A bill for an act relating to the duties of insurers under medical malpractice insurance policies.
Summary
Senate File 13 would impose a statutory duty on insurers that provide medical malpractice coverage for health care providers to negotiate claims in good faith and to respond to settlement offers made within policy limits. If a claimant offers to settle a professional negligence claim at or below the policy limit and the insurer refuses or declines the offer, and the case later results in a judgment above the policy limit, the insurer would be liable for the full judgment amount rather than only the policy limit.
The bill also creates a direct cause of action for the insured health care provider against the insurer if the insurer fails to negotiate a settlement within policy limits when such an offer is made. Recoverable damages would include the provider’s costs and reasonable attorney fees. In effect, the bill shifts financial risk to insurers when they do not settle within limits in situations where a claimant has made a qualifying offer.
Impact
SF 13 would amend Iowa insurance law by adding a new section to chapter 507B governing medical malpractice policy limits and insurer liability. It would expand insurer exposure beyond contractual coverage limits in certain cases and give health care providers a statutory remedy against their insurers for failure to negotiate or settle within policy limits. The bill would affect medical malpractice insurers, physicians and other health care providers covered by professional negligence policies, and claimants in malpractice litigation.
Sentiment
The available record shows limited formal debate and no recorded votes or committee transcript excerpts, so there is no detailed public record of support or opposition in the materials provided. Based on the bill text, the measure appears designed to protect insured health care providers from excess judgments caused by an insurer’s refusal to settle within limits, suggesting a pro-provider and pro-settlement policy approach. The subcommittee assignment indicates the bill was at least under legislative consideration, but the provided materials do not show whether it advanced further.
Contention
The main point of contention is likely the shift of liability from the insured provider to the insurer when a settlement within policy limits is rejected and the case later exceeds those limits. Insurers may object that the bill increases their financial exposure and could pressure them to settle more claims within limits, while health care providers may support it as a safeguard against excess judgments and insurer bad-faith handling. Another likely issue is the creation of a new cause of action and attorney-fee recovery, which could increase litigation over settlement decisions and insurer conduct.
Requires health insurance and Medicaid coverage for family planning and reproductive health care services; prohibits adverse actions by medical malpractice insurers in relation to performance of legally protected health care services.
Requires health insurance and Medicaid coverage for family planning and reproductive health care services; prohibits adverse actions by medical malpractice insurers in relation to performance of legally protected health care services.
Insurance: insurers; processing of a claim; modify duties. Amends secs. 2005, 2006, 2026 & 2049 of 1956 PA 218 (MCL 500.2005 et seq.) & adds sec. 2005b & ch. 30B.