Jeffrey M. Liggio
Florida Supreme Court Reminds Us That Bad Faith Actions Center Around the Actions of the Insurer, Not the Insured
In a recent opinion, the Florida Supreme Court reversed a Fourth DCA decision and instead reinstated a jury verdict awarding a GEICO insured $9.2 million due to GEICO’s bad faith handling of a wrongful death claim. See Harvey v. GEICO, No. SC17-85, 2018 WL 4496566 (Fla. Sept. 20, 2018). The Harvey decision is worth review as it reminds us that when dealing with bad faith actions, the focus should be on the conduct of the insurer who allegedly committed bad faith, not the insured.
James Harvey, the GEICO insured, was involved in a motor vehicle accident in 2006, resulting in the death of a 51 year-old husband and father of three children. Six days after the accident, the law firm for the driver killed in the accident (the “Decedent”), requested that GEICO make Harvey available for a recorded statement. The GEICO adjuster handling the claim against Harvey informed the attorney for the Decedent’s estate that she could not confirm whether Harvey would be available to provide a statement. Harvey, however, had asked GEICO to relay to the attorney for the Decedent’s estate that they were coordinating with Harvey’s personal counsel who would not be available to provide the statement until after the Labor Day weekend.
GEICO never relayed to the estate attorney of Harvey’s intentions to provide a recorded statement. Having received no further information from GEICO, the Decedent’s estate filed suit against Harvey approximately one month after the accident. The case against Harvey went to trial and a jury awarded the estate $8.47 million in damages. Harvey subsequently filed a bad faith action against GEICO based on the judgment in excess of his $100,000 in coverage under the GEICO policy. A jury awarded Harvey $9.2 million for his bad faith claim against GEICO.
On appeal, GEICO argued that Harvey did not offer sufficient evidence at trial to support his bad faith claim. The Fourth District agreed, reversing the jury’s verdict and instead finding that the evidence at trial was insufficient to show GEICO acted in bad faith. Harvey appealed to the Florida Supreme Court which quashed the Fourth District’s decision and reinstated the jury’s original verdict.
The court in Harvey cited to two prior cases for bad faith precedent in Florida: Boston Old Colony Insurance Co. v. Gutierrez, 386 So.2d 783 (Fla. 1980) and Berges v. Infinity Insurance Co., 896 So.2d 665 (Fla. 2004). When handling the defense of a claim against an insured, the insurer “has a duty to use the same degree of care and diligence as a person of ordinary care and prudence should exercise in the management of his own business.” Boston Colony, 386 So.2d at 785. This duty arises from the nature of the roles between insurer and insured – because the insured “has surrendered to the insurer all control over the handling of the claim, including all decisions with regard to litigation and settlement, than the insurer must assume a duty to exercise such control and make such decisions in good faith and with due regard for the interests of the insured.” Id.
The court in Harvey disagreed with the Fourth District’s conclusion that an insurer cannot be liable for bad faith “where the insured’s own actions or inactions result, at least in part, in an excess judgment.” Instead, the court concluded that “our precedent states just the opposite,” as the insurer must “exercise such control and make such decisions in good faith and with due regard for the interests of the insured.” Boston Old Colony, 386 So.2d at 785.
Applying the law to the facts in Harvey, the court found that GEICO “dropped the ball” by failing to “use the same degree of care as a person of ordinary care and prudence should exercise in the management of his own business.” Id. When counsel for the Decedent’s estate requested a recorded statement from GEICO’s insured, GEICO not only refused to provide the statement, but it also failed to inform its insured of the request until two weeks later. When Harvey informed GEICO he planned to meet with his attorney to gather the information necessary for the statement, GEICO never relayed this information to the estate’s attorney. The Harvey court concluded that had GEICO acted with “due regard” for the interests of its insured, the excess judgment could have been avoided.
The court made an interesting point about the role of negligence in proving a bad faith claim. The court agreed with the Fourth District that negligence is not the standard for finding bad faith, reiterating its holding in Boston Old Colony that “[b]ecause the duty of good faith involves diligence and care in the investigation and evaluation of the claim against the insured, negligence is relevant to the question of good faith.” 386 So.2d at 785. With this in mind, the Harvey court found that GEICO knew that the estate’s request for a statement was both reasonable and critical to a prompt resolution to the wrongful death claim against its insured. Citing Berges, the court reminded us that “the focus in a bad faith case is not on the actions of the claimant, but rather on those of the insurer in fulfilling its obligations to the insured.” 896 So.2d at 677.