Demanding times
Successful time-limited pre-filing demands after C.C.P. § 999’s arrival
The lawyer listened to the presenter. “For those of you wanting a solid bad faith case after an insurance company wrongfully fails to accept a pre-filing demand, there’s a new statute, and it’s a big deal.” The lawyer, who liked bad faith pivots as much as the next person, perked up as the presenter talked about C.C.P. § 999. While the lawyer was not into numerology, the lawyer thought the fact that the legislature dropped the statute right next to the ever-useful C.C.P. § 998 must be significant.
Gotcha, covered
C.C.P. § 999 applies to demands made after January 1, 2023. It applies to any personal-injury demand made prior to filing suit. Read personal injury here as anything not medical-malpractice or employment-law related. The statute excludes demands made by an unrepresented individual. That little nuance is worth noting. The letter and $50,000 in substantiated medical bills sent by poor Pat Plaintiff before hiring a lawyer that the insurance company rejected will have bad-faith teeth; the same letter sent by a lawyer, absent meeting all C.C.P. § 999’s requirements, won’t.
Why all the hullabaloo over pre-filing demands? Carriers were frustrated with what they, and their bad faith counsel, deemed “Gotcha!” demands. Perhaps those demands sent over on a Friday afternoon, demanding acceptance by Monday morning via a hand-delivered check weren’t such a good idea... And to be clear, our plaintiff-side bad faith colleagues weren’t big fans either. Give them enough rope to hang themselves, they always tell us. They ask for more rope, give it. Fast-forward to C.C.P. § 999’s unveiling. We now have clearly demarcated boundaries of what’s game on for bad faith, and what’s not. With the rules spelled out, it is incumbent upon us to follow them and let insurance companies fail to, as is their wont.
So demanding
So what burdens do C.C.P. § 999 add? Not much. One is what our own bad faith counsel would prefer when receiving a file for bad faith prosecution, namely significant time to accept. The demand must provide 30 days minimum to accept if conveyed by email (or fax for those antiquated insurance document processing systems) or 33 days if sent by mail. The demand must be labeled as a “Time-limited demand” or specifically state it is made under C.C.P. § 999. Insurers demanded this so their scanning software could pick them up. Best, then, to use both terms, put them in bold, and make them prominent. The demand can be sent by email or mail to the address listed by the insurance company at the Department of Insurance for receiving these demands, or to the adjuster if known. That first one may be interesting, as it is a new process for a government agency collaborating with behemoth insurance companies. Thus, it will be best to send it to both adjuster and company-designated address, if known.
The demand must include specific terms and details. These include: a clear and unequivocal offer to settle all claims within policy limits, including the satisfaction of all liens; an offer for a complete release from the claimant for the liability insurer’s insureds from all present and future liability for the occurrence; the date and location of the loss; the claim number, if known; a description of all known injuries sustained by the claimant; and reasonable proof, which may include, if applicable, medical records or bills, sufficient to support the claim. That laundry list is directly from the statute. The rule of thumb here is that if one wants to win that bad faith case and wants the jury to see just how much information was provided, make sure it goes with the package. While these are must-includes, nothing precludes adding additional acceptance terms such as a declaration of no additional insurance. Failure to substantially comply with these requirements will mean that the offer will be deemed unreasonable in any later bad faith efforts.
Their ball
Once the carrier receives the offer, it can request clarification, further information, or more time. These are not deemed counteroffers or rejections. Your bad faith lawyer will tell you to do everything you can to meet their concerns, within reason, although this is not specified in the statute. If (or, ahem, when) the carrier rejects the time-limited demand, it now has to do so in writing, within the time to accept the demand, with the basis for its rejection. That basis will be relevant to any bad faith action. Watching insurance companies create form letters, constrain adjuster autonomy, and yet provide enough basis to benefit from the letters in bad faith cases will be curious.
Outro
Back to our lawyer. After the seminar, the lawyer provided the statute changes to the firm’s prelitigation team, who retooled the demand package template to comply with C.C.P. § 999. While insurance companies adapt slowly, we consumer firms should do everything we can to pivot quickly. With a new statute there will be breakage, and best that happens on the insurance company side.
Miles B. Cooper
Miles B. Cooper is a partner at Coopers LLP, where they help the seriously injured, people grieving the loss of loved ones, preventable disaster victims, and all bicyclists. Miles also consults on trial matters and associates in as trial counsel. He has served as lead counsel, co-counsel, second seat, and schlepper over his career, and is an American Board of Trial Advocates member.
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