Hepler Broom, LLC

New Missouri Statutes May Substantially Impact How Insurance Carriers Approach Liability Claims

July 6, 2017

Over the past few years, insurance companies have learned that handling liability claims in Missouri with coverage issues or policy-limit settlement demands can be an incredibly complex, and in some cases, dangerous endeavor. Much of that complexity stems from Missouri Revised Statute § 537.065, a statute which has been used as a powerful sword against carriers to collect rather large judgments in many cases.

On April 26, 2017, the Missouri General Assembly voted to repeal the current § 537.065 and replace it with a modified version. That replacement, House Bill 339, was signed into law by Governor Eric Greitens on July 5, 2017 and will become effective on August 28, 2017. Once it does, plaintiffs, defendants and their insurance carriers alike will enter uncharted territory.

While repealing the current § 537.065, H.B. 339 enacts a new § 537.058 and a modified version of § 537.065. Section 537.058 sets forth parameters for time-limited demands, defined essentially as a time-limited offer to settle a claim for personal injury, bodily injury or wrongful death against a tort-feasor within the tort-feasor’s limit of liability insurance. Such time-limited demands must conform to the requirements of § 537.058; otherwise, they will not be considered a reasonable opportunity to settle or be admissible in a claim against the carrier for extra-contractual damages, or damages in excess of the limit of liability for any policy applicable to the claim.

The statute imposes various requirements on the time-limited demand. The demand must be in writing, reference this statute and be sent to the tort-feasor’s liability carrier via certified mail, return-receipt requested. The statute imposes at least two fairly significant requirements. First, the time limit for responding to the demand must be stated in the written demand and “shall not be less than ninety days from the date such demand is received by the liability insurer.” Second, the demand must be accompanied by a list of the claimant’s health care providers from the time of injury until the date of the demand, a description of all injuries and a HIPAA-compliant authorization to allow the carrier to obtain records from the provider.

These are some of a number of restrictions imposed on time-limited demands under the new § 537.058 with the potential to drastically change the way time-limited settlement demands are conducted in Missouri.

In addition to these new requirements for time-limited demands under § 537.058, the Missouri General Assembly adopted a modified version of § 537.065. Section 537.065 allows a claimant and tort-feasor to enter into an agreement in which the claimant largely agrees not to collect any judgment that may be entered against the tort-feasor from the tort-feasor’s personal assets. Instead, the claimant agrees to collect any such judgment from only the tort-feasor’s liability insurer. In the past, so-called “537.065 agreements” have gone beyond the scope of the statute, often requiring the insured to terminate insurer-retained defense counsel and not defend against the suit.

The new § 537.065 makes several considerable changes to the prior version of the statute. The statute now limits a claimant and tort-feasor’s ability to enter into an agreement not to execute against the tort-feasor’s personal assets in the event of a judgment only if the tort-feasor’s insurer “has the opportunity to defend the tort-feasor without reservation but refuses to do so.”

The new statute also creates a fairly unique procedural system. After the claimant and tort-feasor enter into an agreement under the new § 537.065 (or similar covenant not to execute, even if it does not expressly reference the statute), they are required to provide the carrier with written notice of same and the carrier has thirty days to intervene as a matter of right in the pending suit for damages. Before this statute, Missouri courts frequently rejected a carrier’s attempts to intervene in the underlying lawsuit. The statute grants carriers a right to intervene in the underlying suit, potentially to prevent a large uncontested judgment from being entered in the first place.

Together, these new statutes have the potential to substantially impact the way carriers approach liability claims in Missouri. The extent of that impact has yet to be revealed. In the meantime, however, policyholders and insurance carriers can strategize the best approach for handling these changes and anticipate the inevitable issues that are bound to arise. To get ahead of the game, contact HeplerBroom attorneys for their insight and expertise.