Get Full Government Meeting Transcripts, Videos, & Alerts Forever!
Get email alerts on the Insurance Regulation topic
No spam. Unsubscribe anytime.
House passes insurance-contracts bill restricting discretionary clauses after floor debate
Summary
The Utah House approved First Substitute Senate Bill 135 on March 5, 2018, banning discretionary authority clauses in certain insurance policies to preserve a de novo standard of judicial review; the bill passed 53–13 after floor debate about effects on local insurers.
First Substitute Senate Bill 135, which seeks to prohibit so-called discretionary authority clauses in life, health and disability insurance contracts, passed the Utah House on March 5, 2018, by a vote of 53–13.
The bill’s House sponsor, Representative King, opened floor remarks by declaring a personal conflict of interest: “I need to declare conflict of interest,” he said on the floor, and then described the measure’s purpose. King told colleagues the bill would ban clauses that he said can change the standard of judicial review and deprive insureds of a de novo review in court, arguing that consumers deserve an even playing field when policy denials are challenged.
Representative Dunnegan opposed the bill’s approach on the floor, saying the measure could harm local carriers as well as national insurers. “I do not support this,” Dunnegan said, arguing the change would remove flexibility insurers sometimes use to approve novel treatments or coverages. He cautioned that the bill’s remedy for “bad actors” operating nationally could have unintended consequences for local companies.
Representative McCall spoke in support, saying the issue has persisted for years and praising the sponsor’s expertise on the topic. “I just wanna rise in support of this,” McCall said, and added that the sponsor’s input has been “incredibly helpful.”
The substance of the bill narrows and prohibits contract language that, according to sponsors, permits insurers to reserve discretionary authority and thereby shift the standard of review in litigation. Supporters said the change aligns Utah with other states and the recommendations of insurance regulators; opponents warned of collateral impacts on coverage decisions.
The House recorded final passage of the first substitute to Senate Bill 135 with 53 yes votes and 13 no votes and returned the measure to the Senate for further consideration.
Actions and next steps: First Substitute Senate Bill 135 was passed by the House and transmitted back to the Senate. Any implementation or litigation would depend on subsequent action and judicial interpretation of the amended statutes.
