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< A succession election? | Main | Kung-Fu Lawmaking >

Possible Veto Bait

Posted at 1:19 PM on March 18, 2008 by Michael Marchio

Remember the "Good Faith" insurance practices bill? The one that was stripped out of a $2 billion public safety bill last session because Gov. Tim Pawlenty threatened to veto the whole thing over it? Well, its back, and won Senate approval this afternoon.

The original version of SF2822, sponsored by Sen. Tarryl Clark (DFL-St. Cloud), according to our friends at Senate Briefly, means that "the insured must show, first, that the insurer lacked a reasonable basis for denying benefits and, second, that the insurer acted with knowledge or reckless disregard for the lack of a reasonable basis. The bill limits insureds' recovery to economic damages and permits, but does not require, courts to award attorney fees."

During the floor debate, Sen. Linda Scheid (DFL-Brooklyn Park) said she was concerned about the court awarding attorneys fees and driving up the costs of premiums, and offered a delete-all amendment. These amendments replace the entire text of a bill. Its pretty much the legislative equivalent of a lawmaker yelling "Oh Snap" right there on the floor.

Scheid's amendment kept most of the provisions, but limited the attorney's fees to $40,000 and gives the insured an additional award of "half the difference between the insurer's pre-trial offers and the final award, up to $100,000", which would reassure insurance companies that they wouldn't be paying attorney's fees through the nose and passing the cost off to other customers.

Scheid's amendment was adopted on a 37-30 vote, though it was 35 to 32 before a few lawmakers, seeing it would pass, changed their votes to go with the majority. It then passed on a voice vote.

While Scheid's amendment may have carried the day, Sen. Clark could end up being the big MFL winner from this. While Scheid's amendment may be less generous to the insured, it had more support. The governor may not like this one any better than last year's "Good Faith" bill, but if it has enough support to override the potential veto, Sen. Clark will get the points, not Sen. Scheid.

This could precede a street fight in the House. Yesterday, Rep. Steve Smith (R-Mound) rose on a point of personal privilege on the floor to address a lobbying campaign by the insurance industry attacking him for co-sponsoring the house file of the bill. "The Insurance Federation of Minnesota has been distributing information claiming that I personally, in my profession as a lawyer, will be lining my own pockets through my support of "Good Faith" legislation."

According to an email he read on the floor, he'd been accused of "Bringing this up to help line the pockets of trial lawyers like yourself will change my voting preference. I'm sure you also support SF2822, Rep. Atkins Good Faith bill, another bill that will benefit you and your brother trial lawyers."

He went on:

"Why can't we discuss bills on their merits? These emails accusing me of seeking personal financial gain and improper motives strike at the very core of our work here in this chamber...How offensive and troubling that the Insurance Federation can spend $1 million or more to threaten our elections and discredit our actions with false and misleading accusations that have no merit."

Rep. Smith doesn't often give floor speeches, but when he does, he makes them count. And for the record, he is not a trial lawyer, he is an attorney practicing family law. HF3115, co-authored by Smith, with a chief author of Rep. Joe Atkins (DFL-Inver Grove Heights), has passed through the Commerce and Labor, but that's a floor hearing we'll be sure to watch out for, and may even hold a floor-a-palooza on it.