A coalition of insurance companies has taken its latest step in an effort to repeal a new state law that could triple damages against insurance companies in certain court cases.
The coalition, Consumers Against Higher Insurance Rates, turned in 155,220 signatures Friday to get Referendum 67 on the ballot. State law requires 112,440 valid signatures, but initiative backers generally need to collect 25 to 30 percent more to allow for invalid signatures.
If enough signatures are valid, voters will decide in November whether to keep the law.
The coalition has raised more than $1.8 million for its campaign. It spent more than $350,000 of that on signature-gatherers to qualify the measure for the ballot. Now the group will campaign to repeal the law by encouraging voters to vote no on the referendum.
The new law makes several changes, but the one that has insurance companies most riled is a provision that allows courts to approve triple damages if an insurance company unreasonably denies coverage or payment.
The insurance industry contends the new law, which does not apply to health care, makes it easier for people to sue if claims are denied.
“It’s an added incentive for people to file lawsuits and adds to more frivolous lawsuits because the payout is bigger,” said Dana Childers, a spokeswoman for the campaign.
The companies say the threat of triple damages will drive up settlements, leading to an increase in costs that would ultimately be passed on to consumers.
Trial lawyers, who lobbied hard to get the law passed in the Legislature, say it will not lead to frivolous lawsuits and higher insurance premiums.
The new law “basically says insurance companies have to treat people fairly and they have to pay legitimate claims in a reasonable and timely fashion. If they are doing that, there will be no penalties under the law,” said Sue Evans, a spokeswoman for the Approve 67 campaign. The group has raised about $270,000, mostly from attorneys.
Gov. Christine Gregoire tried, without success, to head off the referendum by brokering a compromise deal between insurance companies and trial lawyers. Key players negotiated for several weeks, and they were still talking on Thursday, said Marty Brown, the governor’s legislative liaison.
“They just ran out of time,” he said. “It’s so complicated that if you don’t have the whole thing nailed down, you just couldn’t get there.”
Gregoire had promised both sides she would work on getting the law changed in the Legislature next year if they could agree on a compromise — and the insurance companies would drop the ballot measure.
Gregoire has concerns of her own about the new law, Brown said. He would not give specifics, but said, “She just felt it wasn’t as clear as it could have been and she wasn’t quite sure what all of the unforeseen circumstances that might result were.”
Sen. Brian Weinstein, D-Mercer Island, an attorney who sponsored the new law in the Legislature, said there’s nothing wrong with the way it’s written. He argues it gives insurance companies “an incentive to do the right thing the first time around and not deny a claim without a reasonable basis. I don’t think it’s a burdensome law.”
It’s not clear if the governor will keep working on new insurance legislation now that it appears Ref. 67 will be on the ballot.
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