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Judicial Application of the Minnesota Good Faith Claims Act (Minn. Stat. Sec. 60418) |
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Judicial Application of the Minnesota Good Faith Claims Act (Minn. Stat. Sec. 60418).[1]
In 2008 “the Minnesota Legislature passed a new law that applies to first-party insurance claims entitled the Good Faith Claims Act (“Act’) [which permits an insured] to bring a separate cause of action against an insurer for a failure to act in good faith in the handling of a first-party claim.”
The Good Faith Claims Act excludes workers compensation, health and dental insurance, life insurance, township mutual fire insurance and arbitration and appraisal decisions.
In order to recover increased taxable costs up to one half of the amount awarded for actual damages and attorney fees up to a maximum of $ 25,000.00 and $ 100,000.00, respectively under the Good Faith Claims Act the claimant must establish a prima facie case under the Act in a motion to amend the pleadings to assert additional taxable costs addressed to the sound discretion of the trial court. Following an Award of actual damages the trial court then awards the forgoing increased taxable costs if warranted. There have been no appellate decisions on the issue since the passage of the Act.
Insurers are arguing in cases decided under the Act that Wisconsin’s “fairly debatable” standard should govern the motion to amend the complaint based on the similarity of Minnesota’s act to that of Wisconsin.
District Courts, thus far, are granting more motions to amend the Complaint then they are denying, i.e. Lobbins v. Allstate Ins. Co., Hennepin County District Court File No. 27-CV-08-5318 (12-30-08), Howard, J. (UIM claim); Turner v. Am. Fam. Mut. Ins. Co., Anoka County District Court File No. 02-CV-08-8364 (03-19-09) Askew, J. (UIM claim); Gerseth, et al v. North Star Mut. Ins. Co., Traverse County District Court File No. 78-CV-08-268 (10-20-09), Seibel, J. (UIM claim); King’s Cove Marina, LLC v. St. Paul Mercury Ins. Co., et al, Dakota County District Court File No. 19-HA-CV-09-2118 (06-02-09), Spicer, J. (Property damage claim); Hristova v. Am. Fam. Mut. Ins. Co., Winona County District Court File No. 85-CV-07-3091 (10-15-09), Thompson, J. (UIM claim); Fahey v. R&L Carriers, Inc. and Protective Insurance Co., Dakota County District Court File No. 19-HA-CV-08-1096 (08-07-09), Sutherland, J. (UIM claim)).
A number of the reported District Court decisions that have considered the application of the Good Faith Claims Act were subsequently settled without any ruling on whether increased taxable costs were actually recoverable. Lobbins, supra; Turner, supra; Hristova, supra
Even when the District Court permits the plaintiff to amend the complaint at least one judge has gone on to deny an award of enhanced taxable costs based on all of the evidence as a result post trial motions. Gerseth, et al v. North Star Mut. Ins. Co., Traverse County District Court File No. 78-CV-08-268 (10-20-09), Seibel, J. (UIM claim).
In four District Court cases the Court denied plaintiffs’ motions to amend the complaint to claim damages under the Good Faith Claims Act for varying reasons. Gades v. Allstate Prop. Cas, Claims Service, Hennepin Co. District Court File No. 27-CV-07-22561 (09-30-08), Blaeser, J. (No-fault benefits claim “reasonably debatable”); Bement v. Am. Fam. Ins. Grp., Becker County District Court File No. 03-CV-08-1378 (01-12-09), Evans, J (Property fire claim reasonably denied in light of evidence of questionable circumstances); Herbert v. State Farm Mut. Auto. Ins. Co., Dakota County District Court File No. 19-C3-07-10672 (01-26-09), Sovis, J. (UIM benefits based on “advice of counsel” defense for claim alleged to have arisen following service of the Complaint); and Agbeginou v. Am. Fam. Mut. Ins. Co., Hennepin County District Court File No. 27-CV-09-8364 (12-03-09), Blaeser, J. (UIM)).
During the course of first party benefit litigation discovery demands may be made for disclosure of the claims file, the deposition of the claims handler and the Rule 30.02(f) deposition of an insurer representative which motions might well be granted. Hiner v. Allstate Ins. Co., Hennepin County District Court File No. 27-CV-09-7021 (07-30-09), Blaeser, J.
It can reasonably be anticipated that plaintiffs will seek to depose claims handlers so as to obtain an explanation of any shorthand in the file, the handler’s knowledge of the insured’s medical treatment, injuries, diagnosis and reports, the basis for denying the UIM claim and the handler’s knowledge of the insurer’s policies and for the company. Hiner, supra.
Likewise, 30.02(f) representatives of the insurer itself may be required to respond to depositions asking them about UIM policies and procedures for analyzing UIM claims, claims representatives training, and those decision making processes employed for plaintiff’s claim. Hiner, supra.
Michael J. Ford
Quinlivan & Hughes, P.A.
[1] Huether, “How District Courts Have Interpreted and Applied the Minnesota Good Faith Claims Act (Minn. Stat. Sec. 604.18),” Minnesota Defense (Summer 2010), p. 3.
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