Senate Bill 418, codified into West Virginia Code Section 33-11-4a, eliminates suits by third parties against any person for violation of the Unfair Claims Settlement Practices Act under West Virginia Code Section 33-11-4(9), whether brought in a separate suit or in the underlying litigation. The sole remaining remedy available to a third-party claimant for conduct defined as unfair settlement practices or bad faith settlement of a claim is an administrative complaint. 

The complaint must be filed with the Commissioner no later than one year following the actual or implied discovery of the alleged unfair claims settlement practice.

On a form provided by the Commissioner, the claimant must state the following information: 

If any part of the complaint is deficient, the Commissioner must contact the claimant within 15 days of receipt to obtain the necessary follow-up information.

The Commissioner must provide the person or entity against whom the complaint was filed with written notice of the complaint. (Proposed administrative rules require notice to be given within five (5) days) If the respondent either: (1) substantially corrects; or (2) offers to resolve the complaint in a manner the Commissioner finds reasonable within 60 days, the Commissioner will close the complaint.  The insurer must report to the Commissioner in writing of the disposition of the complaint within 15 days of its disposition, but no later than 45 days from receipt of notice of the complaint from the Commissioner.  If there is no disposition, the insurer must report to the Commissioner in writing on the status of negotiations with the insured within 45 days of receiving notice.

If the complaint remains open after 60 days, the Commissioner may conduct an investigation to determine the merits of the allegations. If the Commissioner finds the complaint has merit, and that it has not been resolved, the complaint shall be forwarded to the Office of Consumer Advocacy (“OCA”), who may advocate for the claimant’s interest at any hearing or judicial review. The Commissioner may at his or her discretion order further investigation and a hearing to determine if the insurer has submitted an Unfair Claims Settlement Practice and, if so, the extent of the violation. If the Commissioner elects to have a hearing, she shall give 10 days notice of the hearing, and it shall be held in the geographic region of the state where the complainant resides. The hearing shall be held within 90 days of the filing of the complaint, unless the parties or the Commissioner agree to an extension. Under proposed regulations, corporations must be represented by a counsel licensed by the state of West Virginia. 

The Commissioner shall determine whether or not the respondent committed the unfair claims settlement tractice alleged in the complaint and, if so, shall also determine whether it was intentional, whether it was committed with such frequency as to constitute a general business practice and whether it was a result of an egregious act. 

If the Commissioner finds that the insurer has violated a provision of the Unfair Claims Settlement Practices Act, the Commissioner may take appropriate action. Such action shall include: (1) a cease and desist order; and may also include (2) a fine; and (3) restitution to the claimant from the Unfair Claims Settlement Victims Trust Fund. It can also result in revocation or suspension of the license to do business if the person knew or reasonably should have known that he or she was in violation of the articles. 

Fines are paid to the State of West Virginia and differ, depending upon the level of culpability of the insurer:

Restitution, which can be awarded to a claimant who has suffered damages as a result of a general business practice or an egregious act, regardless of whether it occurred as a general business practice, may include: (1) actual economic damages; and (2) non-economic damages not to exceed $10,000.00. Restitution may not include attorney’s fees or punitive damages. 

Any person aggrieved by any such order may appeal to the circuit court of Kanawha County, or the judge thereof in vacation, within 30 days after the order or the order denying rehearing has been mailed or delivered to the persons entitled to receive the same, by presenting a written petition to such court or judge and mailing a copy to the Commissioner. Upon receipt of the petition, the Commissioner must transmit to the clerk of that court the record of the proceedings. The court or judge will then set a time for hearing the petition. The petitioner must give notice, in writing, of the time and place of the hearing to the Commissioner at least 15 days prior to the hearing. The court or judge, without a jury, will then hear and determine the matter upon the record of the proceedings before the Commissioner. However, if good cause is shown, the court may permit the introduction of additional evidence, and may enter an order revising or reversing the order of the Commissioner for further proceedings.

The Supreme Court of Appeals may review the judgment of the circuit court upon appeal in the same manner as other civil cases to which the State is a party.