By Gary S Frisch, Government Affairs Chair
The probability that we may fail in the struggle ought not to deter us from the support of a cause we believe to be just. Abraham Lincoln
The 2017 session of the Colorado General Assembly finally heated up with several bills of interest introduced since my last article. Let's dig right in.
SB17-45. Allocation of defense costs in a construction defects claim. The bill was heard in the Senate Business, Labor & Technology Committee on 2/8/17 and was passed amended to Senate Appropriations. It has not been scheduled for a hearing in Senate Appropriations. The amended version has a change to when an evidentiary hearing is to be scheduled. In addition language was added that statements made in an evidentiary hearing cannot be used in a subsequent action. This bill is supported by PIIAC, Colorado Association of Commerce and Industry (CACI) and Colorado Civil Justice League (CCJL).
Opposition to SB17-45 centers mainly on two changes to current statute. First, under CRS 13-20-803.5 an insurer presented with a CDARA notice has a duty to defend regardless of whether or not another insurer also has a duty to defend. SB17-45 removes this requirement and replaces it with language regarding the ability of insurers to come to an agreement regarding the allocation of defense costs. If an agreement cannot be reached then an evidentiary hearing is to be held on the issue.
The second change that is resulting in opposition is the removal of the requirement that an insurer has to reasonably investigate the claim. However this only removes this language from CRS 13-20-808. This bill makes no changes to CRS 10-3-1115 or 10-3-1116 regarding the unfair handling of claims.
SB17-45 is co-sponsored by both the President of the Senate and Speaker of the House. A leadership bill such as this has a very good chance of passing both Houses and being signed into law by the Governor.
HB17-1169. Construction professionals' right to repair. This bill is scheduled for hearing in the House State, Veterans, & Military Affairs Committee on 3/1/17 at 1:30. The bill would allow a builder upon receiving a notice of a construction defect to inspect the property and either offer to repair or make a settlement. This would take place before a lawsuit could be filed. The committee assignment in the House does not bode well for a successful hearing. PIIAC has not taken a position on this bill; however, CACI does support it.
SB17-155. Statutory definition of construction defect. The bill was introduced on 2/3/17 and assigned to Senate Business, Labor & Technology. It has not been scheduled for hearing. The bill would define a construction defect as something that causes property damage or bodily injury. The bill would codify the standard general liability coverage trigger for construction defects. PIIAC is monitoring this bill; CACI has taken a support position.
SB17-156. Concerning authority of a unit owners association to pursue resolution of construction defects disputes. The bill was heard in Senate Business, Labor & Technology and referred amended to the Senate Committee of the Whole for second reading. The bill states that if the governing documents for a common interest community require mediation or arbitration of a construction defect claim, even if the requirement is removed by subsequent action by the HOA board, mediation or arbitration is still required for a construction defect claim. The mediation or arbitration must take place in the judicial district where the community is located. In addition an advance notice must be given to all unit owners and written consent of a majority of owners is required. PIIAC is monitoring this bill. CACI has a support position as well as CCJL.
SB17-157. Authority of a unit owners association to pursue litigation and notification requirements. This bill was introduced on 2/17/17 and assigned to Senate Business, Labor & Technology. It is not yet on the calendar for hearing. The bill requires that an association that is going to bring suit against a builder or developer must notify all unit owners and obtain approval of a majority of unit owners. The bill limits the contact a builder or developer can have with unit owners while the HOA is seeking their approval for a lawsuit. PIIAC has not taken a position on this bill. CACI is supporting this bill.
SB17-155, SB17-156, and SB17-157 should pass the Senate. In view of the language regarding unit owners associations' ability to proceed with lawsuits, survival in the House for SB17-155 and SB17-156 is remote. Also similar bills such as these have not passed the House over the past two years. While SB17-155 does not deal directly with lawsuits, the fact that CDARA notices would be limited to actual property damage or bodily injury makes a positive result in the House remote.
SB17-181. Modification of the collateral source rule. This bill is scheduled for hearing in the Senate Judiciary Committee on 3/7/17 upon adjournment. While we have this bill listed under auto legislation the language is not limited to auto. The bill would modify the collateral source rule applicable to civil litigation, which stipulates that a jury should not be told about insurance coverage or other sources from which a plaintiff has received or may receive compensation (collateral sources). PIIAC supports this bill.
SB17-182. Uninsured motorist damages. This bill is scheduled for hearing on 3/7/17 in Senate Judiciary upon adjournment. Under current law carriers cannot offset a UM claim with damages paid under Med Pay. This bill clarifies that insurers do not have to pay more than the actual damages caused by the crash. In addition insurers would be authorized to prohibit stacking of UM limits in a single policy covering multiple vehicles or multiple policies issued by one insurer or insurers under common ownership or management. PIIAC supports this bill.
SB17-191. Market based rates for interest on judgments. This bill is scheduled for hearing in Senate Judiciary on 3/7/17 upon adjournment. Currently the interest rate on judgments is 9%. This bill would tie the interest rate on judgments to the post judgment interest rate, which is 2% over the Kansas City discount rate with a floor of 8%. The bill would eliminate the floor. PIIAC supports this bill.
You will notice that the hearing date for these three bills is 3/7/17. Those of you who are attending the RMIIA Day at the Capitol will have an opportunity to attend the hearing on these bills. These bills should be referred by Senate Judiciary to the Senate Committee of the Whole for second and third reading. However the very nature of these bills means the chances of passage in the House are not very good.
Even with a remote chance of passage in the House, the industry will deliver a message that these bills are intended to try and stem the rise in auto insurance rates.
A couple bills of interest have already been defeated. SB17-53 dealt with asbestos claims filed by plaintiffs against an asbestos trust due to a company bankruptcy and filed again against a still solvent company. The bill lost on second reading in Senate.
HB17-1098 would have limited damages auto rental companies could collect for loss of use. The bill was postponed indefinitely in House Business Affairs and Labor.
We are still expecting an auto bill dealing with bad faith. The public adjusters are working a bill (not yet introduced) that would codify the language in Division of Insurance bulletin B-5.26. The bill is in draft form and as yet there have been no meetings with industry representatives.
If anyone wants to discuss these or any other bills please email me at email@example.com.