Wednesday, April 25, 2012
Legislature Will People 'Suffer Mightily' Because of Proposed Insurance Legislation? [Updated]
Posted by Steven Hale on Wed, Apr 25, 2012 at 12:45 PM
A note as we hit the halfway point of what looks to be the last week of this legislative session: The state is going to do a lot this week, much of which you may never hear about. After casually delaying consideration of hundreds of bills all session, like 10th graders with a term paper, legislators are now determined to get out by Friday.
As a result, this week has already featured marathon budget hearings and floor sessions with unending calendars, which have included lengthy detours for debates about the "insidious nature" of Agenda 21 and whether or not Congress should return to an 1850s understanding of the Commerce Clause. Throw in occasional bouts of disorienting stupidity from legislators and lobbyists and it becomes hard to see straight.
All the while, they're making laws.
At some point during a six and a half-hour House session yesterday, legislators passed SB2271, dealing with insurance companies and the requirements for certificates of insurance. Having already passed the Senate, the bill, sponsored by Republicans Sen. Jim Tracy and Rep. Charles Sargent, now heads to the governor for his signature.
And it may have people watching what they treat as junk mail a lot more closely — or should.
Debate on Tuesday centered around an amendment to the bill, which states that payment of an insurance premium constitutes agreement with the policy. The effect, critics argue, is that your insurance company can change your policy — or do something you might not fully understand — then send you a piece of mail about it (which you're sure to throw away) and take your prompt payment of the premium as confirmation that you understand and agree to the policy.
"This is a significant change in the law," said Nashville Democratic Rep. Mike Stewart. "From now on for the first time ever — and this is a complete change in the law — once you pay your insurance premium, that creates a rebuttable presumption, you agree to everything your agent told you, you agree to everything that’s in your contract."
A rebuttable presumption, which is established by the amendment, is an assumption that the court takes to be true until someone proves otherwise. While proponents of the bill, and defenders of the amendment, cited the insured's right to "a day in court," Stewart argued that a rebuttable presumption means that a person who wishes to challenge something in their policy enters the court at a disadvantage that's difficult to overcome.
“Right now it’s on the insurance company to make sure the insured knows what’s going on," Stewart said. "And what we’re asked to do today is completely transform the law and say, ‘No, senior citizen, you, upon paying your bill, will now lose any option for going into court and being successful for trying to assert what you understood to be your agreement.'”
Citing decades-old court cases, Stewart called the bill a "dramatic and bad change in the law" that would place a burden, traditionally borne by insurance companies, on consumers.
"There will be people that will suffer mightily because of this law if it passes this body," he said. "There is going to be somebody whose house burns down, who will be left homeless and precisely because of this law and for no other reason, they will be left without recourse that they have had for at least 70 years in this state.”
In response, bill sponsor Sargent dismissed Stewart's comments, saying he had "exaggerated greatly on that last ten minute orientation." He said an amendment, offered by Democratic Caucus Chairman Mike Turner, which would have required written consent from the insured, would be "total chaos."
"Then, nothing could be done until we hear back from the insured that they agree to a change," Sargent said. "Well, that’s not going to work when you’re sitting in a car dealership and you all of a sudden, you trade cars in and they call. What are we going to do?”
Not surprisingly, Sargent, an insurance agent himself, took issue with the suggestion that an insurance company would try to take advantage of a customer.
“Insurance companies don’t try to sneak things in on you,” he said. “A company is not just going to play with your policy and make a change without your consent. It would make no sense.”
That may be, but it’s not at all what the debate was about. A company might not change your policy without your consent. But opponents’ concerns are that, under the provision in question, they could change your policy and assume your consent as soon as you pay your bill. And given the establishment of rebuttable presumption, a court would agree.
Turner said his amendment would not affect two-way conversations between the consumer and the company, such as the scenario Sargent described, but one-way conversations where the insurance company makes a change and can then assume it's understood by the insured. Turner's amendment was tabled and the bill eventually passed 75-21-1.
Tennessee Citizen Action, which has been speaking out against the bill for several weeks, quickly issued a statement, asserting that the bill would "erode consumer protections" and calling for the state's Department of Commerce and Insurance to review the bill.
"SB2271 will so fundamentally change Tennessee law that we are asking the Department of Commerce and Insurance to review the bill and weigh in on the effect it will have on consumers,” said TCA executive director Mary Mancini in the statement. “Since the bill passed both the House and the Senate and is on its way to the governor’s desk, we ask them to weigh in as soon as possible to advise the governor.”
Pith has also inquired with the department about the bill. Previously, the bill’s sponsor has said that the department had reviewed the bill and was fine with it.
UPDATE: A spokesman from the Department of Commerce and Insurance tells Pith "the department deferred to the will of the legislature on this bill."
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