Georgia law, O.C.G.A. Sec. 9-11-67, enacted on July 1, 2013, has been said to modify and codify the case of Southern General Ins. Co. v. Holt, 262 Ga. 267, 416 S.E.2d 274 (1992), with respect to offers of settlement in personal injury and wrongful death claims resulting from use of motor vehicles. Purportedly, this law aims to protect motor vehicle injury victims from insurance companies that refuse to settle straight-forward injury claims in a timely and reasonable fashion. On closer examination however the language of the statute also gives insurance companies the opportunity to further delay resolution in a variety of cases where fault of the insured is clear and the victim’s injuries are documented.

The background to the Holt case is basically the following. Southern General insurance company insured Bridget Holt who ran a stop sign in 1987 and seriously injured Geneva Fortson. Ms. Fortson’s attorney sent a series of communications to Southern General seeking resolution. Ultimately, the attorney extended an offer to settle for the policy limits of Ms Holt, provided a certified copy of the medical records of his injured client and gave Southern General an additional five days from his initial deadline to settle the case for the policy limits. , The insurer neither sought more time to evaluate the claim nor responded to the offer before the five days expired. After the deadline had passed and the settlement offer had expired, the insurer offered to settle the case for the policy limits of $15,000. Said offer was refused and at trial, the jury found in favor of the plaintiff in the amount of $82,000 – well over the $15,000 of coverage that Ms Holt had with Southern General. This meant that Ms Holt was “on the hook” for the remainder of the judgment. She proceeded to make a claim of bad faith against her own insurance company Southern General by letting Ms. Holt’s attorney pursue a claim for negligent or bad faith refusal to settle within the policy limits. Ultimately the Supreme Court of Georgia affirmed that the jury verdict against the insurance company should be upheld for its bad faith refusal to settle.

The court noted that “[a]n insurance company does not act in bad faith solely because it fails to accept a settlement offer within the deadline set by the injured person’s attorney.” The Court found that the insurer did more than simply fail to settle within the time frame. The insurer had specific and complete documentation, which showed special damages exceeding the limits of the insured’s policy. The Court noted, however, even though the claims representative needed more information regarding medical information, they did not request an extension of time to complete the evaluation of the plaintiff’s claim.

O.C.G.A. Sec. 9-11-67.1 modified and codified offers of settlement in motor vehicle accident claims in Georgia under Holt. Insurance companies have long felt that since Holt, they have often been “punished” unfairly with large penalties for failure to settle in good faith. As such, insurance company representatives have been lobbying the Georgia legislature to repeal Holt time-limits on responding to settlement demands. Plaintiff attorneys on the other hand have fought to ensure that insurance companies remain accountable and pay when it is the right thing to do. This new statute has been presented as a compromise between plaintiffs’ lawyers and insurance companies regarding these issues.

The law clarifies the amount of time an insurer has to respond to an offer of settlement for certain claims but allows the insurer to make inquiries regarding the terms of the offer without that action being considered a counteroffer or rejection. This law may provide a means for insurance carriers to create financial pressure on injury victims to settle claims for less than their full value by delaying the settlement process.

The statute sets forth the requirements for an offer of settlement before any evidence of “bad faith” on the part of insurance company is triggered. They are as follows: 1) The claimant must give the insurer at least 30 days from receipt of the letter to accept the offer; 2) The letter must specify the settlement amount, the party or parties that will be released, the claims that will be released if the offer is accepted; 3) The letter must show the type of release that the claimant will sign; 4) The offer must be sent certified mail or overnight delivery with a return receipt requested; 5) The letter must specifically reference the code section the claim is based upon; and 6) If the other party accepts the offer to settle, then the claimant cannot set a time period for payment sooner than 10 days after written acceptance of the offer.

Although the law does not require plaintiffs to produce all of their related medical records with their initial demand, it does provide a “safe harbor provision” so that insurers or the recipients of the offer can seek clarification regarding the facts of the case, liens, standing to release the claims, medical records and bills without these requests constituting a counter-offer and before agreeing to settle the claim. It is this provision that causes concern for claimants because insurance carriers can use this clause to delay payment of claims where liability and injuries are completely clear.

Insurance companies recognize that injury victims who suffer staggering medical bills and disability from employment feel increasing pressure to resolve a case as time passes. This makes delaying payment of a claim a potentially powerful strategy for forcing a car accident victim to settle for less than the full value of the claim. This new law provides a new tool that insurance companies may use to postpone settling meritorious claims. Time will tell the extent of the impact this may have on overall resolution of meritorious claims by injured people.

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