CCP Section 999 and OPL Practical Refresher

Introduction of CCP Section 999

• Effective January 1, 2023, California enacted CCP § 999 to clarify pre-litigation settlement demands in auto cases.
• Establishes a clearer definition of what constitutes a “reasonable” offer to settle, impacting how policy-limit demands are approached.

Policy-Limit Demands

• Policy-limit demands enable claimants to expedite the settlement process and possibly expose insurers to full liability if they deny a reasonable demand.
• Essential for claimants to prepare these demands properly to benefit from potential bad-faith claims against insurers.

Understanding Policy Limits

• Insurance policies set maximum payout limits for bodily injury and property damage, typically divided into per-person and per-accident limits.
• These demands require insurers to settle within defined policy limits established in the claim.

Bad-Faith Lawsuits

• Insurers must engage in fair dealings; failure to settle valid claims or unreasonable delays can constitute bad faith.
• The court clarified in Pinto v. Farmers Ins. Exch. that unreasonable rejection of settlement demands may expose insurers to bad faith liability.

Requirements Under § 999

• Claimants’ demands must be in writing, labeled as a “time-limited demand,” and reference § 999.
• Claims submitted need inclusion of several material terms:
  • Clear acceptance time (30 days via electronic means, 33 days via standard mail).
  • Unambiguous settlement offers covering all claims and satisfying all liens.
  • Release from future liability, incident location, claim number, detailed injury descriptions, and supporting proof.

Compliance and Reasonable Proof

• Demands must include "reasonable proof," with ambiguity remaining on what constitutes this, aside from medical records and bills.
• CACI No. 2334 provides guidance on what might be deemed reasonable proof, focusing on the claimant’s injuries and potential liability.

Consequences of Non-Compliance

• Failure to comply with § 999 renders a policy-limit demand unreasonable, preventing the claimant from opening the policy for bad-faith claims.
• Unrepresented claimants have more flexibility compared to represented ones bound by these statutory requirements.

Insurers' Responses to Demands

• Upon receiving a demand, insurers can accept it, request clarification, or reject it—rejections must be in writing with clear explanations.
• Insurers must respond to demands and cannot simply disregard them; this lack of response may indicate unreasonable conduct.

Evaluating Insurer Conduct

• The reasonableness of an insurer’s response is assessed case-by-case, with CACI 2337 outlining various factors for consideration, including the clarity of liability and the timeliness of reactions.

Conclusion

• CCP § 999 aims to make the pre-litigation settlement process more transparent and efficient in auto-accident cases by enforcing specific statutory requirements for both claimants and insurers.
• The long-term impact of these changes will require further observation as stakeholders adapt to the new legal landscape.