Missouri Governor Signs Tort Reform Legislation Addressing Claim Settlement Abuses

CHICAGO, July 12 -- The Property Casualty Insurers Association of America issued the following news release:

Missouri has taken important steps toward improving its legal climate with the enactment of comprehensive insurance-tort reform legislation, SS/SCS/HCS/HB 339 & 714, according to the Property Casualty Insurers Association of America. This bill will help curb the abuses associated with section 537.065 and the time-limited demand settlement process.

Under this process an injured party and the insurance policyholder can work together to obtain a judgment exceeding the insured's policy limits through an uncontested trial. The insurance company's hands are tied as they generally are limited to disputing only the legal conclusion of whether coverage existed and typically barred from re-litigating any other aspect of the suit.

This legislation is designed to modify the section 537.065 settlement agreement process so that insurers may intervene in the underlying lawsuit as a matter of right and limits entry into a 537.065 agreement to insureds whose insurers have declined coverage or refused to defend then without reservation. Additionally, the bill establishes standards for time-limited demands. Time-limited demand letters are often used by plaintiffs' lawyers to "set-up" insurers for bad faith failure to settle claims.

"The standards contained within this bill allows insurers a reasonable minimum level of information about a claim before they are forced to make a settlement decision that could expose them to 'bad faith' liability," said Hilary Segura, counsel, state government relations for PCI. "This legislation brings greater fairness to claims settlement process by allowing insurers the opportunity to make a reasonable claims decision before being faced with unlimited tort liability."

Other tort reform this session:

The governor also recently signed SB31, which makes changes to the collateral source rule (paid v. billed damages) so parties can only introduce evidence of the actual cost of the medical care rendered, instead of the value of those costs rendered.

In March, the governor signed HB153, the expert witness bill, which switches Missouri's expert witness standards from the Frye model to the Daubert standard. This creates a higher standard for expert evidence, improves the reliability of expert witness testimony, and puts Missouri in line with a majority of states regarding the standard used for expert testimony.

PCI promotes and protects the viability of a competitive private insurance market for the benefit of consumers and insurers. PCI is composed of nearly 1,000 member companies, representing the broadest cross section of insurers of any national trade association. PCI members write $202 billion in annual premium, 35 percent of the nation's property casualty insurance. Member companies write 42 percent of the U.S. automobile insurance market, 27 percent of the homeowners market, 33 percent of the commercial property and liability market and 34 percent of the private workers compensation market.