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ENGROSSED HOUSE
BILL NO. 2144 By: Kannady, Deck, Pae,
Schreiber, Rosecrants,
Provenzano, Moore, Harris,
Miller, Roe, Humphrey,
Ranson, Townley, Pfeiffer,
Caldwell (Chad), Cantrell,
Turner, Marti, George, and
Manger of the House
and
Weaver of the Senate
An Act relating to insurance; creating the Insurance
Consumers Protection Act; providing definitions;
creating a statutory cause of action; clarifying
determination of reasonableness and necessity;
providing who may bring action; declaring certai n
policy, contract, or plan provisions void; clarifying
there is no requirement to exhaust administrative
remedies; directing that claimants are entitled to
trial by jury; clarifying issues of bad faith are
question of fact; creating a statutory cause of
action against certain bad faith insurers; clarifying
duty of good faith and fair dealing is nondelegable;
providing when a cause of action for bad faith shall
lie; providing for damages; permitting punitive
damages; providing categories; directing jury to base
award on certain factors; limiting certain punitive
damages; clarifying considerations and defenses;
clarifying that causes of actions in act do not limit
other actions; providing for codification; and
providing an effective date.
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
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SECTION 1. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 1119 of Title 12, unless there
is created a duplication in numbering, reads as follows:
This act shall be known and may be cited as the "Insurance
Consumers Protection Act ".
SECTION 2. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 1119.1 of Title 12, unless there
is created a duplication in numbering , reads as follows:
As used in the Insurance Consumer s Protection Act:
1. "Bad faith" means conduct of an insurer that violates its
duty or duties of good faith and fair dealing to a first -party
claimant or third-party beneficiary by acts including but no t
limited to unreasonably or untimely refusing to pay or tender the
proper benefits for a valid claim under the insurance policy. This
duty of good faith and fair dealing is contained in every insurance
contract and is a nondelegable duty;
2. "First-party claimant" means an individual corporation,
association, partnership, or other legal entity asserting an
entitlement to benefits owed directly to or on behalf of an insured
under an insurance policy. First-party claimants include a public
entity that has paid a claim for benefits dues to an insurer 's
unreasonable delay or denial of the claim;
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3. "Insurance" is a contract whereby one undertakes to
indemnify another or to pay a specified amount upon determinable
contingencies;
4. "Insurer" means every person engaged in the business of
making, selling, or binding contracts of insurance or indemnity in
Oklahoma, except for independent insurance agents and captive
insurance agents that market for only one insurer. A nonprofit
hospital service and medical ind emnity corporation is an insurer
within the meaning of this act. The term insurer does not include
burial associations;
5. "Insured" means a person for whom the insurance policy is
written to protect;
6. "Issued in this state " refers to every health and disability
policy, insurance contract, insurance certificate, and insurance
agreement existing, offered, issued, delivered, or renewed in the
State of Oklahoma or providing health or disability benefits to a
resident or domiciliary of the State of Oklahom a and every employee
benefit plan covering a resident or domiciliary of the State of
Oklahoma, whether or not on behalf of an employer located or
domiciled in Oklahoma, on or after January 1, 2005, notwithstanding
any contractual or st atutory choice-of-law provision to the
contrary;
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7. "Person" means an individual, entity, company, insurer,
association, organization, society, reciprocal or inter -insurance
exchange, partnership, syndicate, business trust, or corporation;
8. "Prior authorization" or "pre-authorization" means the
review and approval by the insurer of treatment recommendations from
a health insurance policyholder 's physician or the review by the
insured's agent experienced in remedying the type of casualty or
damage at issue; and
9. "Third-party beneficiary" means a person that receives
benefits from a contract between two other parties, one of which is
an insurer, even though they are not a party to the contract .
SECTION 3. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 1119.2 of Title 12, unless there
is created a duplication in numbering, reads as follows:
A. There is hereby created a statutory cause of action for an
insured under an insurance policy, as a first -party claimant, and
any third-party beneficiary to the contract of insurance between the
insurer and insured, to maintain an action in district court or any
court of competent jurisdiction for the bad faith refusal of or
untimely pre-authorization of benefits, and for payment o f such
benefits.
B. Provided, however, the recommended treatment for which pre -
authorization or payment of benefits is sought shall be reasonable
and necessary for the person covered by the insurance policy. The
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reasonableness and ne cessity of the recomm ended treatment shall be
determined by a jury.
C. Either the first-party claimant or third -party beneficiary
may prosecute a claim for bad faith created by this act.
D. An insurance policy, insurance contract, or plan that is
issued in this state shall n ot contain a provision purporting to
reserve discretion to the insurer, plan administrator, or claim
administrator to interpret the terms of the policy, contract, or
plan or to determine eligibility for benefits. If an insurance
policy, contract, or plan contains such a provision, the provision
is void.
E. There is no requirement to exhaust any administrative
remedies with the Oklahoma Insurance Department before filing an
action asserting a cause of action for bad faith in a district
court.
F. A claimant under this section is entitled to a trial by
jury.
G. The issue of bad faith is always a question of fact which
must be submitted to a jury pursuant to Section 6 of Article 2 of
the Oklahoma Constitution.
SECTION 4. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 1119.3 of Title 12, unless there
is created a duplication in numbering, reads as follows:
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A. There is hereby created a statutory cause of action against
an insurer, except pursuant to an i nsurance policy providing for
statutory workers' compensation benefits under the Administrative
Workers' Compensation Act in Title 85A of the Oklahoma Statutes or
the Workers' Compensation Code in Title 85 of the Oklahoma Statutes,
if the action or actions of the insurer is in bad faith as defined
by this act.
B. There is no requirement to exhaust any administrative
remedies with the Oklahoma Insurance Department before filing an
action asserting a cause of action for bad faith in a district
court.
C. A claimant under this section is entitled to a trial by
jury.
D. The issue of bad faith is always a question of fact which
must be submitted to a jury.
E. The duty of good faith and fair dealing is contained in
every insurance contract and is a nondelegable duty.
SECTION 5. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 1119.4 of Title 12, unless there
is created a duplication in numbering, reads as follows:
A cause of action for bad faith created by t his act shall lie
if:
1. The insurer was required under the insurance policy to pay
the insured's claim;
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2. The insurer's refusal to pay the claim was unreasonable or
untimely under the circumstances related to the claim;
3. The insurer had no reasonabl e basis for the refusal, or the
amount it offered to satisfy the claim was unreasonably low; or
4. The violation by the insurer of its duty of good faith and
fair dealing was the direct cause of the injury sustained by the
insured.
SECTION 6. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 1119.5 of Title 12, unless there
is created a duplication in numbering, reads as follows:
A. If the insurer violates its duty or duties of goo d faith and
fair dealing, the amount of damages shall be fixed as the amount of
money that will compensate a first -party claimant or third -party
beneficiary for any loss suffered as a result of the breach of the
duty of good faith and fair dealing.
B. In fixing the amount of damages, the jury may consider
financial losses, emotional distress, embarrassment, loss of
reputation, and mental pain and suffering.
C. The jury may award punitive damages for the sake of example
and by way of punishing the insurer based upon the follow ing
factors, in accordance with Section 9.1 of Title 23 of the Oklahoma
Statutes:
1. The profitability of the misconduct to the insurer;
2. The duration of the misconduct and any concealment of it;
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3. The attitude and conduct of the insurer upon discove ry of
the bad faith action; and
4. The financial condition of the insurer.
D. Category I. Where the jury finds by clear and convincing
evidence that an insurer has recklessly disregarded its duty to deal
fairly and act in good faith with its insured; th e jury, in a
separate proceeding conducted after the jury has made such finding
and awarded actual damages, may award punitive damages in an amount
not to exceed the greater of:
1. One Hundred Thousand Dollars ($100,000.00); or
2. The amount of the actua l damages awarded.
E. Category II. Where the jury finds by clear and convincing
evidence that:
1. An insurer has acted intentionally and with malice towards
others; or
2. An insurer has intentionally and with malice breached its
duty to deal fairly and act in good faith with its insured.
The jury, in a separate proceeding conducted after the jury has
made such finding and awarded actual damages, may award punitive
damages in an amount not to exceed the greatest of:
a. Five Hundred Thousand Dollars ($500 ,000.00),
b. twice the amount of actual damages awarded, or
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c. the increased financial benefit derived by the insurer
as a direct result of the conduct causing the injury
to the plaintiff and other persons or entities.
F. Category III. Where the jury finds by clear and convincing
evidence that:
1. An insurer has acted intentionally and with malice towards
others; or
2. An insurer has intentionally and with malice breached its
duty to deal fairly and act in good faith with its insured, and the
court finds, on the record and out of the presence of the jury, that
there is evidence beyond a reasonable doubt that the insurer acted
intentionally and with malice and engaged in conduct life -
threatening to humans, the jury, in a separate proc eeding conducted
after the jury has made such finding and awarded actual damages, may
award punitive damages in any amount the jury deems appropriate,
without regard to the limitations set forth in subsections B and C
of this section. Any award of punitive damages under this
subsection awarded in any manner other than as required in this
subsection shall be void and reversible error.
G. In determining the amount, if any, of punitive damages to be
awarded under either subsection B, C, or D of this section, the jury
shall make the award based upon the factors set forth in subsection
A of this section.
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H. Any award of punitive damages under this section awarded in
any manner other than as required in this section shall be void and
reversible error.
SECTION 7. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 1119.6 of Title 12, unless there
is created a duplication in numbering, reads as follows:
A cause of action for bad faith as provided for by this act
requires analysis of the insurer's action and not the interpretation
of any health insurance plan or how a health insurance plan relates
to the claim. Any insurance contract issued in this state that
offers health insurance benefits shall not contain a provision
purporting to reserve discretion to the insurer to interpret the
terms of the contract . If an insurance contract contains such a
provision, the provision is void . The interpretation of a health
insurance plan shall not be a defense to a bad faith cause of
action.
SECTION 8. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 1119.7 of Title 12, unless there
is created a duplication in numbering, reads as follows:
The causes of actions authorized in this act are in ad dition to,
and do not limit or affect, other actions available by statute or
common law, now or in the future . The statutory causes of action
created by this act are in addition to the common law bad faith
causes of action and in no w ay limit remedies or rights established
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by common law for the cause of action for breach of the duty of good
faith and fair dealing under Oklahoma law.
SECTION 9. This act shall become effective November 1, 2025.
Passed the House of Representatives the 13th day of March, 2025.
Presiding Officer of the House
of Representatives
Passed the Senate the _____ day of __________, 2025.
Presiding Officer of the Senate