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Assembly approves payee notification

Without a single “nay” vote at any step, the Virginia General Assembly has approved a law to require insurance companies to notify personal injury claimants when they send settlement checks to claimants’ lawyers.

Senate Bill 984, sponsored by Sen. Mark D. Obenshain, R-Harrisonburg, sailed through the Assembly without a hitch, winning final House approval on Friday.

The smooth ride at the legislature followed a long and bumpy course for the proposal at the Virginia State Bar. The first suggestion of a check on lawyer defalcation in 2007 was met with howls of indignation from some trial lawyers.

Objections were largely muted later that year when news emerged that a Woodbridge lawyer had managed to steal millions of dollars by settling claims without notifying his clients.

The VSB then endorsed a payee notification law by a 39-25 vote in 2009, but the proposal faced opposition from the Virginia Trial Lawyers Association. The Supreme Court of Virginia asked for a hold on the idea to allow more discussion.

By the time the issue came before the VSB Council once more in 2012, a “fragile coalition” of stakeholders supported the plan and opposition disappeared.

If signed into law by the governor, the bill will require notice to claimants of payments of $5,000 or more to claimants’ lawyers for any claim arising out of a Virginia-issued insurance policy. The language of such a notice is strictly prescribed and a copy must be sent to the lawyer.

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