GA Court of Appeals Pushes Back Against “Byzantine” Time Limited Demands Under O.C.G.A. § 9-11-67.1

The Georgia Court of Appeals issued an important ruling for insurers and claims professionals, addressing the practice of using time-limited settlement demands under O.C.G.A. § 9-11-67.1. In Gomez et al. v. USAA Casualty Insurance Company, the court enforced a policy‑limits settlement and made clear that the statute has increasingly been invoked in ways that test its intended purpose.

Background and Facts

The case arose from a fatal motor vehicle accident. The tortfeasor had an insurance policy issued by USAA Casualty Insurance Company with $50,000 per‑person liability limits.

Before any lawsuit was filed, claimants’ counsel sent USAA a time‑limited, pre‑suit settlement demand for the policy limits. The court described the demand letter as emblematic of an “ongoing saga” in Georgia auto‑liability litigation. The court observed that such demands often include “onerous, byzantine terms in the hope of causing a botched acceptance,” opening the door to a later bad faith claim and the prospect of a far larger verdict.

On one hand, the demand letter in this case expressly asserted that O.C.G.A. § 9‑11‑67.1 did not apply to the offer. On the other hand, the letter repeatedly referenced the statute, purported to track its requirements, and invoked it as governing law throughout the correspondence. In addition, the demand imposed several extra‑statutory conditions, including provisions declaring the offer rejected for immaterial errors, such as an “extra or missing comma or period or misspelling, even if accidental.”

USAA’s Response and Subsequent Dispute

USAA responded by accepting the statutory material terms required by O.C.G.A. § 9‑11‑67.1 (2021) in writing and tendering the $50,000 policy limits. At the same time, USAA explicitly declined to accept the extra‑statutory conditions.

Claimants then tried to withdraw the offer, arguing that no binding settlement existed because USAA did not accept every condition contained in the demand letter. Claimants also refused to provide wire transfer instructions, prompting USAA to mail a settlement check for the policy limits, which claimants did not accept.

USAA filed suit seeking declaratory and equitable relief to enforce the settlement. The trial court granted judgment on the pleadings in favor of USAA and ordered specific performance of the settlement agreement.

Claimants appealed, arguing that:

• O.C.G.A. § 9‑11‑67.1 (2021) did not apply to pre‑suit settlement offers
• No contract was formed due to a lack of mutual assent
• Specific performance was an improper remedy

The Court of Appeals’ Decision and Its Impact for Insurers

The Georgia Court of Appeals affirmed in full in favor of USAA, delivering a win for insurers and reinforcing the statutory framework.

The appeals court held that O.C.G.A. § 9-11-67.1 (2021) applies to any qualifying settlement offer made before an answer is filed (encompassing pre-suit demands as well). It held that enforcing the settlement offer did not violate basic contract principles, and that specific performance of the settlement agreement was an appropriate remedy.

Although the appeals court’s analysis in Gomez addresses the 2021 version of O.C.G.A. § 9‑11‑67.1, it remains directly applicable under the 2024 amendments to the statute. These largely codify the principles relied on by the court and further strengthen the statutory framework, protecting insurers from manufactured bad faith exposure arising from time‑limited settlement demands.

Several points are particularly important for carriers and claims professionals:

• The appeals court openly acknowledged—and criticized—the use of confusing, contradictory and hyper‑technical demand letters designed to manufacture bad faith exposure.
• Insurers do not create ambiguity or counteroffers by rejecting extra‑statutory demand conditions while accepting the statutory material terms.
• Strict compliance with O.C.G.A. § 9‑11‑67.1 is a strong defense against bad faith claims, even when the demand letter purports to disclaim the statute’s applicability.
• The decision provides clear guidance for safely accepting Georgia time‑limited demands, particularly in low‑limit, high‑exposure auto cases.

Takeaway

With Gomez, the Georgia Court of Appeals sent a clear message: O.C.G.A. § 9-11-67.1 is not a tool for gamesmanship. Insurers that carefully adhere to the statute’s requirements should be able to enforce settlements under the statute.

Please contact Nick Heintzman, Christy Maple or any member of the Phelps insurance team with questions or for advice or guidance.