SB1424 - 532R

Be it enacted by the Legislature of the State of Arizona:

Section 1. Section 20-461, Arizona Revised Statutes, is amended to read:

START_STATUTE20-461. Unfair claim settlement practices; definition

A. A person shall not commit or perform with such a frequency to indicate as a general business practice any of the following:

1. Misrepresenting pertinent facts or insurance policy provisions relating to coverages at issue.

2. Failing to acknowledge and act reasonably and promptly upon on communications with respect to claims arising under an insurance policy.

3. Failing to adopt and implement reasonable standards for the prompt investigation of claims arising under an insurance policy.

4. Refusing to pay claims without conducting a reasonable investigation based upon on all available information.

5. Failing to affirm or deny coverage of claims within a reasonable time after proof of loss statements have been completed.

6. Not attempting in good faith to effectuate prompt, fair and equitable settlements of claims in which liability has become reasonably clear.

7. As a property or casualty insurer, failing to recognize a valid assignment of a claim. The property or casualty insurer shall have the rights consistent with the provisions of its insurance policy to receive notice of loss or claim and to all defenses it may have to the loss or claim, but not otherwise to restrict an assignment of a loss or claim after a loss has occurred.

8. Compelling insureds to institute litigation to recover amounts due under an insurance policy by offering substantially less than the amounts ultimately recovered in actions brought by the insureds.

9. Attempting to settle a claim for less than the amount to which a reasonable person would have believed he was entitled by reference to written or printed advertising material accompanying or made part of an application.

10. Attempting to settle claims on the basis of an application which that was altered without notice to, or knowledge or consent of, the insured.

11. Making claims payments to insureds or beneficiaries not accompanied by a statement setting forth the coverage under which the payments are being made.

12. Making known to insureds or claimants a policy of appealing from arbitration awards in favor of insureds or claimants for the purpose of compelling them to accept settlements or compromises less than the amount awarded in arbitration.

13. Delaying the investigation or payment of claims by requiring an insured, a claimant or the physician of either to submit a preliminary claim report and then requiring the subsequent submission of formal proof of loss forms, both of which submissions contain substantially the same information.

14. Failing to promptly settle claims if liability has become reasonably clear under one portion of the insurance policy coverage in order to influence settlements under other portions of the insurance policy coverage.

15. Failing to promptly provide a reasonable explanation of the basis in the insurance policy relative to the facts or applicable law for denial of a claim or for the offer of a compromise settlement.

16. Attempting to settle claims for the replacement of any nonmechanical sheet metal or plastic part which that generally constitutes the exterior of a motor vehicle, including inner and outer panels, with an aftermarket crash part which that is not made by or for the manufacturer of an insured's motor vehicle unless the part meets the specifications of section 44‑1292 and unless the consumer is advised in a written notice attached to or printed on a repair estimate which that:

(a) Clearly identifies each part.

(b) Contains the following information in ten point or larger type:

This estimate has been prepared based on the use of replacement parts supplied by a source other than the manufacturer of your motor vehicle. Warranties applicable to these replacement parts are provided by the manufacturer or distributor of these parts rather than the manufacturer of your vehicle.

17. As an insurer subject to section 20‑826, 20‑1342, 20‑1402 or 20‑1404, or as an insurer of the same type as those subject to section 20‑826, 20‑1342, 20‑1402 or 20‑1404 that issues policies, contracts, plans, coverages or evidences of coverage for delivery in this state, failing to pay charges for reasonable and necessary services provided by any physician licensed pursuant to title 32, chapter 8, 13 or 17, if the services are within the lawful scope of practice of the physician and the insurance coverage includes diagnosis and treatment of the condition or complaint, regardless of the nomenclature used to describe the condition, complaint or service.

18. Failing to comply with chapter 15 of this title.

19. Denying liability for a claim under a motor vehicle liability policy in effect at the time of an accident without having substantial facts based on reasonable investigation to justify the denial for damages or injuries that are a result of the accident and that were caused by the insured if the denial is based solely on a medical condition that could affect the insured's driving ability.

20. If a motor vehicle liability policy provides for the adjustment or settlement of a motor vehicle loss due to damaged auto glass, failing to provide payment to the insured's chosen vendor based on a competitive price that is fair and reasonable within the local industry at large.

21. If an insurer or third‑party administrator elects to require the inspection of a motor vehicle loss due to damaged auto glass before repair or replacement, failing to conduct the inspection without unreasonable delay. It is deemed an unreasonable delay if the inspection is conducted more than twenty‑four hours after an insured has filed a claim for the repair or replacement of damaged auto glass.

B. Nothing in Subsection A, paragraph 17 of this section shall be construed to does not prohibit the application of deductibles, coinsurance, preferred provider organization requirements, cost containment measures or quality assurance measures if they are equally applied to all types of physicians referred to in this section, and if any limitation or condition placed upon on payment to or upon on services, diagnosis or treatment by any physician covered by this section is equally applied to all physicians referred to in subsection A, paragraph 16 17 of this section, without discrimination to the usual and customary procedures of any type of physician. A determination under this section of discrimination to the usual and customary procedures of any type of physician shall not be based on whether an insurer applies medical necessity review to a particular type of service or treatment.

C. In prescribing rules to implement this section, the director shall follow, to the extent appropriate, the national association of insurance commissioners unfair claims settlement practices model regulation.

D. Nothing contained in this section is intended to provide any private right or cause of action to or on behalf of any insured or uninsured resident or nonresident of this state. It is, however, the specific intent of this section to provide solely an administrative remedy to the director for any violation of this section or rule related to this section.

E. The director shall deposit, pursuant to sections 35‑146 and 35‑147, all civil penalties collected pursuant to this article in the state general fund.

F. For the purposes of this section, "fair and reasonable" means:

1. For parts, not more than a ten percent discount off of benchmark pricing established by national auto glass specifications and published on a quarterly basis.

2. For labor, not less than a seventy‑five dollar per hour rate. END_STATUTE

Sec. 2. Section 20-463.01, Arizona Revised Statutes, is amended to read:

START_STATUTE20-463.01. Unlawful practices; auto glass repair; policyholders; insurers

A. It is an unlawful practice for a person who sells or repairs auto glass to knowingly:

1. Submit a false claim to an insurer for auto glass repair or replacement or for related services:

(a) If the services were not provided.

(b) Showing work performed in a geographical area that in fact was not the location where the services were provided and that results in a higher payment than would otherwise be paid to the person by the policyholder's insurer.

(d) Showing work performed on a date other than the date the work was actually performed and resulting in a change of insurance coverage status.

2. Advise a policyholder to falsify the date of damage to the auto glass that results in a change of insurance coverage for repair or replacement of the auto glass.

3. Falsely sign on behalf of a policyholder or another person a work order, insurance assignment form or other related form in order to submit a claim to an insurer for auto glass repair or replacement or for related services.

4. Misrepresent to a policyholder or other person:

(a) The price of the proposed repairs or replacement being billed to the policyholder's insurer.

(b) That the insurer has approved the repairs or replacement unless the auto glass repair or replacement facility has verified coverage or obtained authorization directly from the insurance company or any other third party administrator contracted with the insurance company and the evidence has been confirmed by fax, e‑mail or other written and recorded communication.

5. Represent to a policyholder or other person that the repair or replacement will be paid for entirely by the policyholder's insurer and at no cost to the policyholder unless the insurance coverage has been verified by a person who is employed by or is a producer contracted with the policyholder's insurer or is a third party administrator contracted with the insurer.

6. Add to the damage of auto glass before repair in order to increase the scope of repair or replacement or encourage a policyholder or other person to add to the damage of auto glass before repair.

7. Perform work clearly and substantially beyond the level of work necessary to repair or replace the auto glass to put the vehicle back into a safe pre‑damaged condition in accordance with accepted or approved reasonable and customary glass repair or replacement techniques.

8. Offer a rebate, gift, gift card, cash or coupon with an aggregate value of more than one hundred dollars to any person in order to induce the policyholder to file an auto glass repair or replacement claim under an insurance policy.

B. It is unlawful for a person who sells or repairs auto glass to intentionally misrepresent the relationship of the glass repair facility to the policyholder's insurer. For the purposes of determining whether a person intended the misrepresentation, it may be presumed that the person intended the misrepresentation if the person was engaged in a regular and consistent pattern of misrepresentation.

C. A violation of this section is subject to enforcement under this article.

D. For the purposes of determining whether a defendant knew of any particular element of the prohibited activity, it may be presumed that the person had knowledge if the person was engaged in a regular and consistent pattern of the prohibited activity. END_STATUTE

Sec. 3. Section 20-469, Arizona Revised Statutes, is amended to read:

START_STATUTE20-469. Motor vehicle loss; choice of glass repair facility

A. Unless otherwise prescribed by contract, a person in this state has the right to choose any glass repair facility for the repair of a loss relating to motor vehicle auto glass. If an insurer recommends or provides information about a glass repair facility, the insurer shall inform the person of this right at the same time as making the recommendation or providing the information.

B. An insurer may not engage in any act or practice of intimidation, coercion, threat, incentive or inducement for or against an insured to use a particular company or location to provide the auto glass repair or replacement services or products. For the purposes of this section, a warranty is not an inducement or incentive.

C. If an insured selects a glass repair facility that is not a network provider, the insurer may not imply that the work of the selected glass repair facility is substandard to a network provider.

D. An insurer may not imply to an insured that the insured will receive faster resolution or completion of an auto glass claim if the insured selects a glass repair facility that is a network provider.

E. If an insurer Requires that an inspection be made of a motor vehicle loss due to damaged auto glass, the inspection must be performed by an adjuster who is licensed in this state and who is an employee of the insured's insurer. An insurer may not require An inspection in any case in which windshield damage is a violation of section 28‑981 or has demonstrably impacted the structural integrity of the motor vehicle or where the motor vehicle is in such an unsafe condition that continued use of the motor vehicle would endanger the driver or other occupant or a person on the highway.

F. This section does not create a private right or cause of action to or on behalf of any person. This section provides solely an administrative remedy to the director for any violation of this section. END_STATUTE

Sec. 4. Section 20-469.01, Arizona Revised Statutes, is amended to read:

START_STATUTE20-469.01. Third-party administrator; glass; violation; classification; definition

A. If a third party third-party administrator recommends or provides information about a glass repair facility to a customer, the third party third-party administrator shall inform the person of the person's right prescribed in section 20-469 to choose any glass repair facility for the repair of the loss relating to motor vehicle auto glass at the same time as making the recommendation or providing information. An independent adjuster or a third party third-party administrator's automotive physical damage appraiser or claims inspector for automotive auto glass repair or replacement work in connection with an inspection limited to automotive auto glass repair or replacement shall not recommend any particular glass repair facility.

B. A third-party administrator may not engage in any act or practice of intimidation, coercion, threat, incentive or inducement for or against an insured to use a particular company or location to provide the auto glass repair or replacement services or products. For the purposes of this section, a warranty is not an inducement or incentive.

C. If an insured selects a glass repair facility that is not a network provider, the third-party administrator may not imply that the work of the selected glass repair facility is substandard to a network provider.

D. A third-party administrator may not imply to an insured that the insured will receive faster resolution or completion of an auto glass claim if the insured selects a glass repair facility that is a network provider.

B. E. This section shall does not apply to any employee or insurance producer of an insurer.

C. F. This section shall does not create a private right of action.

D. G. A person who knowingly violates this section is guilty of a petty offense for a first violation and, notwithstanding section 13-802, shall pay a fine of one thousand five hundred dollars for a second violation within eighteen months after a prior violation of this section and three thousand dollars for any subsequent violation within eighteen months after a prior violation of this section.

E. H. For the purposes of determining whether a defendant acted knowingly, it may be presumed that the person had knowledge if the person was engaged in a regular and consistent pattern of the prohibited activity.

F. I. For the purposes of this section "third party third-party administrator" means any person who provides administrative service or adjusts or settles claims in connection with automobile auto glass repair insurance coverage. END_STATUTE