Welcome To The Sausage Factory

Glenn Koenen

For the last 32 years of my father’s work career he investigated car accidents, mostly messy one involving nasty injuries, for a very major insurance company.  In his last work years he specialized in claims which had gone to lawsuit.

Often facts showed that ‘his’ insured caused the accident and therefore was liable for the damages and injuries.  Then his job was to pay-out the least amount of money necessary to make the claim go away.

Of course, some times the accidents created horrendous situations which required more money than the insurance policy covered.  Back then those cases almost always went to court.  His company provided lawyers for the insured and my father waited to write that “policy limits” check.  As predictable as sunset, the insured would complain about getting the ‘bill’ for the amount above policy limit awarded in the lawsuit: ‘what good is insurance if it doesn’t protect me?’

Over the years a number of those courtroom losers found lawyers who challenged the quality of their insurance-provided counsel – arguing that the insurance company acted in “bad faith,” protecting their interest and not the insured’s.  My father got caught-up in a couple of those suits, with him prevailing because he would meticulously detail the rationale for every decision.

Jump to the 21st Century:  my late father’s old employer, like most of the insurance industry, no longer invests in the staff to do detailed investigation of claims, therefore making it impossible to do as thorough a job representing their policy holders in court.  Well, that results in companies losing more second-round suits over representation.

The industry’s answer?  Change state law.

Remember, for years lawyers representing big business have complained that Missouri – especially greater St. Louis – has become a ‘judicial hellhole’ because people have won significant lawsuits.  [ http://www.judicialhellholes.org/ ]   In response, Republicans now demand a broad net of new state restrictions on lawsuits and damages.  [ https://www.columbiamissourian.com/news/state_news/missouri-lawmakers-call-for-restrictions-in-lawsuits/article_7e88cdea-fa21-11e6-a85d-431ffb87c257.html ]

For example, this year Rep. Bruce DeGroot (R-Chesterfield) introduced House Bill 1531 [ summary:  https://www.house.mo.gov/billtracking/bills181/sumpdf/HB1531P.pdf ] which gives insurance companies a back door to reduce their obligations to their insured:

The bill further sets forth a procedure by which an insurer or risk management entity may timely deposit all applicable limits of coverage into court in an interpleader action, and will not be further liable for any amount in excess of its contractual limits of coverage so long as the insurer defends its insured from any further claim or lawsuit.

Closer to English, the insurance company can give the court a check for the policy limit amount (say, the typical $100,000 in many lower-cost plans), then provide a ‘good enough’ defense and walk away from further obligation.

During floor debate on HB 1531 a Democrat asked if Rep. DeGroot’s push for this bill was related to his law firm’s client losing $14 million in a suit over the adequacy of their defense.  Of course, DeGroot said no.

Now, that “welfare of the people” stuff carved into the stonework in the House chamber implies that legislators look at what is best for the vast majority of Missourians.  Indeed, in that article from last winter Rep. Gina Mitten (D – St. Louis) attacked the package of tort reform legislation:

Opponents to the proposed legislation say that restricting a plaintiff’s options in the civil justice system is merely a chance for already-rich corporations to further pad their bottom line by skirting civil responsibility when someone is harmed by the corporations’ actions. “All of these bills were paid for by elite billionaires,” Mitten said, referring to campaign contributions to lawmakers supporting the measures. “At the end of the day, the folks that actually pay are working Missourians.” 

Thursday morning, January 25th, the Missouri House of Representatives passed, by almost a party-line vote, (99 to 45) HB 1531. [ https://www.house.mo.gov/billtracking/bills181/jrnpdf/jrn013.pdf ]

To date, the passage of HB 1531 hasn’t attracted media attention:  why should it?  With questions ripe concerning the governor’s marital fidelity, a looming massive revenue loss and funding attacks on Mizzou, why would anyone worry about a small bill spit-out of the sausage factory?

Submitted by Glenn Koenen, WCD Member

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