Bill Amendment: IL SB1296 | 2015-2016 | 99th General Assembly

NOTE: For additional amemendments please see the Bill Drafting List

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Bill Title: INDEPENDENT COUNSEL-INSUREDS

Status: 2015-10-10 - Pursuant to Senate Rule 3-9(b) / Referred to Assignments [SB1296 Detail]

Download: Illinois-2015-SB1296-Senate_Amendment_001.html

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Sen. John G. Mulroe

Filed: 4/17/2015

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AMENDMENT TO SENATE BILL 1296
AMENDMENT NO. ______. Amend Senate Bill 1296 by replacing
everything after the enacting clause with the following:
"Section 1. Short title. This Act may be cited as the
Insured's Independent Counsel Act.
Section 5. Provision of independent counsel required.
(a) If an insurer has a duty to defend an insured under a
policy of insurance and a significant and actual conflict of
interest arises that imposes a duty on the insurer to provide
independent counsel to the insured, the insurer shall provide
independent counsel to the insured as provided in this Act
unless the insured waives the right to independent counsel in
writing.
(b) For purposes of this Act, "significant and actual
conflict of interest" means an insurance policy coverage issue
upon which the insurer has reserved its rights and that the

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outcome of that insurance policy coverage issue can be
controlled by the insured's counsel's defense of the lawsuit. A
"significant and actual conflict of interest" does not include:
(1) claims or facts in a civil action for which the
insurer denies coverage;
(2) the mere issuance of a reservation of rights letter
by the insurer;
(3) a claim of damages in excess of the policy limits;
(4) a claim of punitive damages; or
(5) any other conflict that is not significant and
actual.
Section 10. Independent counsel selection.
(a) If a significant and actual conflict of interest arises
that requires appointment of independent counsel, the insurer
shall provide the insured with a list of 3 attorneys who are
independent of the insurer's approved law firm panel and meet
the criteria set forth in subsection (b). The insured must
either select one attorney from the list or select alternative
counsel of its choosing who also meets the criteria set forth
in subsection (b) to defend the insured.
(b) Independent counsel retained under this Act must have:
(1) significant defense litigation experience in the
general subject areas at issue in the civil action; and
(2) malpractice insurance.
(c) The insurer may also require that the independent

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counsel follow any guidelines the insurer has in place for
counsel it retains in the defense of similar civil actions in
the ordinary course of business. The obligation of the insurer
to pay the fee charged by the independent counsel is limited to
the rate that is actually paid by the insurer to an attorney in
the ordinary course of business in the defense of a similar
civil action in the community in which the claim arose or is
being defended. In providing independent counsel, the insurer
may not be responsible for the fees and costs of defending an
allegation for which coverage is properly denied and may only
be responsible for the fees and costs to defend those
allegations for which the insurer either reserves its position
as to coverage or accepts coverage. The independent counsel
shall keep detailed records allocating fees and costs
accordingly. Nothing in this Section shall require the insured
to hire separate independent counsel to defend the insured for
counts for which coverage has been properly denied. Independent
counsel may defend the insured on all counts filed against the
insured.
(d) An insurance policy may contain a provision that
provides a method of selecting independent counsel which
complies with this Section.
Section 15. Other counsel. Any counsel the insured may
retain in addition to the independent counsel selected under
Section 10 of this Act shall be hired at the insured's sole

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expense.
Section 20. Duties of independent counsel; privileged
information. Independent counsel hired under this Act shall
timely consult with the insurer on all matters relating to the
civil action and shall disclose to the insurer in a timely
manner all information relevant to the civil action, except
privileged information solely related to the significant and
actual conflict of interest. A claim of privilege is subject to
review in the appropriate court. Information disclosed by the
independent counsel or the insured to the insurer does not
operate as a waiver of any applicable privilege or work product
protection.
Section 25. Waiver of right to select independent counsel.
An insured may waive the right to select independent counsel by
signing a statement that reads substantially as follows: "I
have been advised of my right to select independent counsel to
represent me in this lawsuit and of my right under State law to
have all reasonable expenses of an independent counsel paid by
my insurer. I have considered this matter fully and at this
time I am waiving my right to select independent counsel. I
have authorized my insurer to select a defense counsel to
represent me in this lawsuit.".
Section 30. Cooperation between insurer, insured, and

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independent counsel. Independent counsel shall cooperate fully
in exchanging information that is consistent with ethical and
legal obligations to the insured. Nothing in this Act is
intended nor shall restrict independent counsel's exercise of
professional judgment in rendering legal services for the
insured or otherwise interfere with any ethical directive
governing the conduct of counsel. Nothing in this Act relieves
the insured of the duty to cooperate fully with the insurer as
required by the terms of the insurance policy.
Section 35. Insurer's counsel. The insurer has the right
to retain its own counsel in addition to the independent
counsel selected under Section 10 of this Act to associate in
and participate in all aspects of the lawsuit at the insurer's
own expense.".