As we all look forward to a successful year handling and defending claims in 2012, it is important to take a moment to remind ourselves about how to handle those pesky ORS 20.080 demands. Because the limit increased from $7,500 to $10,000 on January 1, 2012, we will likely experience an increase in the frequency of these demands.
In short, ORS 20.080 creates a right to attorney fees for the claimant when (1) a pre-litigation demand of $10,000 or less is made on the insured or insurer not less than 30 days before the filing of the complaint and (2) the claimant beats the insurer’s pre-trial offer. The statute was enacted to pressure insurers to settle small claims and, if not handled appropriately, can turn small, relatively benign claims into high risk, attorney fee cases.
When dealing with an ORS 20.080 demand, remember the following tips:
• Make your very best offer within 30 days of the demand. The claimant’s right to attorney fees can no longer be cut off by an offer of judgment. The only way to prevent attorney fees is to keep the jury award under the highest offer made within the 30 day period. Therefore, do not hold back authority until after the suit is filed. Calendar the 30 day period and make your best offer before it expires.
• The claimant must include in the demand all medical bills and property records for which damages are sought. The claimant cannot perfect a right to attorney fees without providing the insurer with the records to support the damages sought.
• Property damage and personal injury claims are aggregated for purposes of the $10,000 limit. A demand that seeks more than $10,000 in personal injury and property damages does not satisfy the statute’s requirements.
• Document everything in writing. Assuming the claimant beats the highest pre-trial offer and creates a right to attorney fees, the court will only award reasonable attorney fees. The court, as part of determining how much to award, will look at the diligence of the parties in trying to resolve the claim. Therefore, create a paper record that shows you handled the claim reasonably. Make all offers in writing. Request additional information in writing. Document in writing the claimant’s refusal to provide key information. These actions will all help keep the attorney fee award down.
• Make sure your outside counsel evaluates the case early and often. Once the 30 days expires and the lawsuit is filed, it is critical that your outside counsel aggressively obtain information to evaluate the case early. The claimant’s attorney fees will only increase as the litigation proceeds.
While ORS 20.080 demands can be problematic, the above tips will help minimize the risk. Keep them in mind as you prepare to deal with more and more of these demands in 2012.