Written by Kevin Kennedy, Esq.
Edited by Bill Pfund, Esq.
The Virginia General Assembly has completed its 2018 legislative session and has enacted several new statutes impacting the insurance defense industry and legal practice. Perhaps the most significant developments from the last session were several bills advanced by the plaintiff’s bar which failed to pass, resulting in the preservation of important Virginia Supreme Court decisions that will continue to shape case evaluation and strategy moving forward. New laws going into effect on July 1, 2018, with special import to our readers are highlighted below, as well as a few noteworthy failed bills.
Required policy limits disclosure for insureds convicted of Driving Under the Influence. Senate Bill 535. Pursuant to the existing language of Va. Code § 8.01-417.01, if a plaintiff is able to produce a total of $12,500 in medical bills and/or lost wages attributable to an accident, the plaintiff’s attorney may submit a request to the alleged tortfeasor’s insurer with a request to disclose the applicable policy limits. Under those circumstances, the insurer is required to respond within 30 days to confirm the amount of the policy limits which may potentially apply to the claim. As of July 1, 2018, the circumstances surrounding required disclosure have been expanded. Under the expanded provision, if an alleged tortfeasor has been convicted of driving under the influence, the plaintiff or his attorney may request disclosure of the policy limits regardless of the amount of any medical bills or lost wages claimed by the plaintiff. Consistent with the prior statute, the insurer must respond within 30 days to confirm the amount of the policy. This disclosure must be made even if the insurer is contesting the application of the policy, and the disclosure is not a waiver of any coverage disputes.
Prohibition against vendor agreements between insurers and court reporters. Senate Bill 545. With the proliferation of vendor agreements between insurance companies and court reporting services, the Virginia State Legislature has responded by declaring these contracts to be against state law. As of July 1, 2018, the newly enacted legislation “prohibit[s] providers of court reporting services from (i) entering into contracts for more than one case, action, or legal proceeding with a party to an action, insurance company, third-party administrator, or any other person or entity that has a financial interest in the case, action, or legal proceeding; (ii) giving an economic advantage to one side that is not offered to the other; (iii) having a financial interest in the action; (iv) entering into an agreement for court reporting services that restricts an attorney from using the court reporter or court reporting services provider of the attorney’s choosing; (v) allowing the format, content, or body of a certified transcript as submitted by the court reporter to be manipulated in a manner that increases the cost of the transcript; and (vi) providing additional advocacy or litigation support services.” The statute also provides monetary penalties for the violator of $500 for a first offense, $750 for the second offense, and $1,000 for every offense thereafter.
Bills related to Worker’s Compensation Cases and Insurers
Tax rate on insurer’s used to fund uninsured employer’s fund remains unchanged. House Bill 82. This bill repeals an enactment clause that provides that the maximum tax rate that may be assessed on insurance carriers or self-insured employers for the purpose of funding workers’ compensation benefits that are awarded against uninsured employers from the Uninsured Employer’s Fund will revert from 0.5 percent to 0.25 percent on July 1, 2018. Repealing the enactment will maintain the maximum rate at its current level of 0.5 percent.
Proof of coverage information. House Bill 531. This bill removes the provision that prevents the Workers’ Compensation Commission from aggregating proof of coverage information filed with the Commission by an insurance carrier or rate service
organization on behalf of an employer with the proof of coverage information filed by or on behalf of other employers.
Employer’s liability for medical services provided outside the Commonwealth. House Bill 558. This bill clarifies that the “medical community,” when referring to providers of medical services rendered under the Virginia Workers’ Compensation Act outside of the Commonwealth, shall be determined by the zip code of the principal place of business of the employer if located in the Commonwealth. If the employer’s principal place of business is not in the Commonwealth, then it shall be determined by the zip code of the location where the Workers’ Compensation Commission would conduct its hearing regarding a dispute concerning the medical services.
Failed legislation attempting to overturn recent Virginia Supreme Court rulings
Spoliation of evidence. House Bill 1336. The Virginia Supreme Court recently affirmed that in order for the judge to instruct the jury on an adverse inference against a party for lost or destroyed evidence, the court must find that the party had “acted in bad faith or with intentional conduct calculated to suppress the truth.” Emerald Point, LLC v. Hawkins, 294 Va. 544, 558, 808 S.E.2d 384 (2017). In response to the ruling, the plaintiff’s bar had advocated for a bill that would do away with a showing of intent or bad faith and allow for an adverse spoliation instruction simply upon a finding that a party “knows or reasonably should know [the evidence] may be material to pending or probable litigation.” This bill was not passed and the recent Virginia Supreme Court ruling remains the standard for determining when a trial court should provide a spoliation instruction to the jury.
UM/UIM Bad faith. Senate Bill 17. In 2017, The Virginia Supreme Court confirmed the longstanding interpretation of a UM/UIM insurers duties to its insured. It ruled that under Va. Code § 38.2-2206(H), a UIM carrier had no pre-judgment duties to its insured and was not liable for bad faith for failure to participate in settlement discussions prior to trial. Manu v. GEICO Cas. Co., 293 Va. 371, 798 S.E.2d 598, 608-09 (2017). Under the proposed Senate bill, a UM/UIM carrier would be liable for bad faith denials of “reasonable settlement demands” made prior to trial. This bill was not passed and the duties of UM/UIM carriers remain limited to simply making timely payment of a judgment for an amount within its policy limits.
Overall, while the Virginia State Legislature considered many bills that could have dramatically impacted insurance and tort law in the Commonwealth, the enacted bills were fairly limited. Should you have any questions regarding the application of new laws to existing or pending claims, your KPM attorneys are always available to address those questions.