SEPTEMBER 2018

Florida Insurance Matters is a monthly update on Florida insurance-related legal developments by the Colodny Fass Insurance Litigation Practice, recently recognized as the Insurance Litigation Department of the Year in South Florida by the Daily Business Review.

About the Author

Amy L. Koltnow, a Colodny Fass Shareholder, focuses her practice on representing insurance companies in complex insurance litigation and counseling insurers on claims resolution. She has represented insurers in connection with property damage and first-party coverage litigation, claims of “bad faith,” high-risk exposures, class actions and multi-district litigation.

For more information about Ms. Koltnow, click here.

 

 

Florida Supreme Court Reinstates High Stakes “Bad Faith” Jury Verdict

In a sharply divided opinion, the Florida Supreme Court reinstated a $9.2 million “bad faith” jury verdict against GEICO for failing to timely settle a liability claim resulting in an excess verdict against the insured. The insured was liable for a car accident that caused the death of another driver. GEICO promptly tendered the $100,000 policy limits to the decedent’s estate attorney, but did not immediately comply with, or respond to, the attorney’s request for a statement from the insured regarding other insurance coverage or assets he may have available. After one month, the decedent’s estate filed suit and a jury ultimately awarded the estate $8.47 million in damages. The insured then filed a bad faith lawsuit and won a verdict against GEICO for $9.2 million.

On appeal, the Fourth DCA held there was no bad faith “as a matter of law” since the insured’s own conduct caused the delay “at least in part”. In reversing the Fourth DCA, the Florida Supreme Court reiterated the law in Florida holds insurers accountable for failing to fulfill their obligations. Whether an insurer acted in bad faith is measured by the “totality of the circumstances” and the focus is on the actions of the insurer in fulling its obligations to the insured and not on the actions of the claimant or the insured. Moreover, it is for the jury to decide. The Supreme Court gave a stern caution to insurers handling claims where liability is clear, and judgment in excess of limits is likely-any delay in resolving the claim could be viewed as evidence of “bad faith”.   

Harvey v. GEICO Gen. Ins. Co., Fla. Sup. Ct. (Sept. 20, 2018)

• Florida federal courts tended to view “bad faith” insurance claims more favorably to insurers; however, the Florida Supreme Court criticized the Florida federal courts as misinterpreting Florida precedent. 

• CAUTION TO INSURERS:  In all catastrophic, serious injury and high damage liability claims, adjusters, and all levels of upper management, should act fast, act proactively and respond to all requests, act with compassion, and act as if it were your personal money at risk. Remember, where liability is clear and injuries severe, the exposure to your insured is “a ticking financial time bomb”.

Public Adjusters Cannot Sue Insurers Directly Pursuant to an AOB that Violates the 20% Statutory Cap on Compensation–But Insurers Beware!

The 3d DCA held in two consolidated cases that a public adjuster (“PA”) cannot sue an insurer directly pursuant to an assignment of benefits (“AOB”) that violates the 20% statutory cap on compensation.  In one case, the insured homeowner assigned her entire claim to a PA which allowed the PA to recover 20% of the proceeds collected plus the right to receive attorney’s fees and costs. The insurer denied the claim and the PA filed suit to recover benefits and attorney’s fees and costs.

The insurer argued the PA had no standing to sue and the AOB was invalid since it violated the 20% statutory cap on compensation for PAs. The appellate court held the PA was still acting as a PA when it filed suit, and thus was subject to the statutory cap on its compensation. The appellate court upheld summary judgment in favor of the insurer in that case.  

The second case involved the same PA and the same form AOB. However, the AOB contract authorized the PA to recover only 10% of the proceeds collected, plus the right to receive any attorney’s fees and costs. The 3rd DCA held that whether that contract violated the statutory cap was an issue of fact since the amount of the final recovery was, as of yet, unknown. The appellate court reversed the summary judgment in favor of the insurer in the second case. 

Gables Ins. Recovery v. Citizens Prop. Ins. Corp. 3d DCA (Sept. 20, 2018)

• This case does not prohibit PAs from suing insurers directly, it merely restricts their compensation to 20% of the total recovery, including attorney’s fees and costs. PAs may sue insurers under an AOB so long as the insured retains the right to receive all recovery over the 20% cap, including attorney’s fees and costs. 

• This scenario could conceivably open a new risk to insurers of AOB lawsuits by PAs.  The AOB may be crafted to exclude attorney’s fees and costs and an insured could also assign the claim for attorney’s fees and costs to his or her retained attorney. Insureds then would be almost completely removed (and insulated) from the litigation process, which would be controlled by PAs and their attorneys. 

• This case presents another reason why the Florida Legislature should urgently address the AOB crisis in first-party property insurance claims.
 

About Amy L. Koltnow

Amy L. Koltnow, a Colodny Fass Shareholder, focuses her practice on insurance disputes from trial through appeals. She has represented insurance companies in federal and state courts, as well as in mediation and administrative forums. Ms. Koltnow oversees complex litigation matters and has successfully defended numerous class actions and insurance bad faith cases. She is a member of the Claims and Litigation Management Alliance, a national, invitation-only organization committed to furthering high standards of litigation and claims management in pursuit of client defense.

To view Ms. Koltnow’s complete professional biography, click here.

Contact Amy at akoltnow@colodnyfass.com or (954) 492-4010.