• Bob Siems

27-1001 has expanded to disability claims

Maryland has expanded 27-1001 to Disability Claims effective October 1 and forward. See House Bill 990 from the present session.

I read the "revised" fiscal policy note. It had nothing of any real interest. I was hoping for an assessment on whether and how insurance bad faith statutes change how insurers price their products or handle their claims. You know, the real policy question behind whether bad faith statutes work. Instead, the only thing in there is a one sentence note that the bill will allow lawyers who litigate these disputes to have more business. Ah well...

I think this kind of expansion is generally a good idea. Other insurance lawyers (specifically Alex Brown) have pointed out that the lack of a bad faith statute for health insurance practically encourages insurers to act in bad faith in adjusting health insurance policies. In my view, this is even worse than in property insurance markets. In a property-insurance claim, winning produces cash payments. As a lawyer, if I'm confident I'll win, I can take a percentage of any recovery as part or all of my fee. That makes representing even relatively poor clients financially possible. Health and Disability insurance meanwhile doesn't produce large cash payouts. I cannot take one third of someone's heart transplant. As a result, people can't use the payout to finance the litigation. That means prospective clients without financial resources cannot afford lawyers to fight with their insurer. This statute will create fee shifting that will allow insureds with disability policies to get legal representation with less financial cost.

#InsuranceRegulations #InsuranceBadFaith #CivilProcedure #MarylandInsuranceAdministration

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