20 May, 2024

New Legislation in Georgia Levels the Playing Field for Auto Accident Claims

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Governor Brian Kemp signed Senate Bill 83 on April 22, 2024 in an attempt to even the playing field of pre-suit time-limited demands for auto accident cases. For some time now, plaintiff’s lawyers have taken advantage of the prior language of O.C.G.A. § 9-11-67.1 to manufacture scenarios where it is extremely difficult, if not impossible, to meet all of the conditions contained in their demands. In some demands, the conditions even force waiver of applicability of the statute altogether so as to include various conditions not contemplated by the statute. The new language of O.C.G.A. § 9-11-67.1 attempts to fix and rein in some of that gamesmanship. The goal of the amendment is to reduce failure-to-settle litigation in cases where an insurer does everything it can to accept a time-limited-demand per the conditions outlined in the amended statute. It became effective upon signing on April 22, 2024.

It is well known by lawyers and insurance professionals who handle auto accident claims in Georgia that an insurer can be liable for more than the contracted insurance limits for negligent failure to settle in certain scenarios. See S. Gen. Ins. Co. v. Holt, 262 Ga. 267, 268 (1992). When policy limits are comparably low to a plaintiff’s alleged damages, there is incentive for a plaintiff’s lawyer to try to orchestrate a scenario where an insurer is deemed to have made a counteroffer to the pre-suit demand, thereby deeming it rejected, to arguably open the insurer’s policy limits. We have seen this play out in a number of different scenarios that produce arguably absurd results, including language on a settlement check that it is void after 90 or 180 days, or incorrect placement or omission of a comma from a law firm’s name.

There is a relevant purpose to the framework of negligent failure to settle claims in Georgia. It ensures that insurers place the interests of their insureds at least equal to their own when evaluating auto accident settlement demands. The unfortunate consequence of the developing statutory scheme was the forced waiver of abiding only by the conditions set forth in O.C.G.A. § 9-11-67.1 that led to the inclusion of conditions created with the sole purpose of making unconditional acceptance as difficult as possible.

To combat the potential for absurd results when insurers try to accept demands in good faith, the Georgia General Assembly modified O.C.G.A. § 9-11-67.1, making some important changes:

A Safe Harbor. The modified statute creates a safe harbor for insurers which purport to accept a time limited demand in accordance with the terms of the amended statute. O.C.G.A. § 9-11-67.1(i)(1) (as amended) states, “[t]here shall be no civil action arising from an alleged failure… to settle… where the [insurer]” accepts a time limited in accordance with the terms of the statute.

A note of caution, however, is that this safe harbor only applies to the first offer to settle, if made during the correct pre-suit timeframe. If the safe harbor is not met, it cannot be used in response to a later demand: “Where the recipient does not comply with paragraph (1) of this subsection in response to an offer made in compliance with subsection (b) of this Code section, this subsection shall not apply to any subsequent offer to settle a tort claim for personal injury, bodily injury, or death arising from a motor vehicle collision.” O.C.G.A. § 9-11-67.1(i)(3) (as amended).

Conversely, it would appear that the safe harbor may still apply to any offer to settle a tort claim for personal injury, bodily injury, or death arising form a motor vehicle collision, not just those subject to the statute—but still only available once: “Except as provided in paragraph (3) of this subsection, this subsection shall apply to any offer to settle a tort claim for personal injury, bodily injury, or death arising from a motor vehicle collision; and shall apply to any such offer even where such offer expressly provides that any or all of this Code section does not apply to such offer; and shall not be construed to only apply to offers made pursuant to subsection (b) of this Code section.” O.C.G.A. § 9-11-67.1(i)(2) (as amended).

Exhaustive List of Material Terms for Acceptance. The amended statute enumerates seven terms that must be in a time limited demand and specifically allows them as the “only material terms.” O.C.G.A. § 9-11-67.1(b)(1) (as amended). A time limited demand may include terms not enumerated in the statute, but those are now deemed “immaterial.” A rejection of such immaterial terms by an insurer “shall not subject [an insurer] to a civil action arising from an alleged failure… to settle” if the material terms are met. O.C.G.A. § 9-11-67.1(c) (as amended).

No More Modification or Waiver of Applicability. Importantly, O.C.G.A. § 9-11-67.1(e) (as amended) now states, “ Nothing in this Code section is intended to prohibit

parties from reaching a settlement agreement in a manner and under terms otherwise agreeable to both the offeror and recipient of the offer; provided, however, that no party shall require another party, as a condition of settlement, to waive or modify the application of this Code section or any provision of this Code section.” (emphasis added and signifies the new language to the statute). A plaintiff’s lawyer can no longer force waiver or modification of the confines of O.C.G.A. § 9-11-67.1.

A Bilateral Contract. A time limited demand will now be considered an offer to enter into a bilateral contract. O.C.G.A. § 9-11-67.1(a) (as amended). The goal with this change is to eliminate a scenario where an insurer fails to perform some specific act to form the unilateral contract. Now, courts should be able to enforce settlements based on parties’ stated mutual intent to enter into the settlement. As a result, the parties are able to form a binding contract upon written acceptance.

Insurers and defense lawyers can call these revisions by the General Assembly a victory, or more aptly, a return to more reasonable results. It is expected that the new modifications will help limit failure to settle liability in Georgia. Of course, plaintiff’s lawyers will examine the language of the modified statute and will push it to its limits. As a result, it may be some time before Georgia Courts are able to examine the practical reality and effect the amendments will have.

Authors:

David A. Olson, Partner
Meg E. Olson, Partner and Member of QPWB’s Trucking & Transportation Division

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