Monday, March 23, 2009

Bill Banning Insurance Company Bonuses for Denial of Claims Advances

A measure that would prohibit insurance companies from paying employees bonuses when they deny claims has been approved by the Senate.

SB 103 also makes illegal the practice of paying bonuses to employees when they cancel insurance policies.

"Colorado consumers are one step closer to getting the quality medical care they’re already insurance companies paying for," bill sponsor Sen. Morgan Carroll, D-Aurora, said. "To tie the denial of insurance coverage to monetary bonuses is not only unethical but unscrupulous. Insurance companies should not be in the practice of lining the pockets of those who deny medical services to their customers."

The bill provides that juries, in lawsuits contesting an insurer's refusal to pay a claim, may consider payment of bonuses for denial of claims or cancellation of policies as evidence of bad faith behavior by the insurer.

Technically, SB 103 defines insurers payment of bonuses in those circumstances as an unfair claim settlement practice.

The bill, which passed on third reading by a 22-11 vote, now moves to the House.

Sen. Al White, R-Hayden, joined all of the chamber's Democrats in support of the measure. Senate minority leader Josh Penry, R-Fruita, and Sen. Shawn Mitchell, R-Broomfield, did not vote.