Lawmakers Approve Lower Penalties for ‘Knowing’ Insurance Law Violations

The Senate has approved and sent to the governor a bill that will reduce the maximum civil penalty for “knowing” violations of state insurance laws from $25,000 per occurrence to $1,000 per occurrence.
The bill, HB1845, also establishes a two-year deadline for the state insurance commissioner’s office to complete an investigation of wrongdoing once it is underway and five-year deadline for launching an investigation after state officials “reasonably should have know” the offense occurred.
The measure was sponsored by Sen. Bill Ketron, R-Murfreesboro, and Rep. Charles Sargent, R-Franklin, who are both insurance agents.
It passed the House 96-0 on Monday with no debate or discussion on the floor beyond Sargent’s brief description of the measure – not including mention of the penalty provisions – and his declaration that “all worked out” with the Department of Commerce and Insurance.
On the Senate floor Thursday, however, Sen. Roy Herron, D-Dresden, attacked the bill as an “unprecedented” move to “hamstring the (insurance) commissioner” in protecting consumers against insurance agents and underwriters who deliberately break the law.


“This is the bill that, if you were the Bernie Madoff of insurance in Tennessee, this is your (way to) get out of jail and go home free,” said Herron, referring to an investment advisory convicted of what has been called the largest “Ponzi scheme” in the nation’s history.
Herron said the bill will “reward those who commit insurance fraud or do the citizens wrong.” The senator said he had been told that Insurance Commissioner Julie Mix McPeak was “not altogether happy” with the bill and urged that the vote be delayed until she could present her views to senators.
Ketron refused to delay, however, saying, “We (he and the commissioner) had a conversation in my office. She feels good about it.” Senate Commerce Committee Chairman Jack Johnson, R-College Grove, added that representatives of the department were asked “if they were OK” with the bill and “they acknowledged they were.”
A similar bill was offered last year, during Democratic Gov. Phil Bredesen’s tenure, but failed. McPeak was appointed by Republican Gov. Bill Haslam.
Ketron said the bill also gives those under investigation the right to get information in complaints against them, while they are now unfairly left with “a black cloud over their heads” once people hear about a pending complaint. He said “the department is not really sure why they came up with the $25,000 (penalty) in the first place.”
Current law sets the penalty for a “knowing” offense at $25,000 with a maximum of $250,000 in total penalties. The bill lowers that to $1,000 per violation and a $100,000 maximum total.
A legislative staff description of other language in the measure says it requires investigations of complaints to be “reasonable in scope” and to be conducted “in the least intrusive manner possible.”
The bill passed the Senate 20-10 with all no votes coming from Democrats. It now awaits Haslam’s signature.

Another Herron Loss
The Senate has given final approval to a bill, SB339, that grants immunity from liability for injuries caused by “bovine activities” so long as the owner of cattle or other bovines posts warning signs. Herron also objected to that measure, saying it “goes too far” by granting broader immunity than similar laws other state.
Sen. Jim Tracy, R-Shelbyville, sponsor of the bill, said he disagreed with Herron. Tracy said the bill has the same language contained in a 19-year-old law enacted to grant immunity for “equine activities,” or those involving horses, ” and there have been “no questions about what was done with equines in 1992.”

2 thoughts on “Lawmakers Approve Lower Penalties for ‘Knowing’ Insurance Law Violations

  1. Observer43

    So, let me get this straight, an Insurance Agent, Company, or whatever can flat out lie to you and steal your money. But no matter if you paid a $5000 premium all they will be responsible for is $1000.00?

  2. Observer43

    So, let me get this straight, an Insurance Agent, Company, or whatever can flat out lie to you and steal your money. But no matter if you paid a $5000 premium all they will be responsible for is $1000.00?

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