S. C.“Insurance Welfare” Bill Bad for Citizens
Daniel L. Draisen, Esq./The Injury Law Firm, PC (with thanks to Christopher Pracht, Esq,)
Today, I write to you about a current and very real threat to South Carolina citizens’ ability to recover reasonable or fair compensation when you or a loved one are hurt or killed by someone else’s negligent acts.
Senator Shane Massey (Majority Leader of the Senate) has introduced legislation written by the insurance lobby. The bill is co-sponsored by Senator Thomas Alexander (President of the Senate). The bill is S244, Senate Bill 244, or as we call it the “insurance welfare bill”. I encourage everyone to take a moment to read the bill here.
In short, S224 does the following:
1. Essentially eliminates “Bad Faith Claims” in South Carolina.
This would allow insurers to deny claims for practically any reason. Currently, insurers in SC can be held liable for the unreasonable denial of claims without a good faith basis or reason for the denial. The proposed change would make SC law similar to Federal law applicable to employer sponsored benefit plans, which are governed by ERISA. ERISA severely limits the recourse you have when your claim is denied or not paid by the insurance company (i.e., medical bills under a health insurance plan, short or long-term disability under a disability plan, etc.)
2. Allows non-parties to be named or listed on the verdict form. This would allow defendants to allege that fault, or a percentage of fault, should be assigned to any number of other persons or entities not named in the lawsuit, and would, if the judge or jury assigns liability to such non-parties, effectively reduce the amount that an injured party can recover from the named defendants. To prevent such result, injured parties in SC would have to amend their lawsuit and sue every person or entity that any defendant asserts might have any liability. Further, if joint and several liability is also eliminated (see below), it would mean that you can only collect amounts based on the percentage of fault assigned to each defendant or non-party individually, regardless of their ability to pay.
3. Allows seatbelt nonuse to come into evidence.
4. Eliminates Gross Negligence Exception to Medical malpractice damage caps. Currently, in SC if an injured party can prove by clear and convincing evidence that a doctor or care provider acted with extreme or deliberate disregard, the damages are not subject to the damages cap which can be as low as $300,000 per person per occurrence. This change would apply the damages cap to all medical malpractice claims regardless of the conduct of the doctor or care provider. You would not be able to seek punitive damages over and above the damages cap regardless of the conduct.
5. Re-defines “occurrence” to make it impossible to show multiple occurrences. Currently, in a medical malpractice case, an injured person could recover the Tort Claims cap limit for each bad act as a separate “occurrence” rather than being strictly limited to a single Cap limit. This would re-define “occurrence” to make it so that an injured party can only recover the single Cap limit regardless of the number of bad acts. This would further reduce the amount that you or your family who are severely injured or killed can recover.
6. Prevents collection of punitive damages from your own Uninsured Motorist Coverage (UM) or Underinsured Motorist Coverage (UIM). These are insurance coverages you pay premiums for that provide you coverage when you are hurt by someone that is driving without insurance UM), or when you are hurt by someone that does not have high enough insurance limits to cover your damages – this coverage is optional (UIM). Think of what this would do to your recovery in a DUI, reckless driving, inattentive driving, catastrophic injury or fatality case.
7. Creates pure “several” liability (Totally eliminates joint and several liability). This means you will only be able to collect from each defendant according to the percentage of fault assigned to them. Also, if non-parties are added to the verdict form, this could even further reduce the actual recovery by an injured party (i.e., truck driver 70% at fault, truck company 10% at fault, non-party unknown man walking his dog 10% at fault, non-party unknown other car driver 10% at fault…injured party must try to collect 70% from truck driver individually who likely does not have the ability to pay, 10% from the company, and the verdict is reduced by 20% related to the non-parties). The potential net result of this is that you or your family collects only 10% of the damages awarded.
8. Excess Verdict is not evidence of bad faith. “Mere Negligence” is insufficient to support a bad faith claim. This is the law now under the common law, but S224 seeks to codify that insurance companies can be negligent in their claims handling and not be responsible to pay verdicts in excess of their limits of coverage. This disincentivizes insurance companies from offering their limits because there would be no down-side risk even if a jury awards far more than the policy limits. You will end up going before a jury just to try to recover policy limits.
There is more included in S224, but these are the highlights. Also, this threat is REAL despite that “They introduce a bill like this every year”.
TRUST ME, THIS YEAR IS DIFFERENT.
As stated above, the Majority Leader is the bill Sponsor, and the President of the Senate is the Co-Sponsor. These two Senators can combine to pull the bill out of committee and get an up or down vote on the bill at any time they choose. Literally, tomorrow Senator Massey could pull the bill out of committee and put it to a vote.
By our count, my colleagues and I believe the Senate has the votes right now to pass this terrible legislation that benefits ONLY insurance companies and corporate defendants and is HORRIBLE for the citizens of South Carolina and their families.
I ask each of you to immediately reach out to Senator Richard Cash and Senator Mike Gambrell. I am told they both are willing to listen, but we ALL have to act now! I encourage each of you, your families, friends, etc. to write a short note to Senator Cash and Senator Gambrell, or send them an e-mail, urging them to oppose any effort to rush this bill through the Senate.
For reference, Senator Massey’s previous clients include:
Representative Clients: Allstate Insurance Co.; Liberty Mutual Insurance Co.; Kemper National Insurance Cos.; USAA Property and Casualty Insurance Co.; S.C. Insurance Reserve Fund; Canal Insurance Co.; State Auto Insurance Co.; American International Group Claim Services, Inc.; The Seibels Bruce Insurance Group; Kimberly-Clark Corp.; Auto Owners Insurance Co.; American Modern Home Insurance Co.; Concord Insurance Co.; American Reliable Insurance Co.; Global Insurance Co.; Crawford & Co.; National Health Corp, L.P.; Wyndham Risk Management; SmithKline Beecham Consumer Brands; S.C. State Accident Fund; Phar-Mor, Inc.; Owens Corning; Sedgwick of the Carolinas, Inc.; CUMIS Insurance Co.; Universal Insurance Co.; Hubbell/The Ohio Brass Co.; Carlisle Tire & Wheel Co.; Federated Insurance Co.; Time Insurance Co.; Globe Life Insurance Co.; Georgia-Pacific Corp.; S.C. Medical Malpractice Liability Insurance; JUA
