On July 5, 2017, Missouri Governor Greitens signed the Senate Substitute for the Senate Committee Substitute for the House Committee Substitute for House Bills 339 and 714, which brings significant changes to Missouri third-party bad faith litigation. The legislation substantially amends Mo. Rev. Stat. § 537.065, and enacts a new statute, Mo. Rev. Stat. § 537.058. The new § 537.058 and amended § 537.065 become effective on August 28, 2017.


1. Time-limited demands

Under existing Missouri law, there are no meaningful requirements for a time-limited settlement demand from the claimant sufficient to form the basis of a claim for bad faith refusal to settle. The new legislation enacts evidentiary rules that exclude evidence of a time-limited demand in a bad faith case, unless the demand meets the requirements of the statute. A demand that does not meet these requirements “shall not be considered as a reasonable opportunity to settle for the insurer” and “shall not be admissible” in any lawsuit seeking extracontractual damages.

  • New § 537.058 requires that any time-limited demand to settle must be transmitted to the tortfeasor’s liability insurer, must be sent in writing by certified mail, and must reference the statute.
  • A time-limited demand must be left open for “not less than 90 days” from receipt by the insurer.
  • The demand must specify a dollar amount or “applicable policy limits,” and must specify who will be released and what claims will be released if accepted.
  • There must be an unconditional release of the insured for all liability in exchange for the payment demanded.
  • The demand must reference a claim number, if known, the date and location of the loss, and a description of the injuries sustained by the claimant.
  • The demand must be accompanied by a list of the names and addresses of all healthcare providers who treated the claimant from the date of the incident, and a HIPAA-compliant medical authorization.
  • If the claimant asserts a claim for wage loss, the demand must be accompanied by a list of all employers from the date of the incident until the date of the demand, accompanied by a written authorization to obtain employment records necessary to verify wages, earnings, compensation, or profits “however denominated.”
  • Claimant cannot demand that payment of the settlement funds be earlier than 10 days following the insurer’s receipt of a fully-executed unconditional release of the insured by the claimant.

2. Insureds are not permitted to enter into § 537.065 agreements unless the insurer has the opportunity to defend without reservation but refuses.

Most significantly, the amendments to § 537.065 now bar an insured from entering into an agreement with the claimant unless the tortfeasor’s insurer has the opportunity to defend without a reservation of rights, but refuses to do so. Our read of the statute is that, if the insured wishes to refuse a defense offered under reservation, the insured must give the insurer an opportunity to withdraw its reservation and defend without reservation.

3. Notice to insurers before a judgment may be taken against the insured if a § 537.065 agreement has been made with the claimant.

The amendments to § 537.065 now require that, where the insured tortfeasor has entered into a § 537.065 agreement with the injured claimant, no judgment may be entered against the insured before the tortfeasor’s liability insurer has been provided with written notice of the execution of the agreement, and at least 30 days have lapsed after the insurer’s receipt of such notice.

4. Insurer’s right to intervene in personal injury/property damage lawsuit.

Insurers shall have 30 days after receipt of a notice that the insured has entered into a § 537.065 agreement to intervene in the underlying lawsuit. The insurer is entitled to intervene as a matter of right, not permissively at the discretion of the court.

Under existing law prior to this legislation, some Missouri courts have held that an insurer that has filed a declaratory judgment action may intervene in a tort action for the limited purpose of seeking a stay pending the determination of coverage, though such intervention has been permissive, rather than as a matter of right, and there has been a split of authority in the Missouri Courts of Appeals as to the propriety of intervention. See, e.g., Whitehead v. Lakeside Hosp. Ass’n, 844 S.W.2d 475 (Mo. App. W.D. 1992) (permitting intervention); State ex rel. Mid-Century Ins. Co., Inc. v. McKelvey, 666 S.W.2d 457 (Mo. App. W.D. 1984) (same). The new legislation resolves these issues in favor of intervention as a matter of right.

5. The limitations of the revised § 537.065 apply regardless of what the agreement is called.

Regardless of how the parties denominate their agreement, if it has the effect of a covenant not to execute against the insured, it will be treated as an agreement under the amended statute.


The Missouri Constitution bars the legislature from passing any retrospective law: “That no ex post facto law, nor law impairing the obligation of contracts, or retrospective in its operation, or making any irrevocable grant of special privileges or immunities, can be enacted.” Article I, Sec. 13 Constitution of Missouri. Technically, ex post facto is a term applicable only to criminal laws, where the term “retrospective” applies to civil rights and remedies. State v. Thomaston, 726 S.W.2d 448, 459 (Mo. App. W.D. 1987).

“‘Retroactive’ or ‘retrospective’ laws are generally defined, from a legal viewpoint, as those which take away or impair vested rights acquired under existing laws, or create a new obligation, impose a new duty, or attach a new disability in respect to transactions or considerations already past.” State ex rel. Clay Equip. Corp. v. Jensen, 363 S.W.2d 666, 668 (Mo. 1963). “We have many times held that a statute is not retrospective in its operation within the constitutional prohibition, unless it impairs a vested right. . . . Nor is an act retrospective if it but substitutes a remedy or provides a new remedy.” Id. at 669.

Rules of evidence are not deemed to be “vested,” substantive rights in Missouri. “A right to have one’s controversies determined by existing rules of evidence is not a vested right.” O’Bryan v. Allen, 108 Mo. 227, 232, 18 S.W. 892, 893 (1891). In O’Bryan, the Missouri Supreme Court held that rules of evidence “pertain to the remedies which the state provides for its citizens” and “they neither enter into and constitute a part of any contract, nor can be regarded as being of the essence of any right which a party may seek to enforce.” Id.

Like other rules affecting the remedy, they must, therefore, at all times be subject to modification and control by the legislature; and the changes which are enacted may lawfully be made applicable to existing causes of action even in those states in which retrospective laws are forbidden; for the law as changed would only prescribe rules for presenting the evidence in legal controversies in the future, and it could not, therefore, be called retrospective even though some of the controversies upon which it may act were in progress before.

O’Bryan, 108 Mo. at 232, 18 S.W. at 893.

“No person can claim a vested right in any particular mode of procedure for the enforcement or defense of his rights. Where a new statute deals with procedure only, prima facie it applies to all actions [including] those which have accrued or are pending and future actions.” Jensen, 363 S.W.2d at 669. The constitutional bar on ex post facto or retrospective laws “does not apply . . . to a statute dealing only with procedure or the remedy.” Id. “A substantive law relates to rights and duties giving rise to the cause of action, while procedural statutes supply the machinery used to effect the suit.” Patrick v. Clark Oil & Ref. Co., 965 S.W.2d 414, 415-16 (Mo. App. S.D. 1998). “Statutes affecting the competency or discoverability of evidence are procedural.” State ex rel. Faith Hosp. v. Enright, 706 S.W.2d 852, 854 (Mo. 1986)

The legislature has a clear and constitutional right to enact evidentiary statutes. St. Louis v. Cook, 359 Mo. 270, 274, 221 S.W.2d 468, 469 (1949). The Missouri Supreme Court in Jensen specifically held that evidentiary and procedural statutes apply to all actions within their scope, “whether commenced before or after the enactment, that is, unless a contrary intention is expressed by the legislature, and a statute affecting only the remedy may apply to a cause of action existing at the time the statute was enacted.” 363 S.W.2d at 669. Thus, an evidentiary statute applies to actions already on file at the time the statute becomes effective. “Laws which change the rules of evidence relate to the remedy only, may be applied to existing causes of action, and are not precluded from such application by the constitutional provision.” O’Bryan v. Allen, 108 Mo. 227, 231-32, 18 S.W. 892, 893 (1891). Evidentiary and procedural statutes apply to all pending cases which have not yet been reduced to a final judgment. Claspill v. Missouri P.R. Co., 793 S.W.2d 139, 140 (Mo. banc 1990).

In Enright, the Supreme Court entered an order of prohibition precluding discovery of hospital peer review committee materials based upon a statute enacted after the cause of action accrued. 706 S.W.2d at 856. In Claspill, the Supreme Court precluded enforced a statutory provision that excluded from evidence information that was compiled for purposes of developing a highway safety construction project. 793 S.W.2d at 140.

Accordingly, it should be settled law in Missouri that evidentiary and procedural statutes can be applied to any action, including any pending action, that is tried after the effective date of the statute.


A. Procedural aspect of the legislation that will apply to already-accrued claims and lawsuits in progress as of Aug. 28, 2017

  • The insurer’s right to intervene in a personal injury/property damage lawsuit if it knows or has reason to know that a § 537.065 agreement has been entered.

This is a procedural aspect of the statute, and should be applicable to cases in progress and not yet reduced to a judgment as of August 28.

  • 30 days’ notice to insurers before a judgment may be taken against the insured.

This change to § 537.065 is a procedural change, which requires that notice be given to the insurer if the insured has entered into a § 537.065 agreement before judgment is entered against the insured. This should apply to bad faith claims that have accrued in the sense that the claimant has made a policy limits demand to settle that was not accepted, but not where a judgment has already been taken against the insured. Insurers should be prepared to argue that a judgment entered on or after August 28 is not valid if the insurer was not provided with 30 days’ written notice prior to its entry, even if the § 537.065 agreement was executed previously.

B. Changes that will apply only on and after Aug. 28, 2017

  • The insured’s ability to enter into § 537.065 agreements without notice to the insurer is probably not affected prior to August 28.

Restrictions on the insured’s right of contracting may not be retroactively applied, under the Missouri Constitution’s ban on retrospective application of laws affecting substantive rights. Contracting rights are among those specifically identified as being substantive.

Policy limits demands made on or after August 28 must conform to the requirements of § 537.058, unless made within 90 days prior to a jury trial on the claim.

C. Evidentiary aspects of the legislation should be retroactively applied to accrued and pending claims.

New § 537.058.7 provides that any time-limited demand that does not comply with the requirements of the statute “shall not be admissible” in any lawsuit seeking extracontractual damages. This is an evidentiary rule. Under the authority described above, it should apply to the trial of bad faith claims after August 28. Evidentiary statutes are typically applied to accrued and pending claims.

As we have previously discussed, the requirements of § 537.058 for a policy limits demand that would support a bad faith claim (that a demand be left open for 90 days and be accompanied by authorizations) are already required by the statute that authorizes recovery of prejudgment interest, Mo. Rev. Stat. § 408.040. In 2005, as part of comprehensive tort reform efforts, the legislature amended § 408.040 to provide that, before a settlement demand could trigger the accrual of prejudgment interest, it must be transmitted by certified mail, be accompanied by an affidavit of the claimant and, where applicable, medical or wage loss records and authorizations, and be left open for 90 days.

At least one court seemed to recognize the legislature’s intent that a demand in the format specified by § 408.040 was a necessary predicate for a bad faith claim. See Johnson v. Allstate Ins. Co., 262 S.W.3d 655, 664 (Mo. App. W.D. 2008). In Johnson, the court held that claimants’ “demand letter satisfied the requisites of Section 408.040, RSMo 2000, which authorizes individuals with a claim like the Johnsons' to make a demand to an insurance company for either the policy limits or for a specific amount of money.”

Moreover, although claimants attempting the bad faith setup are in the habit of treating a policy limits demand as a one-time-only offer, there is usually no good faith basis for the drop-dead deadline. The intent of the original § 537.065, and certainly the intent of the statute as amended by the present legislation, is to allow the claimant to recover the insurance policy proceeds, not to “blow up” the limits of the policy and recover more than the liability limits. Accordingly, even where the claimant has previously made a demand that was not accepted prior to August 28, there appears to be no reason why the claimant could not be required to make a second demand in accordance with the new requirements, as the claimant has never had any substantive right under Missouri law to recover more than the insurance policy proceeds.