Shields Departing Senate with One More Insurance Reform Bill in His Quiver

Senate Bill 1591 will open up to the public the consumer complaints filed with the Insurance Division, which acts as the primary recourse against abuses in the state insurance industry. Shields, the longtime critic of the industry, is not seeking re-election, making it his last significant legislative success.

Sen. Chip Shields, D-Portland, is leaving the Oregon Senate where he began: nudging along the often intractable insurance industry toward more accountable business practices for Oregon’s citizens and entrepreneurs.

On Tuesday, Shields brought to the floor Senate Bill 1591 -- which gives the public access to complaints against insurance companies filed with the Oregon Insurance Division, and any actions the state agency takes against these companies. The bill passed the Senate 26-1, with just Sen. Doug Whitsett, R-Klamath Falls, the chamber’s most conservative member, opposing.

“The complaints and what comes of those complaints is currently considered confidential. [This legislation] seeks to bring transparency to the regulatory complaint process,” said Emily S. Miller, an insurance coverage attorney at Parsons, Farnell & Grein in downtown Portland.  “Not only would this allow small businesses and Oregon insureds to better vet their insurance options, but this would create a natural incentive for insurance companies to avoid the kinds of practices that give rise to regulatory complaints.”

If SB 1591 becomes law, journalists and the public as well as consumers will be able to access records of complaints filed with the Oregon Insurance Division against leading health insurers like Regence BlueCross BlueShield or Providence Health Plan and learn what the state is doing to protect consumers.

“The first bill I passed in 2005 was an insurance reform bill, and the last bill I pass is an insurance reform bill,” Shields remarked, noting bittersweetly that SB 1591 will likely be the last bill he sponsors and carries on the Senate floor before he hangs up his spurs at the end of the session.

After seven years in the state Senate and 12 overall  in the Legislature, Shields has declined to seek re-election in November. During his tenure, the Portland liberal made the insurance industry the target of his ire, culminating with his failed attempt in 2013 to force insurers to abide by the consumer protections of the Unlawful Trade Practices Act, which would allow them to be sued for fraud.

“Insurance is the only line of business that is exempt from the state’s anti-fraud statute,” Shields reminded his colleagues Tuesday.

Despite hours of testimony from citizens and small-business owners who testified that insurers had brazenly refused to pay legitimate claims -- a situation Shields argued was caused by their immunity to fraud -- the anti-fraud law passed the House on a bipartisan vote only to die in a Senate committee because it lacked the support of moderate Democrats, including Sen. Betsy Johnson of Scappoose and Sen. Laurie Monnes Anderson of Gresham.

Shields told The Lund Report on Monday that SB 1591 is being passed as a consensus compromise with key backing from moderate Democrats, including Sen. Lee Beyer of Springfield and Senate Majority Leader Ginny Burdick of Portland.

The Senate Business and Transportation Committee passed SB 1591 unanimously, after the insurance industry lobbied to kill Shields’ further-reaching measure, SB 1590, which would have required insurers to defend policyholders against lawsuits.

SB 1590 was also opposed by some insurance brokers, including Kelsey Wood of Roseburg, who argued that forcing insurers’ hands in such a way could raise premiums and limit his ability to offer certain kinds of small business insurance.

“Football is a game of inches. Sometimes the Legislature feels like a game of millimeters,” Shields said. “[SB 1591] isn’t what I’d prefered to pass, but it’s an advancement nonetheless.”

Shields said SB 1590 had been borne of a bipartisan workgroup focused on protecting small businesses that included two Willamette Valley business owners -- Sen. Kim Thatcher, R-Keizer and Sen. Alan Olsen, R-Canby. Shields’ wife, a nurse practitioner, also owns a small business, the Hands on Medicine clinic in north Portland. SB 1591 spins off one concept from SB 1590 into a stand-alone bill.

If SB 1591 had been brought forward in a vacuum, Shields said the insurance industry likely would have killed it. But insurers had spent their energy attacking SB 1590, and Burdick and committee chairman Beyer backed Shields’ desire to pass something significant, so the insurance industry did not fight the lesser measure.

In 2013, the insurance industry’s unexpected support helped pass into law another sleeper pick that Shields had sponsored, which empowered the state insurance commissioner to force insurers to pay claims. Their support for increased regulation came as they faced the prospect of private right of action under the anti-fraud law.

Shields is widely expected to be replaced in the election for the heavily Democratic Senate seat by Rep. Lew Frederick, D-Portland. Frederick’s House district, which Shields once represented, corresponds with the eastern half of Shields’ Senate district, which stretches across the north side of Portland.

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