On April 22, 2024, Governor Kemp signed into law Senate Bill 83, overhauling Georgia’s statute governing pre-suit time-limited demands (TLD) in auto wreck cases, O.C.G.A. § 9-11-67.1. The amendment aims to reduce or eliminate failure to settle litigation in cases where an insurer accepts a claimant’s TLD per the amended statute.
In Georgia, an insurer can be liable for negligent failure to settle in certain circumstances. See S. Gen. Ins. Co. v. Holt, 262 Ga. 267, 268 (1992) (“An insurance company may be liable… for failing to settle… where the insurer is guilty of negligence…”). Because personal lines auto policies often have low limits, claimants have faced a perverse incentive to send a TLD that they hope will be rejected rather than accepted for some time. A rejection arguably opens the insurer’s limits and puts a deep pocket in play. Acting on that incentive, claimants’ lawyers in Georgia have routinely sent TLDs littered with conditions of performance, hoping that if the insurer attempts to accept the TLD but inadvertently mishandles one of those conditions, it will, by effect, reject the TLD. Indeed, in recent years, Georgia courts have been besieged by head-scratching motions practice in auto cases where insurers move to enforce settlements, and strangely, the claimant argues that the pre-suit offer it made that was unconditionally accepted by the insurer did not, in fact, create a binding settlement.
For example, in two recent cases – Patrick v. Kingston, 370 Ga. App. 570 (2024) and Pierce v. Banks, 368 Ga. App. 496 (2023) – claimants successfully argued that their own TLDs, unconditionally accepted by the insurers, did not result in binding agreements. In each case, a claimant sent a TLD after suffering injuries in an auto wreck, and the insurer purported to accept it. However, when the insurers sent the settlement checks, they included language that they were “void” after 90 or 180 days. In each case, the Court of Appeals invalidated the parties’ settlement on this language, reasoning that the claimant is the master of the offer, the TLD did not authorize the self-voiding language, and the insurer had, albeit inadvertently, made a counter-offer instead of accepting the TLD.
The claimant’s lawyers have pushed the envelope even further. Famously, in Pierce, the claimant’s counsel argued that a missing comma should scuttle the settlement. There, the TLD required payment to “Aaron Pierce and Brooks Injury Law, LLC” but the settlement check omitted the comma between “Law” and “LLC.” While the Court of Appeals sidestepped that argument by finding the “void” language dispositive, the “missing comma” drew nationwide attention and has become a shorthand in Georgia for the gamesmanship seen in TLD practice.
Plainly, scenarios like a missing comma or a self-voiding settlement check are far from the reason that failure to settle law exists in Georgia. This law requires an insurer to consider the insured’s interests equally when making settlement decisions; when an insurer attempts in good faith to do just that and unconditionally accept a TLD, the basis for holding the insurer liable for an excess judgment appears to be lacking.
In recognition of the same, the Georgia General Assembly overhauled O.C.G.A. § 9-11-67.1, making three principal changes:
- Creation of a Safe Harbor. The amended statute creates a safe harbor from failure to settle litigation for an insurer who purports to accept a TLD in accordance with the terms of the amended statute. O.C.G.A. § 9-11-67.1(i)(1) (as amended) (“[t]here shall be no civil action arising from an alleged failure… to settle… where the [insurer]” accepts a TLD in accordance with the terms of the statute).
- Enumeration of Material Terms for Acceptance. The amended statute enumerates seven terms that must be in a TLD and defines them as the “only material terms.” O.C.G.A. § 9-11-67.1(b)(1) (as amended). The amended statute further clarifies that while a TLD may include terms not enumerated in the statute, any such term is “immaterial.” A rejection of it by an insurer “shall not subject [an insurer] to a civil action arising from an alleged failure… to settle” if the insurer otherwise satisfies the terms of the statute. O.C.G.A. § 9-11-67.1(c) (as amended).
- Creation of Bilateral Contract. Under the amended statute, a TLD will now be considered an offer to enter a “bilateral” – not unilateral – contract. O.C.G.A. § 9-11-67.1(a) (as amended). The aim here is to form a binding contract at the moment of acceptance, such that an insurer’s failure to fulfill a condition would constitute, at most, a breach of contract rather than a rejection of the TLD in the first instance.
The General Assembly’s revisions to O.C.G.A. § 9-11-67.1 mark a significant victory for insurers in limiting failure to settle liability in Georgia. With that said, claimants’ lawyers are sure to test the boundaries of the statute. Time will tell if the amendments achieve their goals.
If you have any questions concerning the amendments to O.C.G.A. § 9-11-67.1 or the Georgia failure to settle law, don't hesitate to contact Seslee Smith, Ryan Burke, or Nathan Miles, leaders of the Insurance Coverage practice group.
