Don't Just Ignore Compliant Requests

Post by Jack Griffeth

Sometime ago, I wrote a blog article on the new Code Section 38-77-250, which requires automobile insurance companies to disclose, prior to suit, the limits of coverage pursuant to specific requests.  Since then, I have had a number of inquiries asking two recurring questions. 

1. What is the operative trigger for the statute – the date of the accident or the date of the request?
2. Do insurers even have to respond to requests for fleet insurance information?

In my opinion, it is the date of the compliant request that triggers the statute, not the date of the accident.  In other words, if an accident happened in 2011 or at any time before the effective date of Section 38-77-250, an insurance company must provide the information requested, if the compliant request is after January 1, 2012, unless exempted from the statute.

If you read the statute as a whole, the focus centers on a “compliant request.”  Not every letter requesting the information complies with what the statute provides as the necessary steps that a plaintiff must do in order to get the information.  Assuming, however, that a plaintiff’s lawyer has properly requested the information, then an automobile insurance company must provide the information as designated by the statute regardless of the date of the accident. 

The second question has to do with a fleet policy. Fleet policies are exempt from the statute, but the question is, must an automobile insurance company at least respond to the compliant request?  In my view, an automobile insurance company cannot ignore a compliant request along these lines, but it should respond to the plaintiff’s lawyer, enclosing a copy of the statute if need be, and politely decline to provide the coverage because it is exempt from the statute’s requirements.  In other words, I would favor at least a reply to the request and would urge insurance companies not to simply ignore the request.  For instance, the statute requires an insurer to reply to a non-compliant request and advise as to the deficiencies of the request.  Don’t just ignore! 

I suppose that either of these items above-mentioned can be taken to a ridiculous conclusion.  For instance, a compliant request might be made for an accident on which the statute of limitations has expired.  Though a plaintiff’s lawyer might be prohibited from filing suit, nevertheless, there is no provision in the act that allows the insurance company NOT to respond to a compliant request.  My suggestion would be to send a reply, explain that the statute of limitations has expired and provide the information anyway.  A response is what the statute, taken to its absolute logical [or perhaps, illogical] conclusion, requires.

If you have any questions, please don't hesitate to contact me.

- Jack  

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Law gives plaintiffs right to know details of defendant’s insurance coverage

Attorney Jack Griffeth

The homepage of SC Lawyers Weekly today has an article relating to Collins & Lacy attorney Jack Griffeth's recent post about a little-known element of the newly-enacted South Carolina Fairness in Civil Justice Act of 2011, which became effective January 1, 2012.  It discusses how insurance companies must now, under certain conditions, disclose the automobile coverage limits to a plaintiff’s lawyer prior to the lawyer filing suit. To read Jack's original blog post click here. 

Here is the article by SC Lawyers Weekly that quotes Jack.  The hard copy version will be in mail boxes this week.  If you have any question about the law, please don't hesitate to call us.

Law gives plaintiffs right to know details of defendant’s insurance coverage

by Phillip Bantz

Published: January 20th, 2012

A provision tucked inside the S.C. Fairness in Civil Justice Act of 2011 quietly became law earlier this month, and is expected to reduce the number of personal injury lawsuits filed in the state’s courts.

The law took effect Jan. 1 as part of the tort reform bill and requires auto insurers that may be liable for any part of a claim to disclose coverage limits to plaintiffs prior to the filing of a lawsuit. Plaintiffs seeking the information must first file a certified written request that includes the accident report tied to their claims. Insurers have 30 days to reply.

North Carolina enacted a similar disclosure law in 2004, but it requires plaintiffs to jump through several more hoops than the South Carolina version of the law. For instance, in order to request coverage limits, an N.C. plaintiff must give the insurer access to all of their medical records for three years prior to the date of the claim, along with any medical records pertaining to the alleged injuries.

“I call it the hostage exchange. We give you the [records] release and you give us the policy limits information,” said Christopher R. Nichols, a personal injury lawyer at the Nichols Law Firm in Raleigh. “It sounds like South Carolina’s law is better than ours.”

Columbia plaintiffs’ lawyer Joseph “Pete” Strom Jr. was a chief negotiator in S.C.’s insurance disclosure legislation. By getting insurers to lay their cards on the table upfront, both sides will be more apt to negotiate and settle cases, he said.

“This is clearly a good thing for not only the plaintiffs but the court system,” he said. “If you represent a plaintiff in a case and there are serious injuries, you cannot fulfill your fiduciary duty to determine what is collectable in a civil action without knowing the amount of insurance coverage. With this new law, lawyers will now know on the front end what the coverage is and will be able to settle cases without having to file suit.”

Strom said segments of the insurance industry initially resisted the disclosure law, but in the end most agreed that it would promote quicker settlements and less litigation. He added that he and others in the plaintiffs’ bar wanted the bill to be expanded to include commercial, fleet and umbrella insurance policies.

“Hopefully, when the insurance companies see a positive outcome from this,” Strom said, “we’ll have an opportunity to revisit the commercial piece down the road.”

Defense litigator Jack D. Griffeth of Collins & Lacy in Greenville said the disclosure law is not particularly bad news for the insurers he often represents, as long as they stay in compliance with the new criteria.

The statute, Section 38-77-250 of the S.C. Code of Laws, requires an insurer’s corporate officer or claims manager to reply to a plaintiff’s coverage disclosure request under oath. The notarized statement must include the name of the insurer, name of each insured and limits of coverage – or the insurer can provide a copy of the policy declaration page.

“Providing this insurance information is not a waiver of any defense, whether that is a merits defense or defense that coverage doesn’t exist for some reason,” Griffeth said. “It’s putting out the basic information.”

If a plaintiff’s disclosure request is insufficient, the law still requires the insurer to issue a written response detailing the deficiencies in the request. Then the plaintiff can file an amended request.
Several personal injury lawyers raised questions about two confusing facets of the new law. It is silent about whether the insurer’s declaration page must be notarized like the statement in response to a disclosure request. And it is unclear about whether the law’s effective date applies to the date that an injury occurs or when the disclosure request is filed.

Regardless of the law’s ambiguity, Griffeth is advising insurers to err on the side of caution.

“The bottom line for any practitioner is to get a declaration page with an accompanying letter, at minimum, and preferably a declaration page with a notarized affidavit of coverage,” he said. “Then there isn’t any question about it.”

G.W. King Smith, a plaintiffs’ lawyer at Smith & Griffith in Anderson, said most of his colleagues would not settle a case without first acquiring at least a certified declaration page from the insurer if there was any question about coverage.  “I don’t know that it’s going to change much having a requirement to do it,” he said.

As for the effective date, Griffeth believes that it pertains to the date of a request, not of an auto accident. If an insurer received a disclosure request before the law took effect, he is advising that it is not obligated to provide a response.

“But if the lawyer filed a request in December and comes back in mid-January and says, ‘How come you didn’t answer my letter?” he added. “Well, then I think the insurance company has a duty to reply."

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Insurers Must Disclose Limits Before Suit is Filed

Post by Jack Griffeth

As part of the newly-enacted South Carolina Fairness in Civil Justice Act of 2011, which became effective January 1, 2012, insurance companies must now, under certain conditions, disclose the automobile coverage limits to a plaintiff’s lawyer prior to the lawyer filing suit.  This has been a controversy in our state for a number of years, and this provision is tucked away into this somewhat comprehensive legislative bill at Section 38-77-250.

It provides that every insurer that provides automobile insurance coverage in South Carolina, which is or may be liable to pay for all or any part of any claim, shall provide “within 30 days of receiving a written request from the claimant’s attorney, a statement, under oath, of a corporate officer, or the insurer’s claims manager, stating with regard to each known policy of non-fleet private passenger insurance issued by it, the name of the insurer, the name of the insured, and the limits of coverage.” 

This request must be initiated by the plaintiff’s lawyer, and the reply must be “under oath” either by a corporate officer or the insurer’s claims manager.

The statute goes on to say, however, that the insurer “may provide a copy of the declarations page of each policy in lieu of providing such information.”  The statute does not specifically say the declarations page must be certified “under oath” to be a true and accurate copy of the coverage as requested.  A safe course of action might be to provide such a notarized affirmation. 

The plaintiff’s lawyer or claimant’s lawyer also has certain hoops to jump through in making the request.  The Act provides the initial request shall set forth “under oath” the specific nature of the claim asserted and shall be mailed to the insurer by certified mail or statutory overnight delivery.   The request must also state the attorneys are authorized to make such a request and must be accompanied by a copy of the incident report by which the claim is derived. 

This is unexplored territory for insurers in South Carolina but cannot be ignored.   If an insurer receives a request that does not comply, then Section (B) of 38-77-250 requires the insurer to state in writing what additional information is needed in order to comply with this Section.

Additional protection is afforded to the insurance company by other provisions of this law, which provide that this law does not create a waiver of any defenses to coverage available to the insurer, and it is not admissible as evidence.  There is a continuing duty to amend if additional information is obtained and, as noted above, the provisions do not apply to the disclosure of limits from fleet policy limits, umbrella coverage, or excess coverage.  Moreover, the information received is regarded as “confidential and must not be disclosed to any outside party.”  The claimant’s attorney or plaintiff’s attorney must destroy all of the information received pursuant to this Section upon final disposition of the case. 

Finally, the court may impose sanctions for violations. 

A full review of this law bears close scrutiny by all companies writing automobile insurance in South Carolina. If you have any questions, please don't hesitate to contact me.

- Jack  

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