Florida District Court Denies a Bad Faith Claim in a Personal Injury Matter Finding It to be a “Bad Faith Setup”
On June 24, 2021, the United States District Court for the Middle District of Florida was faced with a matter whereby the plaintiff claimed that his insurance claim was rejected due to the insurer’s negligence in handling it. The Court held that although negligence is one of the relevant factors to be considered under Florida’s “totality of the circumstances” test; however, negligence alone cannot support a claim of bad faith. Ilias v. USAA General Indemnity Company, No. 20-834, 2021 U.S. Dist. LEXIS 117879 (M.D. Fla. June 24, 2021).
The claim arose out of an accident involving a multi-vehicle crash which caused the plaintiff, a third-party claimant, to sustain substantial injuries. The driver at fault for the accident was insured by the USAA insurance company, under a policy containing limits of $10,000 per person and $20,000 per accident. Soon after the accident, the plaintiff’s attorney, Maryanne Furman, determined that plaintiff’s injuries were “pretty significant” and would likely exceed the USAA policy’s limit. Thereafter, Furman reached out to USAA and requested a coverage disclosure in accordance with Fla. Stat. §627.413. In response, USAA provided most of the requested information. Within 48 days of the accident, USAA tendered the $10,000 policy limits to settle the plaintiff’s injury claim. Thereby, USAA sent a check for $10,000 and a general release from liability. However, Furman denied receiving the disclosure.
Thus, Furman could not respond to USAA’s tender and instead filed a personal injury suit against USAA’s insured, before the Florida state court. During trial, the jury awarded the plaintiff $5,230,559.44. Post that, the plaintiff filed a third-party bad faith action against USAA, claiming that USAA’s negligent failure to provide the coverage disclosure upon request, constituted bad faith. Plaintiff pointed out USAA’s failure to confirm or deny whether its insured had an umbrella policy of other insurance coverage.
However, the Court found that USAA did not act in bad faith and no reasonable jury could find otherwise. It noted that USAA had instead worked diligently to settle the claim and provided all the requested information. It held that “The only possible misstep in this process was [USAA’s] failure to mail the form.” This court stated that this “misstep,” which resulted in little prejudice, at best demonstrated a need for USAA to “augment its claims practices.” The Court referred to Florida Supreme Court’s ruling in Harvey v. GEICO General Insurance Company, 259 So.3d 1 (Fla. 2018) and agreed that the Florida Supreme Court held that negligence is a relevant consideration in determining a claim of bad faith. However, the Court held that “Harvey plainly states that ‘negligence is not the standard’ for liability in a bad-faith action[.]” For that reason, “USAA’s actions, though potentially negligent to some degree, did not rise to the level of bad faith[.]” It additionally found that no reasonable jury could find that USAA had caused the excess verdict against its insured. It held that although Furman testified that she would have settled the plaintiff’s injury claim had USAA provided the coverage disclosure; however, the actions belied the claim, instead suggesting a “bad faith setup”. The Court noted that Furman never made a demand for policy limits, did not inform USAA that she intended to settle, failed to follow-up with USAA regarding the missing information, and lastly, failed to settle after learning that the insured had no umbrella or other coverage.
The Court further noted that Florida’s third-party bad faith law encouraged a “bad faith setup” where policy limits are small and the damages caused are large, resulting in costly lawsuits. It concluded that it was implausible for “any realistic Florida personal injury lawyer” to contend that a $10,000 tender issue caused a jury verdict exceeding $5 million.
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