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065 agreement reforms approved by Senate

  

JEFFERSON CITY, Mo. — Following a filibuster spanning the early morning hours, the Missouri Senate passed a House tort reform bill Wednesday, setting its own version aside. 

HB 345 from Rep. Bruce DeGroot would modify certain arbitration arrangements, known as 065 agreements. While a parallel Senate bill saw more than five hours of perfection debate, it was tabled in favor of the House version shortly before 6 a.m. DeGroot’s bill quickly passed by a vote of 21-11 with Sen. Mike Moon joining Democrats as a no vote after decrying the shift between bills. 

As defined in Missouri statute, a tortfeasor — someone who commits a civil wrong against another — whose insurer denies them coverage can enter into an agreement with the victim, who limits their pursuit of the tortfeasor’s assets to certain items or forgoes it all together. The defendant agrees to settle or compromise the claim, after which the victim can pursue a claim against the insurer, which can only debate whether or not legal coverage existed in the case.

The statute changed in 2017 when a pair of bills were signed into law. The pieces altered the standards for 065 agreements, allowing 90 days for a settlement demand, penalizing claimants who fail to comply with the statute, and requiring insurers to be notified of the case. 

The Senate language included in this year’s SB 3 came from a bill proposed by Sen. Tony Luetkemeyer which would have ensured that arbitration awards would only be enforceable against insurers if the insurer had agreed to the proceeding in writing. Additionally, the substitute would have reduced the statute of limitations on personal injury claims from five years to two, a provision absent from the House bill. Luetkemeyer also handled the version that ultimately won the night. 

“This is a clarification, the closing of a loophole that everybody in the legislature thought was fixed,” Luetkemeyer said. “It gives carriers the right to intervene in these 065-style cases and specifies what that right of intervention is.” 

Senate Majority Floor Leader Caleb Rowden, who handled the 2017 bills in the upper chamber, said this year’s legislation would close the loophole removing insurers from the legal proceedings and allow carriers to take part in the conversation. 

Sen. Steven Roberts proposed an amendment early in the conversation asserting rebuttable presumptions that exercise of rights under the bill did not constitute bad faith; his proposal led to the filibuster and the subsequent shift in focus.

“This would just dial back some of the parts dealing with arbitration agreements,” Roberts said. “There are definitely situations where certain mechanisms are taken advantage of, but this legislation in its current form goes far beyond that — the function of it would basically invalidate any arbitration agreements at all, which I think is beyond the scope of what we want to do.”

The reforms have seen opposition in past sessions: Missouri Association of Trial Attorneys (MATA) immediate past President Brett Emison previously told The Missouri Times the bill would allow insurers off the hook for denying coverage, going against established case law “at the expense of Missouri families and small business.”