11th Circuit Approves Exceedingly Short Trigger for Bad Faith in Florida

Written by: Drew Brooks, Esq. and C. Michael Johnson, Esq.

On July 20, 2018, the 11th Circuit affirmed a jury verdict against Geico finding there was “more than enough” evidence to support a finding of bad faith in failing to promptly tender policy limits even though Geico tendered its full policy limits within 20 days of learning of the accident.

The timeline is as follows. On 10.27.10 a clear-liability motor vehicle accident occurred; 11.2.10 Geico was first notified of the accident; 11.4.10 Geico learned that the plaintiff was airlifted to a hospital with severe brain injury and that the police report indicated the insured driver was at fault for failure to yield right of way; 11.5.10 Geico learns plaintiff was in a coma for 10 days; 11.10.10 Geico internally notes it may need to offer limits; 11.15.10 Geico obtains eye witness confirmation that the accident was the insured’s fault for failure to yield right of way; 11.18.10 plaintiff’s husband advises Geico of their intent to hire attorney; and on 11.22.10 Geico tendered its full $250k limits.

The 11th Circuit focused, almost exclusively, on the severity of the injury and the police report on causation of the accident. No weight was given to the obligation of the insurance claims department to independently investigate the accident nor the reasonable time period needed to document the basis for paying the insured’s limits and obtain management approval for doing so. In its decision, the 11th Circuit also did not mention that the plaintiff’s counsel immediately rejected the limits tendered just 20 days after Geico was first notified of the accident.

This decision sets bad precedent. It will lead to plaintiffs rejecting prompt tenders of settlement by insurers. If the failure to tender limits sooner than 20 days from first notice of an accident is long enough to let the question of bad faith go to a jury, the court has essentially given up its role as the gate keeper. No conceivable harm or prejudice could result from any perceived delay in tendering limits in this case. Are police reports to be serve as judge and jury in determination of an insured’s liability and a plaintiff’s contributory fault? Here, Geico assigned personnel to the claim who located an eye witness and interviewed that witness about how the accident occurred within 11 days of first notice of an accident. Geico then paid its limits within 7 days of that interview. Considering the regulatory oversight and auditing requirements of insurance companies, are these time periods to properly document a claim and obtain authority to tender payment not reasonable as a matter of law under Powell v. Prudential Prop. & Casualty Ins. Co., 584 So. 2d 12 (Fla. 3d DCA 1991)?

If there is no En Banc review of this decision overturning it, then in every casualty with severe injuries and a police or other government report assigning liability to an insured who has insufficient liability limits, expect few plaintiffs in Florida to accept an insurer’s tender of limits as they will instead elect to try the case and seek a verdict including bad faith damages. Insurers in Florida may be compelled to forego any independent investigation of such a casualty and instead elect to tender their insured’s limits nearly instantaneously to avoid bad faith exposure. Even under that scenario, which will have its own negative repercussions, some passage of time will occur as first level claims representatives prepare reports and seek authority to pay the limits on a claim. We see no good coming from Bannon v. Geico Gen. Ins. Co., No. 17-14184, 2018 U.S. App. LEXIS 20204 (11th Cir. July 20, 2018).