Missouri’s Bad Faith Bill
As many are aware, the legislative session has ended and several bills impacting personal injury practice will soon become law. Among these are the bad faith bill which sets out requirements for time-limited demands and alters §537.065.
Time-Limited Demand (§537.058)
The time-limited demand provision of the bad faith bill sets forth certain requirements that must be met in order for demands, and the carrier’s failure to accept such demands, to be used in evidence in any subsequent bad faith action brought by the claimant or the insured for the benefit of the claimant. To fulfill the requirements of this section, the demand must:
While the section does not require a claimant to send a demand that satisfies these elements, the downside of not doing so, especially in an excess case, may warrant strict adherence to the sections requirements. If the demand does not meet the requirements, the offer will not be deemed a reasonable opportunity to settle and cannot be used in evidence in an extra-contractual suit brought by the injured party or the insured for the benefit of the injured party. Thus, the carrier’s incentive to resolve valid claims is significantly reduced in the absence of a time limited demand in compliance with §537.058 due to a concomitant reduction in extra-contractual liability.
- Be in writing, reference §537.058 and be sent by certified mail;
- Be left open for at least 90 days;
- State the amount requested or demand the policy limits;
- State the date and location of the loss and the claim number if known;
- Identify the parties to be released;
- Describe the claims to be released;
- Offer an unconditional release to the insurance company’s insured;
- Provide the names and addresses of all healthcare providers and an appropriate HIPAA authorization; and
- Provide a list of the claimant’s employers and authorizations if a wage loss claim is asserted.
In order to ensure claims are promptly paid and carriers perform their obligations properly, demands in compliance with this section should be made early by claimants when excess exposure is a possibility. Further, insureds should seek personal counsel, even at an early stage, to make it known that the claims should be settled.
Revised §537.065-Intervention Headaches
In the past, carriers generally did not have the ability to intervene in 3rd party liability actions.
However, the key change to §537.065 alters this long-standing rule and permits the carrier 30 days to intervene after receiving notice that an .065 or similar agreement has been entered into by the claimant and insured.
In theory, the new section appears to permit insurance companies to interject themselves into 3rd party claims even when the carrier has previously denied coverage and refuses to provide an indemnity commitment. The presence of the carrier in the underlying tort action leads to several interesting issues. Included among these is what, if any, cooperation is owed by the insured to the carrier. Absent an indemnity commitment from the carrier, the insured is generally excused from adhering to any cooperation provisions in the insurance policy. Additionally, once the carrier becomes a party it will automatically inject the issue of insurance into any case proceeding to trial.
Most importantly however, is the issue of what interest the carrier will be protecting after it has intervened. Assuming no unqualified indemnity commitment has been made, the carrier may steer the defense and attempt to develop facts pushing the insured away from coverage. Such actions may very well constitute a separate and independent basis for bad faith as the carrier is solely advancing its interests to the detriment of its policyholder.
As a whole, the bad faith bill attempts to walk back many of the protections available to insureds when a carrier has refused to perform its policy obligations or refuses an unqualified indemnity commitment. Because of this, the importance of insureds retaining personal counsel at each and every stage of a claim and suit cannot be overstated.