Florida Supreme Court holds Fourth DCA erred in holding that the evidence was insufficient to show the insurer acted in bad faith in failing to settled insured’s claim

On September 20, 2018, the Florida Supreme Court issued its decision in Harvey v. GEICO Gen. Ins. Co., No. SC17-85, 2018 WL 4496566 (Fla. Sept. 20, 2018), a case interpreting the application of the law of bad faith.

This case arises out of a 2006 auto accident between James M. Harvey and motorcyclist, James Potts. Mr. Potts was killed as result of the accident. His estate brought a wrongful death action against Mr. Harvey, and after trial, the jury awarded $8 million to the estate. Mr. Harvey was insured under a policy with GEICO which provided $100,000 in coverage. Mr. Harvey brought a bad faith suit against GEICO. After the trial court denied GEICO’s motion for directed verdict as to bad faith, the jury returned a verdict in favor of the insured. GEICO appealed.

On appeal, the Fourth DCA held that the evidence was insufficient as a matter of law to show that GEICO acted in bad faith in failing to settle the claim. Mr. Harvey, sought review of the Fourth DCA’s decision from the Florida Supreme Court.

The facts of the case demonstrated that:

• Two days after the accident, GEICO determined Harvey was liable
• Three days after the accident, GEICO sent a letter to Harvey explaining that the claim could exceed his policy limits;
• Six days after the accident, the attorney for the estate called GEICO requesting a statement from Harvey in order to determine his assets, whether he had any additional insurance, and whether he was in the course and scope of employment. GEICO did not immediately communicate the request to Harvey, and according to the Estate’s counsel, denied the request.
• Nine days after accident, GEICO tendered its policy limits.
• In response, the Estate’s attorney sent a letter to GEICO acknowledging receipt of the check and GEICO’s refusal to make Harvey available for a statement.
  GEICO faxed that letter to Harvey, who learned for the first time of the request for the statement.
• Harvey told the adjuster that he was going to meet with his attorney to review his financial documents and provide the requested information. The adjuster never relayed this information to the Estate’s attorney.
  A month later the Estate’s attorney returned GEICO’s check and filed suit for wrongful death against Harvey. The wrongful death action resulted in a verdict of $8.47 million in favor of the Estate.

The Florida Supreme Court held that the Fourth DCA erred in holding the evidence was insufficient to show the insurer acted in bad faith. The Court noted that “the critical inquiry in a bad faith 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 held that, here, GEICO completely “dropped the ball and failed to fulfil its obligations to Harvey.”

The Court reiterated that the test for bad faith is not whether the insurer followed a “checklist” of criteria, but is an overall evaluation of whether the insurer acted fairly and honestly toward its insured.

For the full opinion see Harvey v. GEICO Gen. Ins. Co., No. SC17-85, 2018 WL 4496566, at *6.