Saturday, March 23, 2013

New law adds requirements for automobile personal injury "Holt demands" and bad faith claims

On March 22, 2013, the Georgia Senate passed House Bill 336, which establishes a number of requirements and provisions for pre-lawsuit demands to automobile liability insurers made by those injured by other drivers. The bill, which had already passed the Georgia House of Representatives, will become law unless vetoed by Governor Nathan Deal, which is not expected. The law, which will be located at section 9-11-67.1 of the Official Code of Georgia, Annotated (O.C.G.A.), will apply to all automobile wrecks occurring on or after July 1, 2013.

Under Georgia law, insurers providing liability insurance coverage for at-fault drivers causing personal injuries or property damages to others are required to act in good faith in determining whether to pay the injured party's damages. It is not uncommon for a claim to be made for the policy limits of the at-fault driver's insurance coverage. Such demands are often referred to as "Holt demands" or "Smoot demands," based on the principles established in the cases of Southern General Insurance Co. v. Holt, 262 Ga. 267, 416 S.E.2d 274 (1992) and State Farm Mut. Auto. Ins. Co. v. Smoot, 381 F.2d 331 (5th Cir. 1967). While the at-fault driver is liable for damages incurred by another party in excess of his or her liability limits, in some cases the insurer can be liable to its own insured (its customer) for those excess damages where it is determined that the insurer acted in bad faith in adjusting the claim.

For example, if an injured party demanded that an insurer pay the at-fault driver's liability limits of $25,000 (which is the minimum coverage required in Georgia) and the injured person was ultimately awarded $50,000 at trial, the insurance coverage would only pay the first $25,000, with the at-fault driver being personally liable for the remaining $25,000. In some cases, however, where the at-fault driver can show that the insurer acted unreasonably by failing to simply pay the $25,000 liability insurance limits, the at-fault driver may be able to recover the excess $25,000, and possibly punitive damages, from the insurance company. The newly enacted O.C.G.A. § 9-11-67.1 establishes certain time requirements and payment options that will now be required in connection with the injuries party's demands.

The full text of the new statute is copied below.

O.C.G.A. § 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 releasee; and
(5) The claims to be released.

(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.

(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 any one 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.

(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.

(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.

Turkheimer & Hadden, LLC
Trial and Appellate Lawyers
TrialLawyersAtlanta.com

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