Unfair Claims Settlement Practices Act . OCGA
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1. Recent Developments In Fair Claims Handling in Georgia
2. Unfair Claims Settlement Practices Act
3. Unfair Claims Settlement Practices Act (5) Compelling insureds or beneficiaries to institute suits to recover amounts due under its policies by offering substantially less than the amounts ultimately recovered in suits brought by them;
(6) Refusing to pay claims without conducting a reasonable investigation;
(7) When requested by the insured in writing, failing to affirm or deny coverage of claims within a reasonable time after having completed its investigation related to such claim or claims;
(8) When requested by the insured in writing, making claims payments to an insured or beneficiary without indicating the coverage under which each payment is being made;
4. Unfair Claims Settlement Practices Act (9) Unreasonably delaying the investigation or payment of claims by requiring both a formal proof of loss and subsequent verification that would result in duplication of information and verification appearing in the formal proof of loss form; provided, however, this paragraph shall not preclude an insurer from obtaining sworn statements if permitted under the policy;
(10) When requested by the insured in writing, failing in the case of claims denial or offers of compromise settlement to provide promptly a reasonable and accurate explanation of the basis for such actions. In the case of claims denials, such denials shall be in writing;
(11) Failing to provide forms necessary to file claims within 15 calendar days of a request with reasonable explanations regarding their use;
5. Unfair Claims Settlement Practices Act (12) Failing to adopt and implement reasonable standards to assure that the repairs of a repairer owned by the insurer are performed in a workmanlike manner;
(13) Indicating to a first-party claimant on a payment, draft check, or accompanying letter that said payment is final or a release of any claim unless the policy limit has been paid or there has been a compromise settlement agreed to by the first-party claimant and the insurer as to coverage and amount payable under the contract; and
(14) Issuing checks or drafts in partial settlement of a loss or claim under a specific coverage which contain language which releases the insurer or its insured from its total liability.
6. Types of “Bad Faith” Claims First Party Claims
Comprehensive, collision coverage
Medical payments coverage
Uninsured motorist coverage
Third Party Claims
7. Insurance Bad Faith O.C.G.A. § 33-4-6(a)?
In the event of a loss which is covered by a policy of insurance and the refusal of the insurer to pay the same within 60 days after a demand has been made by the holder of the policy and a finding has been made that such refusal was in bad faith, the insurer shall be liable to pay such holder” a specified penalty and attorney fees.
8. Application of O.C.G.A. § 33-4-6 Prerequisites
All types of first-party claims
There must be a demand for payment
Insurer must refuse to pay within 60 days of the demand
Finding of bad faith
50% of the loss or $5,000, whichever is greater
All reasonable attorneys fees
9. Uninsured Motorist Claims OCGA §33-7-11(j)?
Exclusive remedy for UM “bad faith”
Bodily injury and property damage claims
Penalties “only” up to 25% plus attorney’s fees
Must file a separate action after judgment in the underlying tort action
10. Third Party Property Damage Claims New OCGA § 33-4-7 patterned after OCGA § 33-4-6:
Required to adjust third-party property claims “fairly and properly”
Make reasonable effort to investigate and evaluate
Where liability is reasonably clear, to make a good faith effort to settle with the claimant
The greater of 50% or $5,000 plus attorneys’ fees
11. Third-Party Bodily Injury Claims Not governed by any particular statute
“Negligence” claim more so than “bad faith”
Claim is insured’s for failure to protect interests
Excess case that could have been settled within policy limits
Insured typically “assigns” claim to claimant for claimant’s agreement not to collect excess
12. Standard for Determining “Bad Faith” An insurance company may be liable for damages to its insured for failing to settle the claim of an injured person where the insurer is guilty of negligence, fraud or bad faith in failing to compromise the claim. McCall v. Allstate Ins. Co., 251 Ga. 869, 870, 310 S.E. 2d 513 (1984).
In deciding whether to settle a claim within the policy limits, the insurance company must give equal consideration to the interests of the insured. Great Am. Ins. Co. v. Exum, 123 Ga. App. 515, 519, 181 S.E. 2d 704 (1971).
13. What is for the Jury to Decide? The jury generally must decide whether the insurer, in view of the existing circumstances, has accorded the insured the same faithful consideration it gives its own interests. U.S. Fidelity & Guaranty Co. v. Evans, 116 Ga. App. 93, 156 S.E. 2d 809 (1967).
However, an 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. Southern Gen. Ins. Co. v. Holt, 262 Ga. App. 267, 269, 416 S.E. 2d 274 (1992).
14. Brightman v. Cotton States 276 Ga. 683, 580 SE2d 519 (2003)?
Tort case for negligent refusal to settle
Jury can find an insurer negligent in its failure to settle within policy limits to time demand
Whether 300k insurer was liable per Holt when it failed to tender limits to a conditional demand for settlement? 100k insurer must pay also
15. Brightman v. Cotton States Two policies of insurance—100k and 300k
Plaintiff Brightman had brain injury with 330k in specials
300k insured driver struck Brightman’s vehicle who was charged with failure to yield right of way although 300k insured was cited for speeding and later charged with DUI/marijuana.
Brightman had $2 million award given him by non binding arbitration prior to demand for settlement to 300k insurer.
Prior and unconditional demand for settlement to 300k insurer rejected.
300k insurer offered to pay outside deadline
Verdict of 1.8 million and an assignment to Plaintiff
2.1 million verdict against 300k insurer
16. Recent Examples of “Bad Faith” in Georgia “Safe and Sound Way” claims handling practices
Inadequate training of adjusters (no license)?
Routinely “override” medical doctors’ findings in BI cases
Underpaid total loss claims
17. Safe and Sound Fined Less Than Patriots Safe and Sound
Leave or reform
State run training for adjusters
Certified documentation to override doctors
2-year monitored grace period (9/7/2008)? Patriots
Belicheat fined $500,000
Patriots fined another $250,000
Lose 2008 first round draft pick
18. Progression In The Spotlight UM Case
$50,000 liability limits (Allstate)?
$100,000 in UM (Progression)?
Soft-tissue, mild traumatic brain injury
Claimed stuttered when speaking
Deposition -- not convinced
19. The Investigation House counsel defending and did not believe claim
Sought evidence to discredit couple
Hired 2 private investigators
Posed as prospective church members
Joined weekly bible study group/confessional
Tape recorded sessions
20. The Publicity Anderson Cooper 360
Every local channel
Georgia Insurance Commissioner investigating
Seeks all evidence, including electronic
Will not accept apology
“That conduct is not something that will be tolerated. Companies that do that do not need to be writing business in Georgia.”
21. Progression’s Response President of Progression issued public apology and said “I was appalled -- actions were incompatible with our values and were inappropriate.”
Later, described investigation as “reasonable and legal”
22. The Suits Underlying suit
Settled for policy limits
No penalties or attorney’s fees
Direct suit against Progression
Invasion of privacy
Breach of confidentiality
23. Recent Case Law Mills v. Allstate Ins. Co., 288 Ga. App. 257, 653 S.E.2d 850 (2007)
Personal injury action arising from a car crash
Plaintiff asserted a claim against insurer of defendant's car for allegedly breaching its duty to adjust plaintiff's loss promptly and fairly
The Court of Appeals held that OCGA §33-4-7, providing that a motor vehicle liability insurer has a duty to make a good faith effort to settle a third party's claims resulting from “loss because of an injury to or destruction of property” did not give plaintiff a cause of action for claim for personal injury
24. Penalties Are Set in Stone! Atlantic Title Ins. Co. v. Aegis Funding Corp., 287 Ga. App. 392, 651 S.E.2d 507 (2007)?
Atlantic contended that the trial court erred by implicitly ruling that, as a matter of law, Atlantic must pay OCGA § 33-4-6 damages in the amount of 50 percent of the losses
This argument is without merit. “[T]he clear language of the statute provided for a payment of either 50 percent of the amount of the loss ... or $5,000.00, whichever was greater.”
Actually, the statute states “not more than 50% of the loss or $5,000.00, whichever is greater.”
Seems to imply penalty could be an amount less than that
25. Experts For Hire Tim Ryles, PhD
Georgia Commissioner of Insurance, 1991-1995
Instrumental in adoption of Unfair Claims Practices Act
Expert on over 100 cases 1995-1998
26. Ryles’ Sample Reports Travelers v. Holox
“Commonly accepted standards of fair claims settlement practices have been compromised in this case.”
Tidwell v. Allstate
“Thus, Allstate had multiple offers to settle over a period of time covering more than four calendar years but chose not to do so. Such misconduct is inconsistent with proper claims handling procedures and shows a flagrant disregard for the interests of its policyholder.”
Gaylord v. CAN
“With these criteria in mind, I maintain that insurers have not conducted a good faith investigation of Gaylord's claim arising from the October 23, 1995 accident, nor have they offered a justifiable basis for denying the claim in the event that Gaylord is found liable for the alleged damages caused by the accident.”
27. In Other News . . . West Virginia officials say ban on bad faith suits benefits consumers
In 2005, West Virginia passed a bill banning third-party bad faith lawsuits
Now, all such claims are submitted to the Insurance Commissioner
West Virginia consumers have saved more than $80 million in insurance reductions
28. The McKinsey Documents Secretive Allstar File Could Show 'Bad Faith'
The McKinsey documents - allegedly show how the insurance giant intentionally has made low-ball claims offers to its customers for years, netting Allstar billions of dollars in the process
The issue came to a head last year, when Insurance Commissioner Kevin McCarty suspended Allstar's right to issue new insurance policies in Florida
A judge later lifted McCarty's suspension
The investigation continues . . . .
29. Conclusion The political era of “tort reform” is quickly fading
Insurance Commissioners, Georgia’s included, are taking a hard line approach on insurance carriers that misbehave
One bad decision can get you on CNN or on the wrong side of the “v” in a lawsuit
Be careful (smart) out there