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Insurer’s Statutory Duties

Insurance companies have various duties under Arizona statutes, including the following:

Ariz. Rev. Stat. Ann. § 20-442 – Unfair Insurance Practices Act

Arizona’s unfair trade practices act provides: “[n]o person shall engage in this state in any trade practice which is prohibited by this article, or defined in this article as, or determined pursuant to this article to be, an unfair method of competition or an unfair or deceptive act or practice in the business of insurance.” Ariz. Rev. Stat. Ann. § 20-442. This statute does provide for a private cause of action.

Arizona law also proscribes a number of unfair claim settlement practices. Ariz. Rev. Stat. Ann. § 20-461(A)(1)-(18). Unfortunately, by its own mandate, the section is not “intended to provide any private right or cause of action to or on behalf of any insured or uninsured resident or nonresident of this state.” Ariz. Rev. Stat. Ann. § 20-461(D). However, if those regulations have been adopted by the insurer as part of its policies and procedures, arguably, its violation of them would be relevant on the issue of bad faith.

Ariz. Rev. Stat. Ann. § 20-3153 – Health Care Insurer Liability

Arizona’s new health insurer bad faith statute does provide a private right or cause of action in relation to health care insurance coverage. The statute provides that: A. A health care insurer is liable for any damages caused to the insurer’s enrollee by the insurer’s delay in authorizing or failure to authorize a request for medically necessary health care services covered under the health care plan or by the insurer’s denial of payment of benefits covered under the health care plan if both:

1. The health care insurer delayed authorizing or failed to authorize the requested health care services or denied payment of the covered benefits without a reasonable basis for that action.

2. The health care insurer knew that it acted without a reasonable basis or failed to perform an investigation or evaluation adequate to determine whether its action was supported by a reasonable basis.

B. A health care insurer:

1. Is liable under this section if the insurer’s conduct was a cause of the enrollee’s damages and if the damages would not have occurred without that conduct.

2. Is not liable under this section if the insurer’s conduct under this section was inadvertent or unintentional.

Ariz. Rev. Stat. Ann. § 20-3153.