In 2012, the Missouri Supreme Court found that Section 538.210 RSMo., which capped non-economic damages in medical malpractice cases, violated the right to a jury trial guaranteed under the Missouri Constitution. Non-economic damages are those that compensate an individual for pain, suffering, etc. The statute capped these damages at $350,000.00. This statue was a key component of tort reform, aimed at restricting your right to recover damages when harmed by the negligence of a health care provider.

Undeterred, tort reformers are at it again in Missouri. Recently, the Senate Small Business, Insurance and Industry Committee held a hearing on SB 617, legislation sponsored by state Republicans on behalf of the big insurance companies. The proposed bill allows an insurance company to present a reservation of rights letter to its insured without breaching the terms of the insurance policy. Currently, under Missouri law, the insurance company has an obligation to defend you in court if you are sued and to pay any resulting judgment. If the insurance company believes there is no coverage for the lawsuit, it tries to reserve its rights, meaning that it will provide a defense, but will try to avoid paying any judgment entered against you as its insured. This obviously raises major issues for you as the insured. How can you expect the insurance company to provide you a full, complete and aggressive defense if it is hoping to avoid payment of any judgment at the end of the trial?

Recognizing this issue, Missouri law has long held that a reservation of rights defense does not have to be accepted by you as the insured. Further, the you can treat the reservation of rights as a breach of the insurance policy and negotiate with the other party to end the lawsuit. Section 537.065 RSMo., allows for a settlement whereby you admit liability and the plaintiff agrees to limit its recovery to your insurance policy. The law promotes the speedy resolution of lawsuits and provides the you with the benefit of the insurance policy for which premiums have been paid. The law protects your assets from being seized to pay a judgment.

Not surprisingly, the Missouri Insurance Coalition, Associated Industries of Missouri, and several individual insurance companies testified in support of the bill. These groups and businesses noted their continued belief that there remains a need for tort reform in Missouri. They admitted that this bill is a key component of additional tort reform in Missouri.

If this bill became law, the insurance companies will be asking you to believe that they are your “good neighbor” and that you’re in their “good hands” while at the same time, they are providing a limited defense and planning to avoid payment of any judgment against you. One opponent of the bill noted that you, the insured, would be “smacked twice” if sued. The Missouri Bar, which represents all lawyers in the State, even those who represent insurance companies, is opposed to the bill.

Please get involved and tell your state representatives that you are against “tort reform” measures that make it easier for big insurance companies to avoid their obligation to you under the terms of the policy you have paid for in Missouri.