ATRA TESTIMONY: 'WELL-INTENTIONED' D.C. INSURANCE BILL WOULD PRIMARILY 'BENEFIT TRIAL LAWYERS'

Ensuing Lawsuits Would Target ‘Good Faith’ Insurers, Too, As Consumers Pay the Price

Washington, DC, June 25, 2009 -- Testifying today before a D.C. Council committee, American Tort Reform Association general counsel Victor Schwartz called proposed legislation targeting so-called “bad faith” claims decisions by insurers “well-intentioned but overly broad,” and warned that several provisions could “punish ‘good faith’ claims decisions, too, and benefit trial lawyers at the expense of every insurance policy holder in the District of Columbia.”

The council’s Committee on Public Services and Consumer Affairs is considering the “Insurance Claims Consumer Protection Amendment Act of 2009” (B18-103), which Schwartz said “represents one of, if not the most expansive legislative proposals of its kind in the country.”

With incentives for plaintiffs’ lawyers that, among others, include triple damages, punitive damages, attorneys’ and experts’ fees, and court costs, all of which will further pressure defendants into settlements, the legislation would “potentially make every insurer’s decision against paying a given claim – even a baseless claim – subject to a lawsuit,” Schwartz pointed out.

“The victims of such costly litigation will be D.C. residents whose insurance premiums will rise at just the wrong time,” Schwartz continued. “While the Act may be intended as a consumer protection measure, unfortunately its cascade of inequities would primarily accrue to the benefit of trial lawyers, not consumers.

“The citizens and small business owners of the District would end up paying more for insurance. Considering current economic conditions, this would likely lead to increased numbers of underinsured and wholly uninsured, and perhaps a decrease in the number of viable small businesses,” Schwartz said.

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The American Tort Reform Association (ATRA) is the only national organization dedicated exclusively to tort and liability reform through public education and the enactment of legislation. ATRA's membership includes non profits, small and large companies, as well as state and national trade, business, and professional associations.