Pay Your Bill, Change Your Policy

April 17, 2012 by  
Filed under Consumer Protections, Recent Blog Posts

UPDATE 4/19/12, 9:00 am: SB2271 passed in the Senate; The House will hear it this morning at 9:00 am. Watch here:

UPDATE 4/18/12, 8:47 am: Watch the Senate debate SB2271 live by going to It is #14 on today’s calendar.

UPDATE 4/17/12: SB2271 is now scheduled to be heard tomorrow morning, Wednesday, 4/18, at 8:30 am

Just as we’re beginning to pass effective public policy on the federal level that protects consumers, we’re heading in the opposite direction in Tennessee.

Not surprising, really, as we’ve already discussed at length the many ways in the which the Tennessee General Assembly is crafting and passing public policy that caters to large corporations and their twenty-first century robbers baron CEOs instead of writing rules that boost the well-being and productivity of hardworking middle and working class families.


The bill we are going to focus on today is what is called a “caption bill.” The best explanation of a “caption bill” was written in 2009 by Tom Humphrey of the Knoxville News Sentinel. Read it here. Mr. Humphrey writes, “Late in most every session of the Tennessee General Assembly, fresh new ideas are brought onto the legislative scene through caption bills, a part of the lawmaking art that may be seen as institutionalized sneakiness [emphasis ours].” FYI, April 16 is late in the session. Read more…


This Thursday, the full Tennessee House of Representatives is set to vote on House Bill 2454 (HB2454) / Senate Bill 2271 (SB2271).

The caption of HB2454/SB2271 reads:

“Insurance Companies, Agents, Brokers, Policies – As introduced, creates requirements for issuance of certificates of insurance; clarifies the effect of such certificates; and authorizes oversight by the commissioner of commerce and insurance regarding regulation and assessing fines in relation thereto — Amends TCA Title 56.”

Title 56 of the Tennessee Code is titled “Insurance” and has 32 chapters and countless parts in each chapter that cover everything from the set up of the Department of Commerce and Insurance to the regulation of all types of insurance and insurance companies. Go take a look at everything Title 56 does here.

So now with a bit of background, there are two things you need to know:

  1. The original bill has been replaced in its entirety with an amendment that creates an unfair financial advantage for large insurance companies over consumers and small businesses, and
  2. The sponsors of the bill, Sen. Jim Tracy (R-Shelbyville) and Rep. Charles Sargent (R-Franklin), are both insurance agents.

HB2454 / SB2271 – THE DETAILS

SPONSORS: Rep. Charles Sargenat (R-Franklin), Sen Jim Tracy (R-Shelbyville)
SUMMARY: With it’s shiny new amendment, HB2454 now reads that if an insurance company changes your policy and notifies you in the fine print of a flyer they send to you with your bill, the change to your policy will take effect and bind you to that change by the simple act of you paying your bill. In other words, HB2454 says that your written and cashed check or automatic bill payment is enough to allow them to completely change your policy.

And this isn’t a bill that would just hurt consumers. It would harm any entity that buys insurance — including small businesses that hire and administrative person to handle all their bill payments. How many bookkeepers read every piece of paper included in a bill and how will you be able to prove that they didn’t?

The U.S. insurance industry has trillions of dollars in assets, enjoys average profits of over $30 billion a year, and pays its CEOs more than any other industry. This is just another example of how they still engage in dirty tricks and unethical behavior at the consumer’s expense to boost their bottom line even further.


HB2454 / SB2271 is NOT the beginning of our state legislature chipping away at consumer rights and giving an unfair advantage to large corporations. Two bills passed LAST YEAR gave insurance companies the breathing room they needed to take advantage small businesses and families.

FIRST, the 1977 Tennessee Consumer Protection Act, which created the Tennessee Division of Consumer Affairswas gutted in 2011 by a new law that took away our right to hold an insurance company accountable for unfair and deceptive business practices. The 1977 Tennessee Consumer Protection Act gave you or me or the proprietor of a small business the ability to hold insurance companies accountable for “Engaging in any other act or practice which is deceptive to the consumer or to any other person…” And if a jury found that the company have violated the Consumer Protection Act, they could help hold them accountable by hitting them where it hurts – the pocketbook. But a piece of new law, Section 15 of the new Civil Injustice Act of 2011, gutted this provision and made it so that only the attorney general of the state can bring a suit against an insurance company. Now given the reality of the attorney generals limited time and resources, it is unlikely they will be able to take the time to bring most of the claims.

For a big picture look at what they’re trying to do, check out this law making it’s way through the legislature right now that would change the Tennessee Constitution to give the governor the sole authority to appoint the attorney general. Yikes, they’re covering all their bases to prevent accountability and transparency from making it to home plate!

SECOND, to be sure insurers have all the power and families and small businesses who need to buy insurance have none, HB 1189 was passed to remove insurance fraud completely from under the Tennessee Consumer Protection Act.

When this bill became law last year, it removed any legal recourse to sue an insurance company who refused to pay a claim. An example would be if your insurance company finds a fraudulent reason to refuse to pay your flood insurance even though you followed the rules and had paid for your bill on time for decades.

LAST, even though our law still forbids “deceptive and unfair acts” by insurance companies, the only person who can enforce the law now is the insurance commissioner since hardworking Tennesseans have no right to hold insurance companies accountable through legal action.

The current commissioner of insurance is a former insurance company lawyer.


It’s worth noting that two recent high visibility lawsuits by businesses against insurers included consumer protection act claims: Gaylord’s suit against their insurer for not paying fully for the Opry Mills flood damage and Gibson’s case against its insurer for the same issue. Those claims were filed under the old law. Those claims could not be brought under the new law.

To be complete, there are still some small ways to hold insurers accountable that have not yet been whacked. But the ones with real teeth – the ones that provide a deterrent against abusive business practices by giant insurance corporations – are now gone, gone, gone.

Tennessee families are working harder, getting paid less, and falling behind our parents’ generation. Now more than ever, hardworking Tennesseans need the protection from abusive business practices.


As we mentioned above, this Wednesday the full Senate is set to vote on SB2271 and this Thursday the full House will vote on HB2454. Find your Senator or Representative by going here and typing in your address and zip code, or by calling 615-741-1100.

Urge your representatives to protect consumers and prevent the further erosion of consumer rights in Tennessee and vote NO on HB2454.


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  1. […] that the Department of Commerce and Insurance was aware of, and supported, the bill. The bill, SB2271 (HB2454) by Rep. Charles Sargent and Sen. Jim Tracy, states that a consumer or small business is bound to a […]

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