SF 13 (LSB 1301XS (2) 91)

SENATE FILE 13

BY  LOFGREN

A BILL FOR

An Act relating to the duties of insurers under medical malpractice insurance policies.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  NEW SECTION.  507B.4D  Medical malpractice policy limit —— insurer liability.
   An insurance company insuring a health care provider, as defined in section 135P.1, against professional negligence shall at all times negotiate in good faith all claims presented to the provider. If a claimant offers to settle a claim within the professional negligence insurance policy coverage limits and the insurance company refuses or declines the offer and the claim proceeds to judgment in excess of the insurance policy coverage limits, the insurance company shall be liable for the full amount of the judgment regardless of the existing insurance policy coverage limitation. The insurance company has a duty to negotiate a settlement within the policy limits if an offer is made by a claimant at or within the policy limits. If the insurance company does not do so, the health care provider shall have a cause of action against the insurance company for the failure to negotiate a settlement within the policy limits. The damages shall include the recovery of all costs the health care provider incurs and reasonable attorney fees.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill provides that an insurance company insuring a health care provider against professional negligence shall negotiate in good faith all claims presented to the provider. If a claimant offers to settle within the policy limits and the insurer refuses or declines the offer and the claim proceeds to judgment in excess of the policy limit, the insurance company is liable for the full amount regardless of policy limitation. The insurance company has a duty to negotiate a settlement within policy limits if an offer has been made by the claimant at or within the policy limits. If the insurance company fails to do so, the health care provider has a cause of action against the insurance company.