Insurers, Trial Lawyers Spar In Florida Auto Accident Case

TALLAHASSEE - The insurance industry and plaintiffs' attorneys are trying to help sway the Florida Supreme Court in a potentially high-stakes case stemming from a fatal auto accident in 2006 in Palm Beach County.

Insurance-industry groups and the Florida Justice Association, which represents plaintiffs' attorneys, have filed dueling briefs in recent weeks in the case centered on whether Geico General Insurance Co. acted in "bad faith" in handling a claim from the 2006 accident.

The insurance-industry groups said in a brief filed last week that a Supreme Court ruling against Geico could expose insurers to "bad faith liability far beyond what has long been established by this court."

"Plaintiff's position would constitute a sea change that would degrade bad faith law such that mere negligence in claims handling could constitute bad faith, even in the absence of any evidence that the insurer was acting in its own best interests or without due regard for the interests of its insured (customer)," said the friend-of-the-court brief filed by the American Insurance Association, the National Association of Mutual Insurance Companies, the Personal Insurance Federation of Florida and the Property Casualty Insurers Association of America.

But the Florida Justice Association, in a brief filed last month, argued that the Supreme Court should overturn a 4th District Court of Appeal ruling in favor of Geico. The association's friend-of-the-court brief said the appeals-court ruling would create "standards for insurer bad faith actions not previously recognized by Florida courts."

The association's brief said the legal basis for bad-faith lawsuits in Florida dates to a 1938 Supreme Court decision and that state law is "now settled that a liability insurance company owes a fiduciary obligation to exercise good faith 'to protect its insured from a judgment exceeding the limits of the insurance policy.' "

In the Palm Beach County case, Geico customer James Harvey was involved in an accident that killed John Potts. Harvey had a $100,000 policy with Geico, which nine days after the accident sent Potts' estate a check for $100,000.

The estate later filed a wrongful-death lawsuit against Harvey and returned Geico's $100,000 check. Ultimately, a jury awarded $8.47 million in a judgment against Harvey, according to court documents. But Harvey filed a lawsuit against Geico alleging that it acted in bad faith by failing to cooperate with the estate's attorney about information the estate had requested before the lawsuit was filed.

The information, at least in part, dealt with Harvey's personal and business assets and whether he was acting in the course of his business at the time of the accident, according to a brief filed by Harvey's attorneys in the Supreme Court. A jury ruled in Harvey's favor on the bad-faith claim, but that decision was overturned by the appeals court.

"Although Geico's claims process was not without fault and could be improved, Geico's handling of the claim did not amount to bad faith as a matter of law," the appeals court ruled in January 2017. "Additionally, even if Geico's handling of the claim were deficient, Geico's conduct was not proven to cause the excess judgment against the insured."

Harvey's attorneys are urging the Supreme Court to find that the appeals court misconstrued the state's bad-faith law.

"The principles governing bad faith conduct by an insurer have been well-settled in this state through a long line of consistent opinions from this (Supreme) Court," Harvey's attorneys wrote in a June 29 brief. "Nonetheless, the 4th District deviated from that clear precedent and ruled that an insurer does not have to act prudently or even reasonably to satisfy its duty of good faith to its insured. That determination is inconsistent with the fundamental principle established by this (Supreme) Court that a liability insurer owes a fiduciary duty to its insured; and a fiduciary cannot be said to comply with its duties when it acts imprudently or unreasonably."

But Geico's attorneys, in a brief filed last month, said the appeals court ruling should be upheld.

"The 4th District Court of Appeal appropriately considered the evidence in the light most favorable to Harvey, applied the correct standard for determining bad faith under Florida law, applied the correct standard for directed verdict, and properly concluded that GEICO was entitled to judgment as a matter of law," the brief said.

As a sign of a potential split on the Supreme Court, justices voted 4-3 in June to take up the case. Chief Justice Jorge Labarga and justices Barbara Pariente, R. Fred Lewis and Peggy Quince were in the majority, while justices Charles Canady, Ricky Polston and Alan Lawson dissented. The court has not scheduled oral arguments, according to an online docket.