Senate Bill 83 and the 3rd Generation of O.C.G.A. § 9-11-67.1

Joseph Kaiser – Managing Partner
Groth, Makarenko, Kaiser & Eidex
May 13, 2024

The History of O.C.G.A  § 9-11-67.1 and how we got here:

In 2013, a compromise between the lobbies for the plaintiffs bar and defense bar created a new statue codified as O.C.G.A. § 9-11-67.1 to create a framework for presenting time limited demands to insurers and address the proliferation of complex demands that had occurred in the years following Southern General v. Holt which established the framework for a negligent failure to settle or bad faith action.

In creating O.C.G.A. § 9-11-67.1 the goal was to establish ground rules that everybody knew and could abide by. However, since the legislation was a compromise, there were many “loopholes” which would be exploited in the aftermath of the passage of the bill. The biggest compromise was that the statute would only apply to motor vehicle accidents in which the plaintiff was represented by an attorney and prior to suit being filed in a case, leaving Holt the law for cases that were in suit. The statute created 5 material terms, which, if accepted, would create a settlement.

Almost immediately, members of the Plaintiffs bar attacked portions of the new statute. In Grange Mut. Cas. Co. v. Woodard, 300 Ga. 848, 855, 797 S.E.2d 814, 820 (2017), The Georgia Supreme Court held that the five material terms were merely a minimum but that a Plaintiff may add additional terms holding that “every Pre-Suit Offer must contain the five enumerated terms, but additional terms are not prohibited.”

In Woodard, the Court also held that OCGA § 9-11-67.1 permits “unilateral” contracts whereby Pre-Suit Offers may demand acceptance in the form of performance (in addition to the statutorily mandated written acceptance) before there is a binding enforceable settlement contract. Woodard at 858.

Another practice that became commonplace was to file suit but not serve the suit on the Defendant or their insurance carrier. This allowed the Plaintiff to then send a demand under Holt without the insurer being made aware that suit has been filed and the demand was a “Holt” demand instead of a 9-11-67.1 demand.

The 2nd Generation of O.C.G.A  § 9-11-67.1

In 2021, the Legislature sought to reform the statute and address the loopholes that had been created through Court of Appeals and Supreme Court holdings. In the 2021 revision, the Court of Appeals made the following changes:

• The amendment made clear that the 5 material terms were the only material terms that could be required by a Plaintiff. 
• Language was edited to provide that the statute applied until an Answer was filed, rather than when suit was filed.

Following the 2021 revision, several attacks were again made upon the statue. These challenges culminated with Pierce v. Banks, 368 Ga. App. 496, 502–03, 890 S.E.2d 402, 408 (2023), cert. denied (Jan. 9, 2024). In Pierce, a demand was presented to Trexis (the insurer) and Trexis sought to accept the demand. However, Plaintiff argued they had not accepted it for primarily to reasons. On the check, the law firms name did not have a comma between the firms name and “LLC” and that payment had to “be received 15 days after Trexis’ written acceptance of th[e] offer.”  Trexis paid prior to the 15 days, however, Plaintiff contended their demand required payment “on” the 15th day and not “by” the 15th day. Plaintiff further contended they were presented a check that bore the words “void after 180 days” which constituted a counteroffer. The Georgia Court of Appeals held that “Where, like here, “the recipient of a pre-suit offer fails to perform the act required to accept the offer, then the parties do not have a meeting of the minds.” de Paz v. Pineda, 361 Ga. App. at 295 (2), 864 S.E.2d 134. “Instead, the purported acceptance of the offer is a counteroffer rather than an acceptance, and no contract is formed…Accordingly, there was no formation of a settlement agreement here”

Senate Bill 83 and the Third generation of O.C.G.A §  9-11-67.1

This past legislative session the legislature provided the most significant and impactful changes to the statute. It is also the first true effort to level the playing field on this issue in Senate Bill 83.  

The bill amends O.C.G.A. § 9-11-67.1 for pre suit demands and does the following:

• Makes these demands bilateral instead of unilateral contracts
• Clarifies that the material terms in the statute can be the only material terms required for acceptance of a demand
• They moved 2 more material terms that were already in the statute in other places for consistency (an affidavit from insurer and date for payment)
• Provided that the date for payment shall be a date “by” which payment shall be made and not “on” which date a payment shall be made.
• Clarifies that any additional terms added to a demand are immaterial and not required for acceptance
• The Plaintiff cannot make the insurer waive the protections of the statute as a condition of the demand)

These are all significant positive improvements, but the most significant change is the new subsection “i” which creates a new safe harbor for ALL demands involving car accidents, not just pre-suit demands.  The safe Harbor provision provides that:

(i)(1) There shall be no civil action arising from an alleged failure by the recipient to settle a tort claim for personal injury, bodily injury, or death arising from a motor vehicle collision, where the recipient provides the offeror on or before the dates specified in the offer:

      (A) A writing that purports to accept in their entirety the material terms of the offer, with the exception of the amount of payment;

      (B) A statement by the recipient under oath regarding insurance coverage provided by the recipient, if required as a material term; and

     (C) Payment of the lesser of:

        (i) The amount demanded in such offer; or

        (ii) The available bodily injury liability limits of the applicable insurance policy or policies issued by the recipient.

Our reading of this amendment essentially means that if a demand is made and the insurer says “We accept” in writing and payment is made, there is a settlement and there can be no bad faith action.  If there is an issue with any of the specific terms that becomes a performance issue and the remedy would be the plaintiff seeking to enforce performance of those conditions but would not void the settlement and would not allow a bad faith action for negligent failure to settle. 

The “new” 3rd generation of O.C.G.A. § 9-11-67.1 was signed by the governor on April 22, 2024 and applies to all demands received after that date.  

Another Noteworthy Piece of Legislation from from the 2024 Legislative Session

It has long been the law in Georgia that when a tortfeasor worked for a motor carrier, that the insurer could be named as a party in the lawsuit. This is referred to as a direct action. This allowed the jury to know of the existence of insurance.

This session, the General Assembly passed Senate Bill 426, which amends O.C.G.A. § 40-1-112 and O.C.G.A. § 40-2-140 and limits the circumstances under which a plaintiff can assert a direct action against the insurer of a motor carrier to only situations where the motor carrier is insolvent or bankrupt or if service cannot be obtained against the driver or motor carrier. The insurer will no longer be permitted to be joined as a party in any other situation. It has been signed by the Governor and takes effect July 1, 2024.