Legislative Update
Following are some of the bills voted on by the House of Representatives in February and March that I thought would be of interest to you. For more information on these or other bills, please contact my office toll-free at (888) 833-6636.
Stopping "Bad Faith" Insurance Practices: The House recently passed a plan that would crack down on insurance companies who delay or deny legitimate claims in order to increase their profits with fines and penalties, put CEOs who deny legitimate claims behind bars and require the insurance company to restore the credit ratings of consumers who have had their lives destroyed.
HB 4244 amends the insurance code to prohibit unfair trade practices in the insurance industries of home, auto, commercial business and workmen's compensation. The bill would allow for damages to be paid by the insurer (company) to the insured (consumer) for bad faith actions in the settlement of claims. Damages paid to the insured would be equal to $10,000 or three times the amount of benefits withheld in addition to certain incurred costs, such as reasonable attorney fees.
HB 4844 establishes an auto insurance company's duty to deal fairly in the settlement of auto insurance claims.
HB 4846 increases penalties for insurance companies who are found by the Insurance Commissioner to have engaged in unfair or deceptive acts or practices. Currently, the law states that a fine of not more than $500 be charged for each violation, but not exceed a maximum of $5,000. If a company knew or reasonably should have known that they were in violation of the law, the fine would increase to $2,500 for each violation, but not exceed a maximum of $25,000 for all violations committed in a six month period. HB 4846 would increase those penalties to $2,000; $20,000; $10,000 and $100,000, respectively.
HB 5020 establishes a "duty to deal fairly" or act in good faith for insurance companies that provide property and casualty insurance. Insurers found to have failed to do so would be liable for compensatory, consequential, economic, non-economic and exemplary damages.
HB 5144 extends protection under the Whistleblower's Protection Act to full-time and part-time employees of insurance companies who report acts of bad faith. HB 5144 also entitles employees who submit useful information to a payment from the Whistleblower Protection Fund.
HB 5145 subjects insurers that commit subsequent bad faith violations to an administrative fine of $1 million following sufficient due process. Fines paid under this Act would be deposited into the Whistleblower Protection Fund.
HB 5146 creates a presumption of bad faith for insurers found to have engaged in bad faith. Along with creating the presumption, the bill also shifts the burden of proving bad faith in such actions from the consumer to the insurer. Insurers that act in bad faith will be liable to consumers for interest, damages and costs, attorney fees and punitive damages.
HB 5147 makes it a felony for high-ranking insurance officials who knowingly encourage work environments where claims are wrongfully denied. HB 5147 imposes punishment of imprisonment up to four years, a fine not more than $50,000, or both.
HB 5148 adds a new provision to the Code of Criminal Procedure making it a Class F felony punishable by a maximum of four years imprisonment for high-ranking insurance officials who knowingly encourage work environments where claims are wrongfully denied.
HB 5149 creates the Insurance Whistleblower Protection Fund. The plan provides that the fines paid by insurers who act in bad faith will be deposited in the fund. It also provides that the fund will be administrated by the Office of Insurance Regulation, as well as guidelines on how money deposited in the fund may be allocated.
HB 5150 allows private citizens cause for civil action against insurance companies in this state who participate in an unfair method of competition, an unfair or deceptive act or practice, or other violations of the uniform trade act.
HB 5151 provides that insurers found to have acted in bad faith in denying claims must take steps to clear the credit reports of consumers who may have been harmed by the wrongful denial of claims.
HB 5149 requires insurers send letters to the three largest credit reporting agencies explaining that any payment delinquencies are not the fault of the consumer and requesting that any resulting delinquencies be cleared from the consumer's credit report. Insurers that do not comply with the reporting requirements are subjected to a monetary fine and also must pay attorney's fees.
Multi-Department Supplemental Funding Bill: The House passed a Senate Bill that contained various changes needed following Executive Order 2009-22, which cut over $350 million from the last quarter of Fiscal Year '09. Additionally, the bill includes several time-sensitive supplemental funding items that have been requested by the State Budget Office.
Include Upper Peninsula in all State Publications: The House passed a plan to require that all state publications include the Upper Peninsula. No current publications would need to be destroyed to comply with this legislation; however, all new publications would need to be in compliance.
Extend Utility Truck Seasonal Weight Limit Exemption: The House passed that will allow utility subcontractors to use county roads to conduct utility maintenance and repairs during the frost law season in generally the same manner as utility companies can presently.
Elder Abuse Prevention Package: The House recently passed a series of bills aimed at combating the reprehensible crime of elder abuse in Michigan by strengthening consumer protections for seniors and increasing penalties for those who financially exploit them.
House Bill 4618 provides for additional punishment for individuals who through fraud, deceit, misrepresentation, coercion or unjust enrichment obtain or use or attempt to obtain or use a vulnerable adult's money or property to directly or indirectly benefit that person knowing or having reason to know the vulnerable adult is a vulnerable adult. House Bill 4727 amends the corresponding sentencing guidelines associated with these new felonies created in HB 4618.
House Bill 4620 amends the Michigan Penal Code to revise the felony of fraudulently obtaining a signature of any person with the intent to cheat and defraud. HB 4626 amends the corresponding sentencing guidelines associated with HB 4620.
House Bill 5011 amends the Code of Criminal Procedure and requires a magistrate to accept a complaint, signed upon information and belief, from someone other than the victim, alleging any crime committed against a vulnerable adult.
Revise Central Registry Clearance Procedures: The House passed an update to the Child Protection Law to amend the circumstances under which DHS is required to states documentation that an individual is not named in the Central Registry as a perpetrator of child abuse or neglect. The revision provides that DHS is required to provide Central Registry clearances as a group or "batch" to agencies using volunteers or employers using seasonal workers if that employment or volunteer work will include contact with children.
Dedicate Iron County Veterans Memorial Highway: The House passed a plan to amend the Michigan Memorial Highway Act to designate the portion of Highway US-2 in Iron County beginning in Crystal Falls from M-69 and continuing west to M-189 in Iron River (approximately 16 miles) as the "Iron County Veterans Memorial Highway."
Modification of the Personal Curriculum Under The Michigan Merit Curriculum: The House passed a bill amend the revised school code by making modifications to the personal curriculum. A personal curriculum is an option initiated by the parent/legal guardian that modifies certain requirements of the Michigan Merit Curriculum and allows a district to award a regular high school diploma to students who successfully complete their personal curriculums.
Reporting Requirement for Emergency Financial Managers: The House passed a plan to require an emergency fiscal manager appointed by the Governor to produce a report every six months for the Governor and the leaders of the Legislature. The report would include a list of expenditures, contracts, loans and personnel changes.
Submission of Affidavits to Registers of Deeds: House Bill 4503 would amend the list of documents allowed to be submitted to a Register of Deeds under existing statute to include an affidavit to correct errors or omissions to documents kept by the register; rather than having to go through the entire submission process again.
Permits for Building Structures Near Airports: The House sent Senate Bill 403 back to the Senate. The plan will allow for the issuance of permits to construct or alter a structure in close proximity of an airport if the airport zoning board has not ruled on the application within a 90 day period and the application has already been approved by the Michigan Aeronautics Commission and the Federal Aviation Administration.
Create the Uniform Prudent Management of Institutional Funds Act: The House sent Senate Bill 411 back to the Senate. The plan will create the Uniform Prudent Management of Institutional Funds Act ("UPMIFA"), which provides standards for the management and investment of charitable funds and the expenditure of endowment funds. The UPMIFA would replace the Uniform Management of Institutional Funds Act ("UMIFA") and conform to the Uniform Law Commission's recommendation.
Amend the Nonprofit Corporation Act: The House sent Senate Bill 412, which will amend the Nonprofit Corporation Act to refer to the proposed UPMIFA (SB 411) rather than the UMIFA, back to the Senate.
To monitor legislation, visit www.legislature.mi.gov.