Court Upholds Fair Claims Settlement Practices Regulations After Decade-long Legal Challenge to Insurance Commissioner’s Authority
After a decade of legal wrangling over the regulations that implement the Unfair Insurance Practices Act (UIPA), a three-justice panel of the
Under the Insurance Code, these unfair acts or practices include misrepresenting what medications or treatments an insurance policy covers, failing to promptly pay claims where liability is reasonably clear, and forcing claimants to file lawsuits to get full payment, and other acts. The Insurance Code allows the commissioner to impose fines of up to
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Based on departmental examination results and following and administrative hearing that took three years, Insurance Commissioner
The court also rejected
Further, the court of appeal also upheld the commissioner's interpretation that an insurer's "willful" violation of the act may be established by showing a purpose or willingness to commit the act and agreed that penalties for willful violations do not need to require a showing that the insurer intended to violate the law or injure someone. The court held, "As the Commissioner points out, he engaged in an extensive, formal rulemaking process in the course of promulgating these regulations. That careful consideration, combined with the Commissioner's expertise in the area, weighs in favor of according significant deference to the Commissioner's interpretation of the terms, and we do so."
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