SB2109 95TH GENERAL ASSEMBLY

LRB095 19301 AMC 45593 b

95TH GENERAL ASSEMBLY
State of Illinois
2007 and 2008
SB2109

Introduced 2/14/2008, by Sen. John J. Cullerton

SYNOPSIS AS INTRODUCED:

215 ILCS 5/154.6	from Ch. 73, par. 766.6
215 ILCS 5/155	from Ch. 73, par. 767
720 ILCS 5/46-5

Amends the Illinois Insurance Code. Provides that a company that commits an improper claim practice may be subject to civil penalties pursuant to the Code or a private cause of action, or both. Removes the $60,000 damage cap in an action by or against a company wherein there is in issue the liability of a company on a policy or policies of insurance or the amount of the loss payable thereunder, or for an unreasonable delay in settling a claim, and it appears to the court that such action or delay is vexatious and unreasonable. Amends the Criminal Code of 1961. Provides that an insurance company or self-insured entity that brings an action against a person for insurance fraud or fraud on a governmental entity in bad faith shall be liable to that person for 3 times (rather than twice) the value of the property claimed, plus reasonable attorneys fees.

A BILL FOR

AN ACT concerning regulation.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The Illinois Insurance Code is amended by changing Sections 154.6 and 155 as follows:

(215 ILCS 5/154.6) (from Ch. 73, par. 766.6)

Sec. 154.6. Acts constituting improper claims practice. Any of the following acts by a company, if committed without just cause and in violation of Section 154.5, constitutes an improper claims practice:

(a) Knowingly misrepresenting to claimants and insureds relevant facts or policy provisions relating to coverages at issue;

(b) Failing to acknowledge with reasonable promptness pertinent communications with respect to claims arising under its policies;

(c) Failing to adopt and implement reasonable standards for the prompt investigations and settlement of claims arising under its policies;

(d) Not attempting in good faith to effectuate prompt, fair and equitable settlement of claims submitted in which liability has become reasonably clear;

(e) Compelling policyholders to institute suits to recover amounts due under its policies by offering substantially less than the amounts ultimately recovered in suits brought by them;

(f) Engaging in activity which results in a disproportionate number of meritorious complaints against the insurer received by the Insurance Department;

(g) Engaging in activity which results in a disproportionate number of lawsuits to be filed against the insurer or its insureds by claimants;

(h) Refusing to pay claims without conducting a reasonable investigation based on all available information;

(i) Failing to affirm or deny coverage of claims within a reasonable time after proof of loss statements have been completed;

(j) Attempting to settle a claim for less than the amount to which a reasonable person would believe the claimant was entitled, by reference to written or printed advertising material accompanying or made part of an application or establishing unreasonable caps or limits on paint or materials when estimating vehicle repairs;

(k) Attempting to settle claims on the basis of an application which was altered without notice to, or knowledge or consent of, the insured;

(l) Making a claims payment to a policyholder or beneficiary omitting the coverage under which each payment is being made;

(m) Delaying the investigation or payment of claims by requiring an insured, a claimant, or the physicians of either to submit a preliminary claim report and then requiring subsequent submission of formal proof of loss forms, resulting in the duplication of verification;

(n) Failing in the case of the denial of a claim or the offer of a compromise settlement to promptly provide a reasonable and accurate explanation of the basis in the insurance policy or applicable law for such denial or compromise settlement;

(o) Failing to provide forms necessary to present claims within 15 working days of a request with such explanations as are necessary to use them effectively;

(p) Failing to adopt and implement reasonable standards to verify that a repairer designated by the insurance company to provide an estimate, perform repairs, or engage in any other service in connection with an insured loss on a vehicle is duly licensed under Section 5-301 of the Illinois Vehicle Code;

(q) Failing to provide as a persistent tendency a notification on any written estimate prepared by an insurance company in connection with an insured loss that Illinois law requires that vehicle repairers must be licensed in accordance with Section 5-301 of the Illinois Vehicle Code;

(r) Engaging in any other acts which are in substance equivalent to any of the foregoing.

A company that commits an improper claim practice described in this Section may be subject to civil penalties pursuant to this Code or a private cause of action, or both.

(Source: P.A. 90-340, eff. 8-8-97.)

(215 ILCS 5/155) (from Ch. 73, par. 767)

Sec. 155. Attorney fees.

(1) In any action by or against a company wherein there is in issue the liability of a company on a policy or policies of insurance or the amount of the loss payable thereunder, or for an unreasonable delay in settling a claim, and it appears to the court that such action or delay is vexatious and unreasonable, the court may allow as part of the taxable costs in the action reasonable attorney fees, other costs, plus an amount not to exceed any one of the following amounts:

(a) 60% of the amount which the court or jury finds such party is entitled to recover against the company, exclusive of all costs. ;

(b) (Blank). $60,000;

(c) The the excess of the amount which the court or jury finds such party is entitled to recover, exclusive of costs, over the amount, if any, which the company offered to pay in settlement of the claim prior to the action.

(2) Where there are several policies insuring the same insured against the same loss whether issued by the same or by different companies, the court may fix the amount of the allowance so that the total attorney fees on account of one loss shall not be increased by reason of the fact that the insured brings separate suits on such policies.

(Source: P.A. 93-485, eff. 1-1-04.)

Section 10. The Criminal Code of 1961 is amended by changing Section 46-5 as follows:

(720 ILCS 5/46-5)

Sec. 46-5. Civil damages for insurance fraud or fraud on a governmental entity.

(a) A person who knowingly obtains, attempts to obtain, or causes to be obtained, by deception, control over the property of any insurance company by the making of a false claim or by causing a false claim to be made on a policy of insurance issued by an insurance company, or by the making of a false claim or by causing a false claim to be made to a self-insured entity intending to deprive an insurance company or self-insured entity permanently of the use and benefit of that property, shall be civilly liable to the insurance company or self-insured entity that paid the claim or against whom the claim was made or to the subrogee of that insurance company or self-insured entity in an amount equal to either 3 times the value of the property wrongfully obtained or, if no property was wrongfully obtained, twice the value of the property attempted to be obtained, whichever amount is greater, plus reasonable attorneys fees. A person who knowingly obtains, attempts to obtain, or causes to be obtained, by deception, control over the property of a governmental entity by the making of a false claim of bodily injury or of damage to or loss or theft of property, intending to deprive the governmental entity permanently of the use and benefit of that property, shall be civilly liable to the governmental entity that paid the claim or against whom the claim was made or to the subrogee of the governmental entity in an amount equal to either 3 times the value of the property wrongfully obtained or, if property was not wrongfully obtained, twice the value of the property attempted to be obtained, whichever amount is greater, plus reasonable attorneys fees.

(b) An insurance company or self-insured entity that brings an action against a person under subsection (a) of this Section in bad faith shall be liable to that person for 3 times twice the value of the property claimed, plus reasonable attorneys fees. In determining whether an insurance company or self-insured entity acted in bad faith, the court shall relax the rules of evidence to allow for the introduction of any facts or other information on which the insurance company or self-insured entity may have relied in bringing an action under subsection (a) of this Section.

(c) For the purposes of this Section, where the exact value of the property attempted to be obtained is either not alleged by the claimant or not specifically set by the terms of a policy of insurance, the value of the property shall be the fair market replacement value of the property claimed to be lost, the reasonable costs of reimbursing a vendor or other claimant for services to be rendered, or both.

(Source: P.A. 90-333, eff. 1-1-98; 91-232, eff. 1-1-00.)