Washington Triple Damages for Unreasonable Insurance Denials, Referendum 67 (2007)

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The Washington Triple Damages for Insurance Denials Bill, also known as Referendum 67, was on the November 6, 2007 ballot in Washington as a veto referendum, where it was approved, thus upholding the legislation. The measure upheld a law allowing consumers to collect triple damages from their insurance company for unreasonably denied claims.[1]

Election results

Washington Referendum 67 (2007)
ResultVotesPercentage
Approveda Yes 910,598 56.70%
No695,32643.30%

Election results via: Washington Secretary of State

Text of measure

The language appeared on the ballot as:[1]

The legislature passed Engrossed Substitute Senate Bill 5726 (ESSB 5726) concerning insurance fair conduct related to claims for coverage or benefits and voters have filed a sufficient referendum petition on this bill.

This bill would make it unlawful for insurers to unreasonably deny certain coverage claims, and permit treble damages plus attorney fees for that and other violations. Some health insurance carriers would be exempt.

Should this bill be:

Approved [ ] Rejected [ ][2]

Support

"Approve 67," an organization advocating for the law, stated that the law puts consumers on a level playing field with big insurance companies. Without the law, there are minimal negative consequences to insurance companies if they unreasonably deny legitimate claims.[3]

Arguments

The following reasons were given in support of Referendum 67 in the Washington 2007 Voters' Guide:[1]

APPROVE 67 – MAKE THE INSURANCE INDUSTRY TREAT ALL CONSUMERS FAIRLY.

Referendum 67 simply requires the Insurance Industry to be fair and pay legitimate claims in a reasonable and timely manner. Without R-67, there is no penalty when insurers delay or deny valid claims. R-67 would help make the Insurance Industry honor its commitments by making it against the law to unreasonably delay or deny legitimate claims.

APPROVE 67 – RIGHT NOW, THERE IS NO PENALTY FOR DELAYING OR DENYING YOUR VALID CLAIM.

R-67 encourages the Insurance Industry to treat legitimate insurance claims fairly. R-67 allows the court to assess penalties if an insurance company illegally delays or denies payment of a legitimate claim.

APPROVE 67 – YOU PAY FOR INSURANCE. THEY SHOULD KEEP THERE PROMISES.

When you pay your premiums on time, the Insurance Industry is supposed to pay your legitimate claims. Unfortunately, the Insurance Industry sometimes puts profits ahead of people and intentionally delays or denies valid claims. R-67 makes the Insurance Industry keep its promises and pay legitimate claims on time. That is why the Insurance Industry is spending millions of dollars to defeat it.

APPROVE 67 – JOIN BIPARTISAN OFFICIALS AND CONSUMER GROUPS SUPPORTING FAIR TREATMENT BY THE INSURANCE INDUSTRY.

Insurance Commissioner Mike Kriedler, former Insurance Commissioners, seniors, workers, and consumer groups urge you to approve R-67. Supporters include the Puget Sound Alliance of Senior Citizens, former Republican Party State Chair Dale Foreman, the Labor Council, and the Fraternal Order of Police.

APPROVE 67 – R-67 SIMPLY MAKES SURE CLAIMS ARE HANDLED FAIRLY.

If the Insurance Industry honors its commitments, R-67 does not impose any new requirements – other than making sure all claims are handled fairly. R-67 would have an impact only on those bad apples that unreasonably delay or deny valid insurance claims.

For more information, visit www.approve67.org.[2]

The arguments in favor of Referendum 67 were prepared by:[1]

  • Steve Kirby, Chair, House Insurance, Financial Services, Consumer Protection Committee
  • Tom Campbell, Chair, House Environmental Health Committee
  • Diane Sosne, RN, President SEIU 1199
  • Skip Dreps, Government Relations Director Northwest Paralyzed Veterans
  • Kelly Fox, President, Washington State Council of Firefighters
  • Steve Dzielak, Director, Alliance for Retired Americans

Contributions

"Approve 67" raised $887,000, primarily from lawyers, by September 2007.[3]

Opposition

"Reject 67," an organization opposing the law, stated that the law is a "solution in search of a problem," an "invitation to frivolous lawsuits" and a way to increase insurance premiums in the state.[3]

Arguments

The following reasons were given in opposition to Referendum 67 in the Washington 2007 Voters' Guide:[1]

REJECT FRIVOLOUS LAWSUITS. REJECT HIGHER INSURANCE RATES. REJECT R-67.

As if there weren’t enough frivolous lawsuits jacking up insurance rates, Washington’s trial lawyers have invented yet another way to file more lawsuits to fatten their pocketbooks. They wrote and pushed a law through the Legislature that permits trial lawyers to threaten insurance companies with triple damages to force unreasonable settlements that will increase insurance rates for all consumers. The trial lawyers also included a provision that guarantees payment of attorneys’ fees, sweetening the incentive to file frivolous lawsuits. There’s no limit on the fees they can charge. What does this mean for consumers? You guessed it: higher insurance rates.

TRIAL LAWYERS WIN. CONSUMERS LOSE.

R-67 is a windfall for trial lawyers at the expense of consumers. Trial lawyers backed a similar law in California, but the resulting explosion of fraudulent claims and frivolous lawsuits caused auto insurance prices to increase 48% more than the national average (according to a national actuarial study) and it was later repealed.

CURRENT LAW PROTECTS CONSUMERS.

Insurance companies have a legal responsibility to treat people fairly, and consumers can sue insurance companies under current law if they believe their claim was handled improperly. The Insurance Commissioner can—and does—levy stiff fines, or even ban an insurance company from the state, if the company mistreats consumers.

R-67 IS BAD NEWS FOR CONSUMERS. REJECT R-67.

Not only does R-67 raise auto and homeowners insurance rates, it applies to small businesses and doctors as well. That means higher medical bills and higher prices for goods and services.

Laws should reduce frivolous lawsuits, not create more. Reject R-67!

See for yourself. Visit www.REJECT67.org[2]

The arguments against Referendum 67 were prepared by:[1]

  • W. Hugh Maloney, M.D., President, Washington State Medical Association
  • Don Brunell, President, Association of Washington Business
  • Richard Biggs, President, Professional Insurance Agents of Washington
  • Dana Childers, Executive Director, Liability Reform Coalition
  • Troy Nichols, Washington State Director, National Federation of Independent Business
  • Bill Garrity, President, Washington Construction Industry Council

Contributions

"Reject 67" raised more than $8,000,000, primarily from insurance companies. State Farm Automobile Insurance contributed $1.6 million. Safeco Insurance donated $1.3 million.[3]

Controversies

Some insurance companies sent letters to their customers in mid-October warning them of likely insurance rate increases should Referendum 67 pass. A complaint was filed with the state's Public Disclosure Commission alleging that these letters amount to an illegal campaign contribution. The insurance companies denied this, saying it is "laughable," and have filed their own complaint with the Public Disclosure Commission, arguing that the state's Trial Lawyers Association, the main supporters of the referendum, violated the law when they sent a pro-67 newsletter to lawyers who are not members of their association. Neither complaint ended up receiving a court case.[4]

Path to the ballot

When the new law was signed into law by Christine Gregoire, in her capacity as Governor of Washington, opponents immediately launched a petition drive to collect enough signatures to forestall the law going into effect, pending a statewide vote on the measure. They submitted 155,220 petition signatures on July 20, 2007.[5]

See also

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