Bill pits lawyers against insurers

04/30/2007

By Mark Brunswick,
Star Tribune
Last update: April 29, 2007


Neither insurance companies nor trial lawyers are likely to win many popularity contests with the general public, but a bruising battle between the two groups at the Legislature shows that both are heavyweight lobbies with friends and influence at the Capitol.

At stake is legislation expanding the rights of ordinary people to sue insurers -- their own or those that insure people they have a claim against.

Trial lawyers say it's an attempt to level the playing field between David and Goliath, giving the little guy a chance to stand up against giant insurance companies, merely by forcing the insurance companies to operate in "good faith."

The insurance industry says the measure will increase premiums, encourage fraudulent claims and line the pockets of trial lawyers.

"It would allow policyholders to 'set up' insurance carriers," Dale Thornsjo, a Minneapolis attorney who has represented the insurance industry, testified at a recent hearing on the bill.

"I think they [insurance firms] are far more concerned about their profits than they are concerned about individual premiums," said Mike Bryant, of the Minnesota Trial Lawyers Association.

About a page in length, the bill, S.F. 2713, says that an insurance company would be liable for damages if it fails to act in good faith by delaying or denying a claim without a reasonable basis.

Despite the brevity of the bill, arguments over its practical legal meaning quickly get complicated amid debates about the difference between "no objectively reasonable basis" versus "reckless disregard."

During a recent committee hearing, Sen. Yvonne Prettner Solon, DFL-Duluth, a clinical psychologist, begged the lawyers on the committee to explain the bill in layman's terms.

Amid the confusion, one fact is clear: Two of the Capitol's most influential lobbies are pulling strings, calling in favors, counting votes and writing checks.

Lobbies spend big

Since 2002, the Trial Lawyers Association has reported $820,000 in lobbying expenditures. Last year alone the Trial Lawyers Association's political action group wrote contribution checks to the House and Senate DFL caucuses totaling almost $46,000.

House and Senate DFL leadership are all co-authors on the bill, and Assistant Majority Leader Tarryl Clark is the chief author in the Senate. DFL leaders have made it clear to their caucuses that passage of this measure is a priority.

On the other side, the Insurance Federation of Minnesota has reported $1.3 million in lobbying expenditures since 2002, and campaign finance records reflect a preponderance of their campaign contributions to Republican candidates and caucuses.

The insurance group has also created the populist-sounding Minnesotans Against Fraud and Higher Insurance Costs to generate grass-roots opposition to the bill.

The group has launched what its organizers say is a $750,000 persuasion campaign. It has taken out full-page newspaper advertisements with a lawyerly looking man pointing a finger and a headline reading "Double Our Lawsuits -- Raise Insurance Costs!"

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