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AB-2429 Insurance: time-limited demands.(2017-2018)

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Date Published: 03/16/2018 04:00 AM
AB2429:v98#DOCUMENT

Amended  IN  Assembly  March 15, 2018

CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Assembly Bill
No. 2429

Introduced by Assembly Member Caballero

February 14, 2018

An act to amend Section 5800 of the Civil Code, relating to common interest developments. add Chapter 6.5 (commencing with Section 585) to Part 1 of Division 1 of the Insurance Code, relating to insurance.


LEGISLATIVE COUNSEL'S DIGEST


AB 2429, as amended, Caballero. Common interest developments. Insurance: time-limited demands.
Existing law regulates insurance and the business of insurance in this state. Existing law specifies various acts that are defined as unfair methods of competition and deceptive acts or practices in the business of insurance, including knowingly committing or performing certain acts with such frequency as to indicate a general business practice of unfair claims settlement practices.
This bill would declare that it is the policy of the state that prompt settlements of civil actions and insurance claims are encouraged as beneficial to claimants, policyholders, and insurers. The bill would require a time-limited demand, as defined, to be in writing and to include specified information, including the time period within which the offer remains open, the entire amount of monetary payment requested for a full and final settlement of the claim, and an offer of a full and final unconditional release from all present and future liability arising out of the occurrence giving rise to the claim. The bill would also require the time-limited demand to include specified documentation to support the claim for damages. The bill would authorize an insurer to accept the time-limited demand by providing written acceptance of the material terms within the time period set forth in the demand.

Existing law, the Davis-Stirling Common Interest Development Act, defines and regulates common interest developments. Existing law requires a common interest development to be managed by an association that may be incorporated or unincorporated. Existing law limits the personal liability for tortious acts or omissions of a volunteer officer or director of an association that manages a common development that is residential or mixed use, if certain criteria are met.

This bill would make a nonsubstantive change to that provision.

Vote: MAJORITY   Appropriation: NO   Fiscal Committee: NO   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 The Legislature finds and declares that it is the policy of this state that prompt settlements of civil actions and insurance claims are encouraged as beneficial to claimants, policyholders, and insurers, and that tactics, including unreasonable time-limited demands designed to create subsequent claims for extra-contractual damages, be eliminated. Both policyholders and insurers doing business in this state are entitled to the opportunity to timely and fairly investigate claims presented without the risk of creating additional liability exposure. This policy benefits the citizens of the state because it allows insurers to discharge their obligations to protect policyholders and promotes settlements that are fair and reasonable.

SEC. 2.

 Chapter 6.5 (commencing with Section 585) is added to Part 1 of Division 1 of the Insurance Code, to read:
CHAPTER  6.5. Time-Limited Demands

585.
 For purposes of this chapter, the following definitions apply:
(a) “Insurer” means the insurance carrier of the tort-feasor, or the first-party insurer to which the demand for settlement is being made, or the third-party insurer of the tort-feasor.
(b) “Time-limited demand” means an offer to settle a claim for property damage, personal injury, bodily injury, or wrongful death made by or on behalf of a claimant to a tort-feasor with a liability insurance policy for purposes of settling a claim against the tort-feasor within or above the policyholder’s coverage limit, which by its terms must be accepted within a specified period of time.
(c) “Tort-feasor” means a person alleged to have caused or contributed to cause property damage, personal injury, bodily injury, or wrongful death to a claimant.

586.
 (a) A time-limited demand shall be in writing and shall include a reference to this section. The demand shall be labeled “Time-Limited Demand: Time Sensitive” and shall be sent certified mail, return receipt requested, to the claims department of the tort-feasor's liability insurer and, if known or reasonably should be known, in care of the insurer’s representative assigned to handle any claim for property damage, personal injury, bodily injury, or wrongful death made by or on behalf of a claimant to a tort-feasor with a liability insurance policy.
(b) A time-limited demand shall include all of the following information:
(1) The time period within which the offer shall remain open for acceptance by the insurer, which shall not be less than 60 days, or the business day following the 60th day if that day falls on a weekend or holiday, from the date that the written demand is received by the insurer.
(2) The entire amount of monetary payment requested for a full and final settlement of the claim.
(3) The date and location of the loss.
(4) The claim number, if known.
(5) A detailed description of all known and reasonably anticipated damages or injuries sustained by the claimant.
(6) The party or parties to be released if the time-limited demand is accepted.
(7) A detailed description of the claims to be released if the time-limited demand is accepted.
(8) A detailed explanation of the legal theory of liability against the tort-feasor or each tort-feasor if the demand is presented to multiple tort-feasors.
(9) An offer of a full and final unconditional release for the tort-feasor from all present and future liability arising out of the occurrence giving rise to the claim for property damage, personal injury, bodily injury, or wrongful death.
(10) Information regarding the absence of insurance for any uninsured person or motor vehicle involved in the occurrence giving rise to the claim.
(11) The name of the insurer of any other at-fault person or motor vehicle.
(12) Written confirmation that an insurer of a person or motor vehicle that has been determined to be partially or wholly at-fault has offered its policy limits in accordance with its obligation under the policy contract.
(13) Disclosure of eligibility, or information sufficient to verify eligibility, for Medicare, Medicaid, or any other federal or state benefit program, and any other known liens or assignments granted by the claimant that apply to any of the damages claimed.
(14) Disclosure of the applicability of Section 3333.4 of the Civil Code to the claimant, if applicable.

587.
 (a) A time-limited demand shall include the following documentation to support the claim for damages or injuries, or both, as follows:
(1) If the claimant asserts a claim for personal injury or bodily injury, the documentation shall include all of the following:
(A) A list of the names, addresses, phone numbers, and email addresses of all health care providers who provided treatment to, or evaluation of, the claimant or decedent for injuries suffered from the date of the injury until the date of the time-limited demand and for any physical or emotional preexisting condition or disability that the claimant alleges was made worse as a result of the occurrence giving rise to the claim.
(B) Nonredacted medical records, treatment logs and notes, and bills from all health care providers who provided treatment to, or evaluation of, the claimant or decedent for injuries suffered from the date of injury until the date of the time-limited demand and for any physical or emotional preexisting condition or disability that the claimant alleges was made worse as a result of the occurrence giving rise to the claim.
(C) The claimant’s signed and dated written authorization under the federal Health Insurance Portability and Accountability Act of 1996 (HIPAA), sufficient to allow the insurer to obtain records from the health care providers listed pursuant to subparagraph (A).
(2) If the claimant asserts a claim for loss of wages, earnings, compensation, or profits, the documentation shall include all of the following:
(A) A list of names, addresses, phone numbers, and email addresses of all the claimant’s employers at the time the claimant was first injured until the date of the time-limited demand.
(B) Complete, nonredacted employment records, tax records, and any written, signed, and dated authorizations sufficient to allow the insurer to obtain records from those employers and tax agencies. Records from employers and tax records shall be provided to document the loss claimed.
(3) If the claimant asserts a claim for property damage, the documentation shall include all of the following:
(A) A detailed list of property damage and any photographs, repair estimates, or other documentation substantiating the value and condition of the property damaged.
(B) Any necessary signed and dated releases or written authorizations sufficient to allow the insurer to obtain records substantiating the property damage.
(b) The recipient of a time-limited demand shall have the right to provide a proposed release, seeking clarification or additional information regarding terms, liens, subrogation claims, standing to release claims, medical bills, billing statements, including all explanations of benefits and payments accepted by health care providers for treatment or evaluation for all known injuries sustained by the claimant, medical records, preexisting medical conditions, and other relevant facts. An attempt to seek clarification or additional information shall not be deemed a counteroffer or a rejection of the time-limited demand, and any time limit imposed in the demand shall be deemed tolled and extended for a minimum of 30 days or until the clarification or additional information is received by the insurer.
(c) The claimant shall have the duty to provide any missing documentation requested by the insurer and the time limit imposed by the time-limited demand shall be deemed tolled and extended for a minimum of 30 days or until the clarification or additional information is received by the insurer.

588.
 (a) An insurer that receives a time-limited demand may accept the time-limited demand by providing written acceptance of the material terms, delivered or postmarked to the claimant or the claimant's representative within the time period set forth in the demand. Written acceptance shall not limit the insurer’s rights to seek a proposed release, additional information, or clarification, as set forth in subdivisions (b) and (c) of Section 587.
(b) The person or entity providing payment to satisfy the material terms of the time-limited demand may elect to provide payment to the claimant or to Medicare, Medicaid, or any other federal or state benefit program, or to any other known lienholder or assignee granted rights by the claimant that apply to any of the damages claimed. Payment may be made by any of the following methods:
(1) Money order.
(2) Wire transfer.
(3) A cashier’s check issued by a bank or other financial institution.
(4) A draft or bank check issued by an insurance company.
(5) An electronic funds transfer or other method of electronic payment.

589.
 In any action, claim, or matter, a time-limited demand that does not strictly comply with the terms of this chapter shall not be considered a reasonable opportunity to settle for the insurer and shall not be admissible to allege any damages that result from noncompliance with, or failure to accept, the time-limited demand.

SECTION 1.Section 5800 of the Civil Code is amended to read:
5800.

(a)A volunteer officer or volunteer director described in subdivision (e) of an association that manages a common interest development that is residential or mixed use shall not be personally liable in excess of the coverage of insurance specified in paragraph (4) to a person who suffers injury, including, but not limited to, bodily injury, emotional distress, wrongful death, or property damage or loss as a result of the tortious act or omission of the volunteer officer or volunteer director if all of the following criteria are met:

(1)The act or omission was performed within the scope of the officer’s or director’s association duties.

(2)The act or omission was performed in good faith.

(3)The act or omission was not willful, wanton, or grossly negligent.

(4)The association maintained and had in effect at the time the act or omission occurred and at the time a claim is made one or more policies of insurance that shall include coverage for (A) general liability of the association and (B) individual liability of officers and directors of the association for negligent acts or omissions in that capacity; provided that both types of coverage are in the following minimum amounts:

(A)At least five hundred thousand dollars ($500,000) if the common interest development consists of 100 or fewer separate interests.

(B)At least one million dollars ($1,000,000) if the common interest development consists of more than 100 separate interests.

(b)The payment of actual expenses incurred by a director or officer in the execution of the duties of that position does not affect the director’s or officer’s status as a volunteer within the meaning of this section.

(c)An officer or director who at the time of the act or omission was a declarant, or who received either direct or indirect compensation as an employee from the declarant, or from a financial institution that purchased a separate interest at a judicial or nonjudicial foreclosure of a mortgage or deed of trust on real property, is not a volunteer for the purposes of this section.

(d)Nothing in this section shall be construed to limit the liability of the association for its negligent act or omission or for any negligent act or omission of an officer or director of the association.

(e)This section shall only apply to a volunteer officer or director who is a tenant of a residential separate interest in the common interest development or is an owner of no more than two separate interests and whose ownership in the common interest development consists exclusively of residential separate interests.

(f)(1)For purposes of paragraph (1) of subdivision (a), the scope of the officer’s or director’s association duties shall include, but shall not be limited to, both of the following decisions:

(A)Whether to conduct an investigation of the common interest development for latent deficiencies prior to the expiration of the applicable statute of limitations.

(B)Whether to commence a civil action against the builder for defects in design or construction.

(2)It is the intent of the Legislature that this section clarify the scope of association duties to which the protections against personal liability in this section apply. It is not the intent of the Legislature that these clarifications be construed to expand, or limit, the fiduciary duties owed by the directors or officers.