News and Information
June 18, 2012

Proposed Payee Notification Statute

Deadline for comment: September 30, 2012

Comments should be submitted in writing to Karen A. Gould, Executive Director, Virginia State Bar, 707 E. Main Street, Suite 1500, Richmond, VA 23219, no later than the end of the business day on the day of the deadline.

On April 25, 2012, the Virginia State Bar Payee Notification Task Force approved the proposed statute. The task force has recommended unanimously that insurance companies be required to notify claimants or judgment creditors that the insurer has issued a payment of $5,000 or more in settlement of a liability claim or judgment to the attorney or other representative of the claimant or judgment creditor. The proposed statute will be presented to the VSB Council in October.

Notice of settlement payment.

A. Upon payment by any insurer of at least $5,000 in a single check to an attorney licensed in Virginia, or other representative, in settlement or satisfaction by an insured or a third party of any claim arising out of an insurance policy issued or delivered in Virginia, the insurer shall send to the claimant or judgment creditor on the underlying insurance or liability claim a notice of such payment as required by subsection B within five business days of the date payment is made or sent to the attorney or other representative of the claimant or judgment creditor.

B. The notice required pursuant to subsection A shall be sent to the physical or electronic address furnished by the claimant or judgment creditor to the insurance company, unless the claimant or judgment creditor has advised the insurance company that no such notice shall be sent.  In the absence of any address or advice furnished by the claimant or judgment creditor, the notice shall be sent to the last known physical or electronic address of the claimant or judgment creditor.

The notice shall be sent by the insurance company only after a settlement has been agreed to by the attorney or other representative of the claimant or judgment creditor and within five business days of the date payment is made or sent to the attorney or other representative, and the notice shall contain only the following language:

"Pursuant to § _____ of the Code of Virginia, you are hereby notified that a payment was sent on (insert date on which payment sent) by (insert name of insurer) to your attorney or other representative (insert name, address, and telephone number of attorney or other representative known to insurer), in satisfaction of your claim or judgment against (insert name of insurer, or insured, whichever is appropriate).

If you have any questions, please contact your attorney or other representative."

C. Nothing in subsection A or B shall (i) create any cause of action for monetary damages for any person against an insurer based upon a failure to provide notice as required by this section or the provision of a defective notice, (ii) establish a defense for any person to any cause of action based on a failure to provide notice as required by this section or the provision of a defective notice, or (iii) invalidate or in any way affect the settlement or satisfaction for which the payment was made by the insurer.

D.  Except as provided and authorized by this section of the Code of Virginia, no insurer shall otherwise communicate with a claimant or judgment creditor known to be represented by an attorney licensed in Virginia, or other representative, regarding settlement of a claim or satisfaction of a judgment, without the written consent of such attorney or other representative.

 

 

Updated: Jun 18, 2012