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Florida Supreme Court rules that claims adjuster's delay in telling insured about injured third party's demand for insured's asset information was sufficient basis for bad faith judgment

On September 20, 2018, In Harvey v. Geico General Insurance Company, No. SC17-85, the Florida Supreme Court ruled that the Florida Fourth DCA erred in reversing a judgment in favor of an insured in an insurance bad faith case. The plaintiff in the bad faith case had previously been sued following a motor vehicle accident in which he was alleged to have negligently caused the death of another driver. Prior to filing the lawsuit in the earlier case, the representatives of the decedent’s estate requested information regarding the plaintiff’s Geico policy limits and sought a recorded statement from the plaintiff regarding the extent of his assets. Geico’s adjuster assigned to the case allegedly did not timely communicate the request for a recorded statement to the insured, resulting in a refusal by the estate representatives of the $100K policy limits. The plaintiff was subsequently sued by the estate, and was found liable for $8.47 million in damages, resulting in the bad faith action against Geico. During the trial of the bad faith claim, the estate’s attorney testified that had he been timely informed of the plaintiff’s limited assets, he would have accepted the $100K policy limits and settled the claim. Evidence was also presented which showed that the claims adjuster had a history of struggling to manager her files. Geico’s motion for directed verdict was denied and the jury found Geico liable for $9.2 million in damages.

On appeal, the Florida Fourth DCA concluded that the evidence was insufficient as a matter of law to show that the insurer acted in bad faith, and, even if the insurer’s conduct were deficient, the insurer’s actions did not cause the excess judgment. In concluding that the Fourth DCA erred, the Florida Supreme Court noted that the issue of bad faith is determined under a “totality of circumstances” standard and a jury’s finding of bad faith cannot be reversed where it is supported by competent, substantial evidence. The Court further noted that the recitation of an insurer’s obligations set forth in the seminal bad faith case of Boston Old Colony Insurance Co. v. Gutierrez, 386 So. 2d 783 (Fla. 1980), and, more recently, in Berges v. Infinity Insurance Co., 896 So. 2d 665 (Fla. 2004), is not a mere “checklist”, and that the critical inquiry is “whether the insurer diligently, and with the same haste and precision as if it were in the insured’s shoes, worked on the insured’s behalf to avoid an excess judgment.” The Court quoted from Goheagan v. Am. Vehicle Ins. Co., 107 So. 3d 433, 439 (Fla. 4th DCA 2012) for the proposition that in a case involving very serious injuries and a likely judgment in excess of the policy limits, “delay in making an offer . . . even where there was no assurance that the claim could be settled could be viewed by a fact finder as evidence of bad faith.” The Florida Supreme Court also rejected the Fourth DCA’s causation analysis, which, relying on federal precedents, had concluded that Geico could not be liable for the excess judgment where the insured’s actions or inactions contribute “at least in part” to the excess judgment. The Florida Supreme Court observed that this is contrary to the standard Florida jury instruction on causation, which simply requires that the insurer’s actions “contributes substantially” to producing the loss.