Missouri lawmakers recently enacted insurance-tort reform legislation designed to help curb the abuses associated with the settlement agreement 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. Insurance companies 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 settlement agreement process so that insurers may intervene in the underlying lawsuit as a matter of right. 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,” Hilary Segura, counsel, state government relations for the Property Casualty Insurers Association of America, said. “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.”
Missouri Gov. Eric Greitens also signed a bill to change 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, Greitens signed the expert witness bill, which switches Missouri’s expert witness standards from the Frye model to the Daubert standard. This seeks to improve the reliability of expert witness testimony, and puts Missouri in line with a majority of states regarding the standard used for expert testimony.