# COMAR Title 31 — Maryland Insurance Administration

## Subtitle 15 — Unfair Trade Practices

### Chapter 15 — Liability of Insurer — Failure to Act in Good Faith

**Authority:** Courts and Judicial Proceedings Article, §3-1701; Insurance Article, §§2-109(a)(1) and 27-1001; Annotated Code of Maryland

**Administrative History:** Effective date: March 27, 2017 (44:6 Md. R. 328)

#### Regulation .01 Purpose.

*COMAR 31.15.15.01*

A. The purpose of this chapter is to:

  (1) Establish the procedures for filing and processing civil complaints against property and casualty insurers and insurers that offer disability insurance that are required to be filed with the Administration pursuant to Insurance Article, §27-1001, Annotated Code of Maryland; and

  (2) Require property and casualty insurers and insurers that offer disability insurance that are the subject of a civil action described in Courts and Judicial Proceedings Article, §3-1701(d), Annotated Code of Maryland, to report to the Administration certain information that the Administration is required to submit to the General Assembly pursuant to Insurance Article, §27-1001(h), Annotated Code of Maryland.

B. This chapter is considered necessary to carry out Insurance Article, Title 27, Subtitle 10, Annotated Code of Maryland.

#### Regulation .02 Applicability and Scope.

*COMAR 31.15.15.02*

A. This chapter is applicable to all insurers that issue, sell, or deliver a policy of property and casualty insurance, and insurers that issue, sell, or deliver a policy of individual disability insurance, that includes first-party coverage in this State.

B. This chapter applies to:

  (1) All civil complaints purporting to state a cause of action under Courts and Judicial Proceedings Article, §3-1701, Annotated Code of Maryland, that are required to be filed with the Administration pursuant to Insurance Article §27-1001, Annotated Code of Maryland; and

  (2) All civil complaints that are to be reported to the General Assembly pursuant to Insurance Article, §27-1001, Annotated Code of Maryland.

#### Regulation .03 Definitions.

*COMAR 31.15.15.03*

A. In this chapter, the following terms have the meanings indicated.

B. Terms Defined.

  (1) “27-1001 filing” means the complaint and supporting documentation filed by the plaintiff that are submitted to the Administration pursuant to Insurance Article, §27-1001(d)(1) and (2), Annotated Code of Maryland.

  (2) “Complaint” means a written document that purports to state a cause of action under Courts and Judicial Proceedings Article, §3-1701, Annotated Code of Maryland.

  (3) “Defendant insurer” means the insurer that is the subject of the complaint.

  (4) “Good cause” means a privilege or doctrine recognized by statute or other law in the State as a basis on which to refuse to produce a document in response to civil discovery requests.

  (5) “Plaintiff” means the person who is asserting the cause of action set forth in a complaint.

  (6) “Responsive filing” means the response to the complaint filed by the defendant insurer with the supporting documentation that meets the requirements of Insurance Article, §27-1001(d)(4), Annotated Code of Maryland.

#### Regulation .04 Filing the Complaint.

*COMAR 31.15.15.04*

A. Plaintiff Filing a Complaint.

  (1) A plaintiff filing a complaint that is required to be filed with the Administration in accordance with Insurance Article, §27-1001, Annotated Code of Maryland, shall submit the complaint to the Administration in accordance with the following procedures:

    (a) The complaint shall include the information and be accompanied by the documents identified in Insurance Article, §27-1001(d)(2), Annotated Code of Maryland;

    (b) The plaintiff shall file an original and one copy of the 27-1001 filing; and

    (c) The 27-1001 filing shall be accompanied by a civil cover sheet.

  (2) The form of the civil cover sheet shall be determined by the Administration and published by bulletin. The civil cover sheet shall be available:

    (a) On the Administration’s website;

    (b) At the Administration’s offices; and

    (c) By mail on request of the plaintiff.

B. The 27-1001 filing and civil cover sheet shall be filed by sending them by:

  (1) First-class mail addressed to the Hearing and Appeals Clerk, Maryland Insurance Administration, 200 St. Paul Place, Suite 2700, Baltimore, Maryland 21202;

  (2) A commercial overnight delivery service addressed to the Hearing and Appeals Clerk at the Administration’s official street address; or

  (3) Hand delivery addressed to the Hearing and Appeals Clerk between the hours of 8 a.m. and 4 p.m. at the official street address of the Administration.

C. The 27-1001 filing and civil cover sheet shall be filed in an envelope marked in bold print in the lower left corner “27-1001 Filing”.

#### Regulation .05 Defendant Insurer’s Responsive Filing.

*COMAR 31.15.15.05*

A. Not later than 30 days after the Administration forwards the 27-1001 filing to the defendant insurer, the defendant insurer shall file a responsive filing with the Administration and mail a copy of it to the plaintiff.

B. The defendant insurer may, for good cause, withhold any document or evidence from its responsive filing that is required to be filed under Insurance Article §27-1001(d)(4), Annotated Code of Maryland.

C. If the defendant insurer elects to withhold any document or evidence from its responsive filing, the defendant insurer shall submit, along with its responsive filing, an index listing each document that is being withheld, in a manner sufficient to identify the document or evidence, and the basis for withholding the document.

D. In-Camera Inspection.

  (1) If the defendant insurer elects to withhold any document or evidence from its responsive filing, the defendant insurer shall submit, along with its responsive filing and the index required under §C of this regulation, a copy of each document listed on the index for in-camera inspection by the Administration.

  (2) Each copy of each document or evidence submitted to the Administration for in-camera inspection shall be clearly stamped “Withheld for Good Cause”.

  (3) All copies submitted to the Administration for in-camera inspection shall be placed in a separate, sealed envelope that includes the case name and MIA filing number and that is marked “Documents Withheld by Defendant Insurer [Name of Insurer] for Good Cause”.

E. The defendant insurer shall file an original and one copy of its responsive filing and the index required under §C of this regulation, along with an electronic copy of the responsive filing and the index on a CD-ROM formatted in PDF (Portable Document Format). The CD-ROM submitted by the defendant insurer may not include the documents submitted to the Administration for in-camera inspection under §D of this regulation.

F. The defendant insurer’s responsive filing and the index and documents required under §§C and D of this regulation shall be filed with the Administration by:

  (1) First-class mail addressed to the Hearing and Appeals Clerk, Maryland Insurance Administration, 200 St. Paul Place, Suite 2700, Baltimore, Maryland 21202;

  (2) A commercial overnight delivery service addressed to the Hearing and Appeals Clerk at the Administration’s official street address; or

  (3) Hand delivery addressed to the Hearing and Appeals Clerk between the hours of 8 a.m. and 4 p.m. at the official street address of the Administration.

G. The responsive filing and the index required under §C of this regulation shall be filed in an envelope marked in bold print in the lower corner “27-1001 Responsive Filing”.

H. The documents submitted to the Administration for in-camera inspection under §D of this regulation are not required to be included in the materials sent to the insured under Insurance Article, §27-1001(d)(4)(ii), Annotated Code of Maryland.

#### Regulation .06 Administration’s Review.

*COMAR 31.15.15.06*

A. The Administration shall review each document or other evidence that the defendant insurer has submitted to the Administration for in-camera inspection under Regulation .05D of this chapter.

B. If the Administration determines that any document or other evidence that the defendant insurer has withheld for good cause is not subject to a privilege or doctrine recognized by statute or other State law and the reason asserted for its withholding is not consistent with Insurance Article, §27-1001, Annotated Code of Maryland, or this regulation, the Administration shall:

  (1) Find that good cause has not been shown as to that document or evidence; and

  (2) Require the defendant insurer to:

    (a) Provide copies of the document or evidence; or

    (b) Give written notice to the plaintiff of its intent to continue to withhold the documents or evidence.

C. The defendant insurer shall reply under §B(2)(a) or (b) of this regulation within 5 business days after the Administration’s determination that the document or evidence is not subject to withholding.

D. After the Administration makes a determination with regard to any document or other evidence the defendant insurer seeks to withhold for good cause, it shall promptly return the documents or other evidence to the defendant insurer at the address of record.

E. The defendant insurer shall advise the Administration in writing within 5 business days after the Administration’s determination that the document or evidence is not subject to withholding if it has elected to:

  (1) Produce the document or evidence to the plaintiff as required; or

  (2) Maintain its position that the document or evidence is being withheld for good cause.

F. If the defendant insurer elects to produce some, but not all, of the documents or evidence which the Administration has determined are not subject to withholding, it shall advise the Administration, in writing, as to which documents or evidence it has produced to the plaintiff and which it has not, and its reasons.

G. The Administration’s final determination will take into consideration a defendant insurer’s failure to disclose documents or evidence which the Administration determined were not being withheld for good cause, and shall consider the defendant insurer’s refusal to produce the documents or evidence to the plaintiff following the in-camera inspection as evidence of the defendant insurer’s failure to act in good faith as required by Insurance Article, §27-1001(e)(4), Annotated Code of Maryland.

#### Regulation .07 Duties of Defendant Insurers.

*COMAR 31.15.15.07*

A. Each property and casualty insurer and insurers that offer individual disability insurance that issue, sell, or deliver a policy that includes first-party coverage in the State shall designate a person authorized to receive 27-1001 filings from the Administration.

B. Each Insurer to which this chapter applies shall notify the Administration of the name and address of the defendant insurer’s 27-1001 filing designee.

C. An insurer that fails to notify the Administration of its designee is considered to have appointed the person previously identified by the insurer to receive process that has been served on the Commissioner as attorney-in-fact, as the insurer’s 27-1001 filing designee until the insurer has notified the Administration of its 27-1001 filing designee.

D. Notice of Disposition.

  (1) Each defendant insurer shall advise the Administration, in writing, as to a disposition by the Office of Administrative Hearings or any court of law of any complaint filed against the defendant insurer under Courts and Judicial Proceedings Article, §3-1701, Annotated Code of Maryland.

  (2) The notice of disposition shall be on the form determined by the Administration and published by bulletin and shall be sent to the Hearing and Appeals Clerk at the Administration within 30 days of the disposition.

  (3) The notice of disposition shall identify:

    (a) The adjudicatory body that issued the disposition;

    (b) The case name and number before that adjudicatory body, as well as the case name and number of any underlying or prior dispositions with respect to that complaint;

    (c) Whether the complaint seeks a determination as to:

      (i) Coverage;

      (ii) An alleged failure by the defendant insurer to adequately value, pay, or value and pay the underlying insurance claim; or

      (iii) Both §D(3)(c)(i) and (ii) of this regulation;

    (d) The type of coverage at issue in the complaint, such as auto UM/UIM, homeowner’s, commercial general liability, individual disability, or other;

    (e) The amount sought as damages in the complaint, itemized by:

      (i) The amount sought as actual damages; and

      (ii) The amount sought as expenses and litigation costs, including attorney’s fees;

    (f) The disposition with respect to each count of the complaint;

    (g) A summary of any determinations made;

    (h) A listing of any amounts awarded by the adjudicatory body; and

    (i) Whether any further proceedings before that body or another tribunal have been filed or are expected to be filed.

E. Notice of Pending Complaint.

  (1) Each defendant insurer shall advise the Administration, in writing, when it is served with a complaint that was not originally filed with the Administration.

  (2) The notice of the pending complaint shall be on the form determined by the Administration and published by bulletin and shall be sent to the Hearing and Appeals Clerk at the Administration within 30 days of service of process.

  (3) The notice of the pending complaint shall identify:

    (a) The court in which the complaint was filed;

    (b) The case name and number assigned to the complaint;

    (c) The parties to the complaint;

    (d) The reason why the complaint was not required to be filed with the Administration before being filed with the court;

    (e) Whether the complaint seeks a determination as to:

      (i) Coverage;

      (ii) An alleged failure by the defendant insurer to adequately value, pay, or value and pay the underlying insurance claim; or

      (iii) Both §E(3)(e)(i) and (ii) of this regulation;

    (f) The type of coverage at issue in the complaint, such as auto UM/UIM, homeowner’s, commercial general liability, individual disability, or other; and

    (g) The amount sought as damages in the complaint; itemized by:

      (i) The amount sought as actual damages; and

      (ii) The amount sought as expenses and litigation costs, including attorney’s fees.