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In Florida, Insurance Bad Faith typically occurs–and often results in a lawsuit–when an insurance company does not pay a claim when it is supposed to¹. Florida’s Insurance bad-faith law is both complicated and evolving, as insurance companies are influential and instrumental in making sure that Tallahassee keeps Florida insurance bad-faith lawyers in business by finding ways to keep their victims from holding them accountable.

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When determining whether or not an insurance company has acted in bad faith, the courts must look at the evidence in the light most favorable to the person who bought the insurance, or whom the insurance was meant to protect, known as “the insured”–and not the insurance company, known as “the insurer.”   

The recently decided Florida Bad Faith claims case of Geico v. James Harvey helps illustrate this². This bad-faith case stems from the tragic incident in which Mr. Harvey caused a car accident that killed John Potts, resulting in a Florida wrongful death car accident claim.

The accident was reported to GEICO, which had insured Mr. Harvey with a $100,000 policy.  GEICO assigned as the claims adjuster Ms. Fran Korkus, who advised Mr. Harvey in writing that the wrongful death claim brought by Mr. Potts’s Estate would exceed his $100,000 policy limits, thereby exposing him to a judgment beyond the policy’s limit. This is called excess exposure, which means that the insurance policy is not enough to cover the amount of damage, in this case the wrongful death that was caused in the accident, and that Mr. Harvey’s personal assets are exposed and at risk by the wrongful death claim.

The adjuster also advised Mr. Harvey that he had the right to hire his own attorney in addition to the one GEICO would provide to defend the case and protect him from an excess judgment.

Mr. Harvey then hired his own attorney to manage his excess exposure. This lawyer then contacted Ms. Korkus, the GEICO adjuster, and advised her that he had been retained to serve as Mr. Harvey’s personal attorney. The attorney for the Potts Estate asked to take the statement of Mr. Harvey to verify his assets, along with whether or not he had additional insurance policies, if he had been working in the course and scope of his employment, and if he had other potential sources of coverage.

Ms. Korkus refused to allow Mr. Harvey to be questioned by the Estate’s lawyer. The Estate claimed that they gave her a deadline to provide Mr. Harvey, or they would sue him.  Ms. Korkus denied that she was told this and instead simply sent the Estate a check for the $100,000 policy limits even though the Estate never actually demanded the policy limits.

Mr. Potts met with his personal lawyer and showed him that his only asset was his business, which had $85,000 in cash. The Estate’s attorney sent Ms. Korkus a letter in response to the $100,000 check and a release indicating that she had refused their request to take Mr. Potts’s statement and again asked for his financial information.

Often in these situations, insurance companies will have their insureds fill out a financial affidavit (a form that this filled out and notarized) detailing their assets and other pertinent information.  This was sent to Mr. Harvey, but for some reason, neither he nor his personal attorney ever completed the form; therefore, it was never provided to the Estate’s lawyer.

Thirteen days later, the Estate filed a wrongful death lawsuit against the Mr. Harvey and returned GEICO’s $100,000 check. Ultimately, a Florida jury returned an $8.47-million judgment against Mr. Harvey, following a jury trial³.

Upon receiving the judgment against him, Mr. Harvey turned right around and sued GEICO for bad faith, as well as his personal attorney for malpractice, actions which then led to an entirely separate case, with its own trial.

At the Bad Faith trial, Mr. Harvey testified that he knew that the Potts Estate had requested his statement before he was sued, that GEICO had informed him of the estate’s request for his financial documentation, and that he had failed to provide it. However, he claimed that he did not know there was a deadline to do so, and that had he known this, he would have provided the affidavit. There is no evidence in the file as to why he did not complete the affidavit.

Even though the Estate’s lawyer never told GEICO as much, he testified that he would have recommended delaying filing the wrongful death claim if GEICO had requested an extension of time, and he would not have pursued the wrongful death case had he known there was only $85,000 of available assets. Additionally, the Estate’s Personal Representative agreed that she should have followed the Estate lawyer’s advice and not sued Mr. Harvey.

Evidence from Ms. Korkus’s employee file showed that she had received some deficient performance reviews and had difficulty managing her workload. At the close of the insured’s case, GEICO moved for a directed verdict, and the trial court denied the motion. After the jury entered a verdict in favor of Mr. Harvey against GEICO, GEICO moved for a judgment notwithstanding the verdict. The trial court denied this motion, too. Of course, GEICO appealed.

In its appeal, GEICO argued that Mr. Harvey did not offer sufficient evidence at trial to prove bad faith and that the trial judge was wrong when he denied their motion for a directed verdict. When an appellate court reviews the denial of a motion for directed verdict, they must review all of the evidence and give the benefit of doubt to the non-moving party–in this case, Mr. Harvey.4

FLORIDA’S BAD-FAITH LAW

Florida imposes a duty on insurance companies to handle claims with the same degree of care they would their own business dealings, because when you buy insurance, you turn over the control of your claim to the insurance company, which decides how to defend it and how to litigate it. Therefore, the insurance company has to act in good faith and make decisions in the best interest of the insured, Mr. Harvey, and not itself.

In Florida, auto insurance companies must provide the following to those they insure, known as the “7 Obligations”:

(1) “advise the insured of settlement opportunities”;

(2) “advise as to the probable outcome of the litigation”;

(3) “warn of the possibility of an excess judgment”;

(4) “advise the insured of any steps he might take to avoid same”;

(5) “investigate the facts”;

(6) “give fair consideration to a settlement offer that is not unreasonable under the facts”; and

(7) “settle, if possible, where a reasonably prudent person, faced with the prospect of paying the total recovery, would do so.”

When a judge or jury is asked to evaluate if an insurance company has acted in bad faith, it must consider the “totality of the circumstances.”5 Therefore, to prove Bad Faith, there has to be more than just carelessness on the part of the insurance company in handling a claim.  Rather it must be shown that the insurance company put its own interests ahead of those of its insured, which also was the cause of the excess judgment.

In this case, the appellate court analyzed the 7 Obligations and found that GEICO had complied with each and every one, and while its conduct in handling the case could have been “improved,” it was not the cause of the excess judgment. In reversing the Bad Faith Claim against GEICO, the appellate court found the following

(1) “advise the insured of settlement opportunities.” Although GEICO admitted it did not immediately inform Mr. Harvey that the Potts Estate wanted to take his statement, the evidence showed that GEICO did notify him, even though the Estate did not tell GEICO that a full settlement of its claim against the Mr. Harvey was contingent upon him providing a statement.

(2) “advise as to the probable outcome of the litigation,” and

(3) “warn of the possibility of an excess judgment.” Here, the record reflects that GEICO promptly warned the insured as to the possibility of an excess judgment.

(4) “advise the insured of any steps he might take to avoid” an excess judgment. The record also shows that GEICO did this too, and recommended that Mr. Harvey retain his own private lawyer, which he did, and, as stated above, informed Mr. Harvey that the Potts Estate wanted to take his statement.

(5) “investigate the facts.” The appellate court found that nothing in the record indicates GEICO was deficient in this regard.

(6) “fair consideration to a settlement offer” because the evidence was undisputed that the Estate never made any settlement offer.

(7) “settle, if possible, where a reasonably prudent person, faced with the prospect of paying the total recovery, would do so.” GEICO attempted to settle with the Potts Estate by tendering, without limitation or even a demand, the full $100,000 policy limit to the Estate’s attorney.

This means that the aggrieved Potts family went through an entire wrongful death trial, which it won, then a bad-faith trial against GEICO, which it also won, only then to have an appellate court take it all away. What a tragic end to this journey. This case also shows the complexity of handling wrongful death traffic accident cases in Florida and the difficulty in holding insurance companies accountable for shoddy claims or their shoddy handling of claims. While our insurance claim law firm in Miami did not represent this family, we know the lawyers who did, and they are some of the best bad faith insurance lawyers in the country. We express our deepest condolences to the Potts family for their loss and applaud the valiant effort of the estate’s lawyers in fighting for their client.

If you have been involved in a car, truck, motorcycle, or pedestrian accident in Florida, the single best thing you can do to make sure that you have adequate protection–whether you are the injured party or the party who caused the accident–is to consult with an experienced attorney as soon as possible. In this case, Mr. Potts had hired his own lawyer, purportedly to protect him.

Our Florida personal injury attorneys handle claims across the state, ranging from traffic accidents, to slip and falls, insurance claims, medical malpractice, theme park injuries, and cruise ship passenger claims against all of the major cruise lines–like Carnival, Royal Caribbean, Celebrity, Norwegian, MSC, Disney and others.

Contact us today and speak with an experienced accident lawyer. We will confer with you about your potential claim. Call us today at 305-441-0440, or toll-free at 1-866-597-4529, or reach us via email at [email protected], SKYPE, or FaceTime.  We get our clients money for lost wages, medical bills, and pain and suffering. We work on a contingency basis, which means we only get paid when you get paid. Call us today–we are ready to help.

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1Specifically an insurance company, in handling the defense of claims against its insured, 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.

2GEICO GENERAL INSURANCE COMPANY, Appellant, v. JAMES M. HARVEY, Appellee. 4th District. Case No. 4D15-4724. January 4, 2017. Appeal from the Circuit Court for the Fifteenth Judicial Circuit, Palm Beach County.

3Mr. Potts settled his legal malpractice claim with his attorney before the Bad Faith trial began.

4Weinstein Design Grp., Inc. v. Fielder, 884 So. 2d 990, 997 (Fla. 4th DCA 2004).

5Berges v. Infinity Ins. Co., 896 So. 2d 665, 680 (Fla. 2004).