Demand Letters and Insurance Bad Faith Claims

The New Demand Letter Law in Georgia; When is the Insurance Company Acting in Bad Faith

For years, case law governing what duties an insurance company has when faced with policy limits demand by an accident victim has been evolving through a series of Appellate judicial decisions. Chief among those decisions were:

Southern General vs. Holt, 262 Ga.267, 416 S.E.2d 274 (1992): If an insurance company refused to pay their policy limits to a victim when requested and the jury returned a verdict for the injuries in excess of the insurance policy, it allowed a new lawsuit to proceed directly against the insurance company to consider whether the refusal to pay was in “bad faith” in that the insurance company did not shield their client when they could have.

Cotton States v. Brightman 276 Ga. 683,580 S.E. 2d. 519 (2003): Clarified that the insurer had to be judged not only on the bad faith issue but also on whether or not they negligently adjusted the claim.

Over the years, stupid Plaintiffs lawyers played fast and loose with these rulings and sent less and less reasonable demands, sometimes employing trickery in the demand language until one fool gloated on the front page of the Legal Newspaper about his "success" in tricking insurance companies. The natural result was action by the legislature and a return to sanity.

Here is the new law: OCGA §9-11-67.1:

"(a) Prior to the filing of a civil action, any offer to settle a tort claim for personal injury, bodily injury, or death arising from the use of a motor vehicle and prepared by or with the assistance of an attorney on behalf of a claimant or claimants shall be in writing and contain the following material terms:

  1. The time period within which such offer must be accepted, which shall be not less than 30 days from receipt of the offer;
  2. Amount of monetary payment;
  3. The party or parties the claimant or claimants will release if such offer is accepted;
  4. The type of release, if any, the claimant or claimants will provide to each release; and
  5. The claims to be released"
ANALYSIS:

Now this is interesting. The first section says the law only applies if the lawsuit has not been filed. The door is probably open for the Plaintiff's attorney to file suit and then send a non-compliant demand. Again, technically the door is likely open but as a practical matter what trial or appellate judge is going find bad faith for chicanery like that.

The more likely pothole in the statute is where an unrepresented party sends the demand without assistance of counsel. That is a scenario in which insurers need to be more careful. If done without guile and the insurer screws around, they might get socked.

"(b) The recipients of an offer to settle made under this Code section may accept the same by providing written acceptance of the material terms outlined in subsection (a) of this Code section in their entirety.

(c) Nothing in this Code section is intended to prohibit parties from reaching a settlement agreement in a manner and under terms otherwise agreeable to the parties.

(d) Upon receipt of an offer to settle set forth in subsection (a) of this Code section, the recipients shall have the right to seek clarification regarding terms, liens, subrogation claims, standing to release claims, medical bills, medical records, and other relevant facts. An attempt to seek reasonable clarification shall not be deemed a counteroffer."

ANALYSIS:

This is going to be the hotbed of disagreement. "The right to seek clarification" and "other relevant facts" are terms that are completely open for debate. I foresee a world where the insurer will stall and use these catch phrases in the response letters to buy as much time as they want. We live in a world where medical providers outsource record production and it can take as much as 60 days to get them in. In serious cases where the injury clearly merits paying the claim and the victim is not making money in the interim, the statute can be used for delay and leverage.

In the drafters defense, its hard to envision better language but I still see a sea of litigation over this language.

"(e) An offer to settle made pursuant to this Code section shall be sent by certified mail or statutory overnight delivery, return receipt requested, and shall specifically reference this Code section.

(f) The person or entity providing payment to satisfy the material term set forth in paragraph (2) of subsection (a) of this Code section may elect to provide payment by anyone or more of the following means:

  1. Cash;
  2. Money order;
  3. Wire transfer;
  4. A cashier's check issued by a bank or other financial institution;
  5. A draft or bank check issued by an insurance company; or
  6. Electronic funds transfer or other method of electronic payment."
ANALYSIS:

I cannot wait for the day that State Farm sends me cash. ;-)

"(g) Nothing in this Code section shall prohibit a party making an offer to settle from requiring payment within a specified period; provided, however, that such period shall be not less than ten days after the written acceptance of the offer to settle."

ANALYSIS:

Hallelujah! I settled a case at mediation in September and the insurer refused to send the check for 3 months until I filed a Motion with the Court. What is the penalty by the way? Can I move for sanctions and costs under the statute if you deliver the check late? In workers comp, there is a penalty for late delivery of payment, is that now our right too? I doubt it but sure would have liked a fixed $250.00 penalty.

"(h) This Code section shall apply to causes of action for personal injury, bodily injury, and death arising from the use of a motor vehicle on or after July 1, 2013."

ANALYSIS:

Now this is important, it does not apply to dog bites, slip and falls and the other myriad claims that exist out there. That was kind of short sighted don't you think?

Lawyers, be sure your demands comply with the new statute for new crashes. Heck, you might want to get into the habit now, even though it is not required. Insurance adjusters, be on your toes because as the months go by and you get comfortable with your latitude under the new law, you may forget it only applies to post July 1, 2013 crashes.

Client Reviews
  • My wife and I were hit by a tractor trailer in 2014. After extensive research online, we were deeply impressed with the various reviews we read on Google and Avvo and chose Chris to represent us. We could not have a made a better decision. Chris and his firm treated us like we were their only clients, soothed our worries, and instantly gained our trust. Chris settled both of our cases for more than we expected.
    ★★★★★
  • A co-worker of my wife recommended Chris to us. At the very beginning Chris showed that he cared and his knowledge is priceless. Going through this process can be aggravating but Chris did a great job guiding me through this and was always available to answer my questions. Chris fought to get what I deserved even though at times I wanted to give up.
    ★★★★★
  • I want to express my deepest sense of gratitude and appreciation to Attorney Chris Simon & Attorney Chris Carsten, for all the hard work that they put forth into my case (car accident filed after being hit by drunk driver). Their attention to detail and professionalism far surpasses their firm's reputation. Because of their diligence and dedication to their craft, they were able to bring my case to a successful close, one that I could live with. You will not find a better team for your case. Should I have a need for their services again in the future, or know of anyone looking for a top notch Auto Accident Law Firm, I would not hesitate to recommend them!!!!
    ★★★★★
  • Wow...Chris is a very good attorney. Me and my son was in a very bad car accident an I was clueless on how to handle the situation. It's very hard to find an attorney who allows you to contact them personally instead of you contacting their asst. I was told that I didn't have a case because the hosiptal put a lien on my acct. Chris prove different and I was able to file my case with the insurance company. The process was very quickly and Im glad I selected the right attorney..Thanks Chris
    ★★★★★
  • Chris is a great lawyer and the most people friendly attorney I have ever delt with. He handled my case with great attention to detail and did so in a very short period of time. He is very consice, efficient, patient and understanding. He has a strong passion for what he does and he does it well. I recommend Chris Simon as legal representation for anyone who has suffreed damages or a loss at the negligence of others. He really cares about you and your case.
    ★★★★★