In 2013, the Georgia Legislature passed a new statute that greatly affects how attorneys who represent persons injured in automobile collisions negotiate with liability insurers. The new law is found at O.C.G.A. § 9-11-67.1 and applies to all personal injury claims arising from automobile collisions occurring after July 1, 2013. It is very important that individuals with personal injury claims and insurers defending such claims retain an attorney who is familiar with the changes codified in this statute, as a failure to comply with its strict requirements can have serious consequences.

Prior to the passage of O.C.G.A. § 9-11-67.1, plaintiffs' attorneys who represented injured parties whose claims exceeded the amount of liability insurance coverage available would often make time limited demands of the liability insurer for the policy limits. Often these demands would have multiple conditions and routinely required that the insurer accept the offer in a very specific manner within a short period of time. If the insurer failed to accept the offer made by the personal injury claimant within the time provided, or agreed to the amount demanded but proposed a term of settlement that differed from the terms delineated by the original demand, many plaintiffs' attorneys would take the position that such a response was a counter-offer and thus, a rejection of the original demand. In the event that the demand was rejected or deemed rejected, the liability insurer could be faced with additional liability to its insured for any amounts obtained in a judgment above and beyond the policy limits as well as the potential for punitive damages. The principles guiding an insurer's duty to settle claims in "good faith" within the policy limits of its insured are set out in Southern General Insurance Co. v. Holt, 262 Ga. 267 (1992). Demands made by personal injury claimants under the old framework were often referred to as "Holt demands". The claims presented by insureds subjected to such excess verdicts were based upon the allegation that their insurer acted in "bad-faith" and thus breached its duty to settle the claims within the limits of insurance available.

In the face of these claims, insurers often complained that the time limits of Holt demands were unreasonable or that when they sought clarification regarding the payment of medical liens and other matters, that their responses were being unfairly characterized by plaintiff's counsel as a counter-offer. On the other hand, many plaintiffs' attorneys asserted that the insurance industry is highly sophisticated and thus, more than capable of responding timely and accurately to these demands. Moreover, many plaintiffs' attorneys argued that it was necessary to have a framework in place that could punish insurers for failing to settle within policy limits, so as to incentivize insurers to compensate injured plaintiffs in cases of clear liability in an efficient manner.

The resulting effect of this dialogue was ultimately codified in O.C.G.A. § 9-11-67.1 which states:

(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.

Essentially, O.C.G.A. § 9-11-67.1 seeks to provide a framework for personal injury claimants to continue to invoke the responsibility of insurers to adjust claims of clear liability in good faith, while providing insurers guidance on what communications they can engage the opposing side in without their response being characterized as a counter-offer, and thus a rejection of the original offer. Most importantly, however, the statute provides that the time limit for responding to these demands shall be at least thirty (30) days. Additionally, it is important to note that under the prior framework, many plaintiffs' attorneys would require that in order for their client's offer to be accepted, that payment had to be tendered within a certain period of time and delivered in a specified form, i.e. a certified check as opposed to a bank check or draft. Under the new statute, insurers now have the ability to accept the offer in writing within thirty (30) days of receipt and claimants have the right to demand that payment be tendered within ten (10) days of such written acceptance. Finally, the statute allows insurers to make this payment in the form of cash, money order, wire transfer, cashier's check, draft, bank check, or electronic transfer without such tender being deemed a counter-offer or a rejection of the original demand.

For persons who have been seriously injured in a motor vehicle collision and for insurers, it is extremely important that their counsel understand the complexities and strict requirements of O.C.G.A. § 9-11-67.1. Failing to properly comply with this statute can result in a personal injury claimant losing the ability to persuade an insurer to expand its coverage in order to avoid or mitigate its potential liability to its insured. Moreover, with respect to counsel or an adjuster responding on behalf of an insured, a failure to respond in compliance with the statute could result in significantly increased liability not only to the insured, but to the insurer itself.

Chris Cohilas has for years represented both plaintiffs and insureds in matters involving serious and catastrophic personal injuries. His direct dial number is (229) 317-5764.