The Olympian

Know before you vote: Referendum 67 details

The legislature passed Engrossed Substitute Senate Bill 5726 (ESSB 5726) concerning insurance fair conduct related to claims for coverage or benefits, and voters have filed a sufficient referendum petition on this bill.

This bill would make it unlawful for insurers to unreasonably deny certain coverage claims and permit treble damages plus attorney fees for that and other violations. Some health insurance carriers would be exempt.

Should this bill be:

Approved [ ] Rejected [ ]

WHAT IT MEANS:

Consumers would have more options when taking on insurers that wrongfully deny or delay valid claims. The possibility of damages of up to three times the plaintiff's claim losses could serve as a deterrent or penalty for insurers that act in bad faith.

An independent fiscal analysis by the governor's Office of Financial Management predicts more lawsuits would be filed in Washington's superior courts — with about 300 notices a year filed at the state Office of the Insurance Commissioner. This could lead to more payouts benefiting state and local governments but also higher insurance premiums, OFM says.

WHAT APPROVE 67 SAYS:

• Washington is one of six states that lack penalties for insurers that act in bad faith and cheat consumers out of full coverage of losses. As a result, insurers systematically stall claimants and offer too-low payouts in the hope of forcing vulnerable people into settlements that profit the company. Triple damage awards would take away insurers' incentive to capitalize on policyholders' misfortune; presently consumers can only sue for actual damages and legal fees. Under Referendum 67, the damages would be paid to the consumer; attorney fees would be awarded separately; insurers would be forced to play fair. The standard for awarding damages remains what it is today: an unreasonable denial of damages. But the law will not authorize the kind of punitive damages allowed in other states.

WHAT REJECT 67 SAYS:

• Referendum 67 would spur frivolous lawsuits. A report by insurance industry consultant Milliman Inc., shows it would drive up insurance premiums by $650 million statewide and roughly $205 per household, because of additional lawsuits and higher claims payouts. There is no clear evidence consumers are being cheated in Washington in the systematic way it's been documented in other parts of the country. The state Office of the Insurance Commissioner is in a position to punish companies that don't play fair. The legal threshold for paying treble damages is lower than the standards in effect in other states that allow for punitive damages.

WHO SUPPORTS:

The Approve 67 campaign reports backing from Gov. Chris Gregoire, who signed the original legislation, Senate Bill 5726, into law. Other endorsers include state Insurance Commissioner Mike Kreidler, the state Democratic Party, county executives from King, Pierce and Snohomish counties, and Seattle Mayor Greg Nickels. Groups endorsing Referendum 67 include the Washington Education Association and American Federation of Teachers-Washington, Washington State Labor Council, other labor groups ranging from Carpenters Union Local 1797 to Washington State Building and Construction Trades Council, Public Citizen, El Centro de la Raza, Puget Sound Alliance for Retired Americans, and Washington Federation of State Employees.



WHO OPPOSES:

The Reject 67 campaign lists endorsements of the Liability Reform Coalition, Washington State Republican Party, Mainstream Republicans of Washington, Log Cabin Republicans of Washington, Association of Washington Business, Building Industry Association of Washington, Washington State Medical Association, Independent Business Association, American Institute of Architects/Washington Council, American Institute of Engineering Companies of Washington, Associated Builders and Contractors of Western Washington, Associated General Contractors, Washington Retail Association, Professional Insurance Agents-Western Alliance, Washington Association of Health Underwriters, chambers of commerce and other trade groups.

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Capitol Chat

• Ref. 67: Noon Wednesday

Spokeswomen for Approve 67 and for Reject 67 discuss the issue and answer your questions. Submit your questions by clicking the link on the home page at www.theolympian.com.