On December 1, 2013, Sen. Kurt Schaefer, R-Columbia, prefiled Missouri SB 498. If passed, this bill would require licensed health insurance navigators to post a surety bond for at least $100,000. This bill is intended to protect consumers by giving them the ability to collect up to $50,000 if their data is misused and/or given to an entity that is not entitled to the information.
Health insurance navigators are licensed professionals who do the following:
- provide public education about the availability of qualified health plans
- distribute unbiased information about enrollment in qualified plans (including the availability of premium tax credits and cost-sharing assistance in the exchange)
- facilitate enrollment in qualified plans
- refer people who need help resolving a problem with their health plan or with their premium assistance to a consumer assistance program or to another appropriate agency that can help with a grievance or appeal
- provide information in a culturally and linguistically appropriate manner to the population being served by an exchange
According to an article about the bill that ran on the Columbia Daily Tribune’s website on Wednesday, January 8, 2014, “local health insurance navigators have mixed reactions to proposed legislation that would require them to be bonded.”
As is, SB 498 contains discrepancies that are not typically accepted in the bonding industry. Section 376.2004, article 1, paragraph 7 states the following:
“(7) Filed with the director, and maintains during the term of the license, in force and unimpaired, a bond in an amount no less than one hundred thousand dollars from an insurer authorized to do business in this state to protect all persons against the wrongful acts, misrepresentations, errors, omissions, or negligence of the navigator. No bond shall be terminated by the bond issuer unless at least thirty days’ prior notice is given to the navigator and director;…”
This paragraph states that surety bonds protect consumers from “the wrongful acts, misrepresentations, errors, omissions, or negligence of the navigator.” Although surety bonds can offer coverage against anything stated in the surety contract, most surety underwriting companies won’t take on the liability of underwriting a bond (1) in which the provisions are vague and (2) that doubles up on the coverage offered by a traditional errors and omissions policy. To encourage sureties to produce this bond, it would make sense for the bill to require licensed health insurance navigators to post both a surety bond and an errors and omissions policy. Additionally, “wrongful acts, misrepresentations, errors, omissions, or negligence of the navigator” should be better defined.
Section 376.2013, lines 6-13 state the following:
“Any person whose personal identifying information is released in violation of this section shall be entitled to bring an action for damages and for such equitable relief, including an injunction, as the court deems necessary and proper. If the court finds for the plaintiff, recovery shall be in the amount of actual damages or fifty thousand dollars, whichever is greater. In addition, a prevailing plaintiff shall be awarded court costs and reasonable attorney’s fees, as determined by the court.”
This excerpt states that consumers are entitled to payment of $50,000 or the amount of actual damages — whichever is greater — should the “wrongful acts, misrepresentations, errors, omissions, or negligence of the navigator” be proven. As currently written, a plaintiff’s actual damages could amount to $15,000, but he or she would receive $50,000 (a $35,000 surplus) to cover losses. The legislation goes on to state that “in addition, a prevailing plaintiff shall be awarded court costs and reasonable attorney’s fees, as determined by the court.” As currently written, the bill states that consumers are entitled to damages of up to $50,000 and court costs and attorney’s fees. Instead, the legislation should state that consumers are entitled to damages and court costs and reasonable attorney’s fees (as determined by the court) not to exceed the penal sum of the bond. Addressing both of these issues would encourage sureties to write this bond in the event SB 498 does pass. As it stands now, this looks like another case of overzealous politicians proposing bond requirements before consulting the surety industry. Despite attempts, Schaefer was unavailable for comment or clarification.
Missouri SB 498 is in the very early legislative stages, so check back for updates in the coming weeks. The Surety Bond Insider makes it a point to stay-up-to-date on news pertaining to the surety industry on a local, state and federal level. Read SB 498 in its entirety here.
If you need a surety bond in Missouri or any other state, contact SuretyBonds.com online 24/7 or by phone at 1 (800) 308-4358 Monday through Friday between 7 a.m. and 7 p.m. CST. Our surety experts are on hand, ready to assist you with all of your bonding needs.