statement of any kind by any employee of the Commissioner.
(c) (d) An insurer may satisfy its obligation to make such filing by becoming a member of, or a subscriber to, a licensed rating organization which makes such filings, and by authorizing the Commissioner to accept such filings on its behalf: Provided, That nothing contained in this article shall be construed as requiring any insurer to become a member of or a subscriber to any rating organization.
(d) (e) The Commissioner shall review filings as soon as reasonably possible after they have been made in order to determine whether they meet the requirements of this article.
(e) (f) Subject to the exceptions specified in subsections (f) (g) and (g) (h) of this section, each filing shall be on file for a waiting period of sixty days before it becomes effective. Upon written application by such insurer or rating organization, the
Commissioner may authorize a filing which he or she has reviewed to become effective before the expiration of the waiting period. A filing shall be deemed to meet the requirements of this article unless disapproved by the Commissioner within the waiting period.
(f) (g) Any special filing with respect to a surety bond required by law or by court or executive order or by order, rule or regulation of a public body, not covered by a previous filing, shall become effective when filed and shall be deemed to meet the requirements of this article until such time as the Commissioner reviews the filing and so long thereafter as the filing remains in effect.
(g) (h) Specific inland marine rates on risks specially rated by a rating organization shall become effective when filed and shall be deemed to meet the requirements of this article until such time as the Commissioner reviews the filing and so long thereafter as the filing remains in effect.
(h) (i) Under such rules and regulations as he or she shall adopt, the Commissioner may, by written order, suspend or modify the requirement of filing as to any kind of insurance, subdivision or combination thereof, or as to classes of risks, the rates for which cannot practicably be filed before they are used. Such orders, rules and regulations shall be made known to insurers and rating organizations affected thereby. The Commissioner may make such examination as he or she may deem advisable to ascertain whether any rates affected by such order meet the standards set forth in subsection (b), section three of this article.
( i) (j) Upon the written application of the insured, stating his or her reasons therefor, filed with and approved by the Commissioner, a rate in excess of that provided by a filing otherwise applicable may be used on any specific risks.
(j) (k) No insurer shall make or issue a contract or policy except in accordance with the filings which are in effect for said insurer as provided in this article or in accordance with subsection (h) (i) or (i) (j) of this section. This subsection shall not apply to contracts or policies for inland marine risks as to which filings are not required.
(k) (l) In instances when an insurer files a request for an increase of automobile liability insurance rates in the amount of fifteen percent or more, the Insurance Commissioner shall provide notice of such increase with the office of the Secretary of State to be filed in the State Register and shall provide interested persons the opportunity to comment on such request up to the time the Commissioner approves or disapproves such rate increase.
CHAPTER 55. ACTIONS, SUITS AND ARBITRATION;

JUDICIAL SALE.

ARTICLE 7. ACTIONS FOR INJURIES.
§55-7-23. Apportionment of damages. (a) In any cause of action involving the tortuous conduct of more than one defendant, the trial court shall:
(1) Instruct the jury to determine, or, if there is no jury, find, the total amount of damages sustained by the claimant and the proportionate fault of each of the parties in the litigation at the time the verdict is rendered; and
(2) Enter judgment against each defendant found to be liable on the basis of the rules of joint and several liability, except that if any defendant is less than twenty-five percent or less at fault, then that defendant's liability shall be several, and not joint, and he or she shall be liable only for the damages attributable to him or her, except as otherwise provided in this section.
(b) Notwithstanding subdivision (2) of subsection (a) of this section, the rules of joint and several liability shall apply to:
(1) Any party who acted with the intention of inflicting injury or damage;
(2) Any party who acted in concert with another person as part of a common plan or design resulting in harm;
(3) Any party who negligently or willfully caused the unlawful emission, disposal or spillage of a toxic or hazardous substance; or
(4) Any party strictly liable for the manufacture and sale of a defective product.
(c) Notwithstanding subdivision (2) of subsection (a) of this section, if a claimant through good faith efforts is unable to collect from a liable defendant, the claimant may, not later than six months after judgment becomes final through lapse of time for appeal or through exhaustion of appeal, whichever occurs later, move for reallocation of any uncollectible amount among the other parties in the litigation at the time the verdict is rendered.
(1) Upon the filing of such a motion, the court shall determine whether all or part of a defendant's proportionate share of the verdict is uncollectible from that defendant and shall reallocate such uncollectible amount among the other parties in the litigation at the time the verdict is rendered.
(2) If such a motion is filed, the parties may conduct discovery on the issue of collectability prior to a hearing on such motion.
(3) Any order regarding such motion shall be entered within one hundred twenty days after the date of filing such a motion.
(4) A defendant's share of the obligation to a claimant may not be increased by reason of reallocation under this subsection if:
(A) The percentage of fault of that defendant is equal to or less than the claimant's percentage of fault; or
(B) The percentage of fault of that defendant is less than ten percent.
(5) A party whose liability is reallocated is nonetheless subject to contribution and to any continuing liability to the claimant on the judgment.
(6) If any defendant's share of the obligation to a claimant is not increased by reason of the application of subdivision (4) of this subsection, the amount of that defendant's share of the reallocation shall be considered uncollectible and shall be reallocated among all other parties who are not subject to subdivision (4) of this subsection, including the claimant, in the same manner as otherwise provided this subsection.
(d) Nothing in this section may be construed to affect, impair or abrogate any right of indemnity or contribution arising out of any contract or agreement or any right of indemnity otherwise provided by law.
(e) Nothing in this section creates or recognizes, either explicitly or impliedly, any new or different cause of action not otherwise recognized by law.
(f) Nothing in this section may be construed to affect, impair or abrogate the provisions of section seven, article twelve-a, chapter twenty-nine of this code or section nine, article seven-b, chapter fifty-five of this code.
(g) This section applies only to causes of action that accrue on or after the first day of July, two thousand five.



NOTE: The purpose of this bill is to provide for insurance reform by expanding and providing for funding, and expanded powers for the office of consumer advocacy; to eliminate a cause of action for an unfair claims settlement practice by third parties; to provide administrative remedies for such third parties and provide for greater administrative penalties for unfair claims settlement practices; to provide for biannual rate filings by certain insurers; and to limit an insurer from including certain expenses in a rate base.

Strike-throughs indicate language that would be stricken from the present law, and underscoring indicates new language that would be added.

§33-11-4a and §55-7-23 are new; therefore, strike-throughs and underscoring have been omitted.

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