Florida Insurance Coverage Attorney

Davis Law Firm is an Insurance Coverage and Business Law Firm in Jacksonville, Florida

The owners of this website have opened their own insurance coverage law firm in downtown Jacksonville, Florida. Insurance coverage attorney Todd Davis is a former U.S. Appeals Court Clerk and previously worked at a large firm in Miami, Florida representing insurance companies. He now represents claimants and policyholders in disputes against insurance companies.

Although we have “changed sides,” we will keep this site as neutral as it’s ever been by providing updates and analysis on insurance coverage cases across Florida.

Davis Law Firm is located in the Bank of America Tower in Jacksonville, Florida. Below is their contact information:

DAVIS LAW FIRM
50 N. Laura Street
Suite 2500
Jacksonville, FL 32202
904-400-1429 (Phone)
904-638-8800 (Fax)
DavisPLLC.com

Insured Woman Had No Right to $10,000 in Uninsured Motorist Benefits; Money Went to Hospital’s Claim of Lien

GEICO Gen. Ins. Co. v. Hoy (Fla. 2d DCA 2013)

A woman with automobile insurance providing $10,000 in per person uninsured/underinsured motorist coverage (“UM”) was treated at a hospital for injuries she sustained in an automobile accident with an uninsured motorist. The woman was discharged from the hospital owing it $39,000, and the hospital filed a claim of lien in that amount in the public records.

The woman signed a release for the $10,000 UM benefits in favor of her insurer and, in exchange, the insurer issued a check in the amount of $10,000. The hospital advised the insurer that it would agree to accept $5,000 of the $10,000 in UM benefits to permit the woman and her husband to have the remaining $5,000 and to satisfy its claim of lien in full. Although the woman thus collected $5,000, she sued her insurer for fraud in the inducement (among other things), claiming that the insurer had misinformed her about the amount she would receive in exchange for signing the release.

The matter went to trial and on appeal the second district ruled that the trial court should have granted the insurer’s motion for directed verdict since the woman failed to establish the damages element of her claim. The court explained that the woman sustained no loss in reliance on the alleged misrepresentation because the hospital had a lien entitling it to receive the entire $10,000 UM benefit and, therefore, the woman technically received $5,000 to which she had no right.

Chiropractic Clinic is Withheld Insurance Benefits for Failure to Comply with Florida Health Care Clinic Act (FHCCA)

State Farm Fire & Cas. Co. v. Silver Star Health & Rehab (11th Cir. 2013)

An insurer paid a chiropractic clinic $151,000 for treatments provided to its insureds, but withheld an additional $86,000 on the basis that the clinic’s failure to comply with the licensing requirements of the Florida Health Care Clinic Act (“FHCCA”) rendered the treatments unlawfully provided.  The insurer then prevailed in a suit for declaratory relief and unjust enrichment.  The clinic appealed, but the Eleventh Circuit affirmed, ruling, inter alia, that a court in a civil action may determine whether there has been a violation of a FHCCA licensing requirement.

The “your product” Exclusion Applies if the Product is not Fundamentally Changed

Recently, in Liberty Mut. Fire Ins. Co. v. MI Windows & Doors, Inc. (Fla. 2d DCA 2013), the Court relied on a “your product” exclusion of a CGL policy to partially reverse summary judgment that was entered in favor of insured window and door manufacturer and against insurer.  The court ruled that the exclusion applied since the fact that a third party added transoms to the insured’s sliding glass doors did not fundamentally change the nature and function of the doors, thus the doors remained the insured’s product.

Florida Supreme Court: Ambiguities in Insurance Policies Interpreted in Favor of Coverage for Policyholder

Recently, I told you about a case handed down by the Florida Supreme Court regarding ambiguities in insurance policies.  I co-authored an article on InsuranceDay.com expanding on the case, titled “Insurers Lose the Safety Net of Extrinsic Evidence for Ambiguities.”  Here’s the link to the article (which requires a subscription) and the body is reproduced below:

Insurers Lose the Safety Net of Extrinsic Evidence for Ambiguities

Recently, the Florida Supreme Court handed down a notable victory for policyholders regarding the rules for resolving disputes over policy interpretation.  In a nutshell, in Washington Nat. Ins. Corp. v. Ruderman, No. SC12-323, 2013 WL 3333059 (Fla. July 3, 2013), the Court held that when a “policy is ambiguous it must be construed against the insurer and in favor of coverage without resort to consideration of extrinsic evidence.”  To simply summarize the ruling, if the policy is deemed ambiguous, the insurer loses—period. The ruling has implications for the industry and means that underwriters and insurers have to exercise extreme diligence when drafting insurance policies in Florida.

In Ruderman, the Court considered whether the “Automatic Benefit Increase Percentage” provision in a home health care coverage policy was ambiguous as it applies to the daily benefit amount or the per occurrence maximum benefit and the lifetime maximum benefit amount.  The Court found that the way the policy was drafted, language that the “Benefits increase by 8% each year” could apply to the daily benefit, but could also be read to apply to the per occurrence maximum benefit and the lifetime maximum benefit amounts.  Needless to say, the Court found that the policy could be reasonably interpreted in two separate ways, each of which affected the outcome of the coverage inquiry.

In the 4-3 decision, the Court made—or “reiterated,” depending on how previous caselaw is interpreted—two fundamental rules regarding the interpretation of insurance policies in Florida.  First, the Court held that, when there is a potential ambiguity in an insurance policy, no extrinsic evidence will be allowed to clarify the potential ambiguity.  Second, in the instance that there is an ambiguity in an insurance policy, the policy must be “strictly construed against the insurer.”  Stated differently, ambiguities will be liberally construed in favor of finding coverage for the insured.  Although the rules arose in the narrow context of home health care coverage for the elderly, it now applies to the construction of all insurance policies under Florida law.

In a well-reasoned dissent, Justice Polston pointed out that precedent disallowing extrinsic evidence applied in situations where an ambiguity had not been declared.  If extrinsic evidence is available to clarify the ambiguity, it serves the parties’ interests that the ambiguity is resolved with all of the available tools of construction, including extrinsic evidence.  Further, he reasoned, the rule regarding construing the language of the policy against the insurer should be used as a last-resort principle, not as a general rule of policy construction as the majority held.   In sum, the dissent proposed that, if a policy is clear, extrinsic evidence should not be allowed, but, in the instance that an ambiguity is present that could be clarified, the rule of construing the policy against the insurer should be the last resort, not a default.  The majority’s holding, he argued, segregates insurance policies from other types of contracts by placing the notion of interpreting an insurance policy against the drafter before basic rules of policy construction.

The majority’s opinion is harsh.  Even when reference to outside evidence is available, the majority suggests courts should turn a blind eye to factors that may easily glean the intent of the parties, including factors as simple as referring to course and custom between the policyholder and the insurer, previous negotiations with an insured, or even some consideration for the level of an insured’s sophistication.

In addition to being a primer on policy interpretation in Florida, Ruderman holds implications for all insurers and underwriters that issue policies in Florida.  Because Florida courts may only view the actual terms of the insurance policy to determine whether there is an ambiguity, insurers must draft policies with a deft eye. It is impossible to anticipate every factual situation that may render a policy subject to more than one reasonable interpretation, but the burden is nonetheless on underwriters to get it right.

The Court did not address policies that include express warranty provisions or policies that include expansive “application” language that essentially incorporates all of the policy negotiating into the four corners of the insurance contract.  If the policy consists of underwriting material, so the argument would go, it cannot be argued that the material is extrinsic but rather it is a part of the policy no different than the insuring agreement, the definitions, or exclusions.

The Court certainly had pointed drafting tips for insurers, including:

[W]here an insurance policy is drawn in such a manner that it requires the proverbial Philadelphia lawyer to comprehend the terms embodied in it, the courts should and will construe them liberally in favor of the insured and strictly against the insurer to protect the buying public who rely upon the companies and agencies in such transactions. We recognize that unless restricted by statute or public policy, insurance companies have the same right as individuals to limit their liability and impose conditions upon their obligations.

Id. at *6. (internal quotations and citations omitted).

Although the Court’s quip that interpreting an insurance policy should not require the intellect of the “proverbial Philadelphia lawyer” was a playful reference to the complicated language of some policies, there is some truth in its jest.  Interpreting an insurance policy can often be a daunting task, which explains the recent trend in policy drafting towards plain language.  In essence, when it comes to insurance policies, the Florida Supreme Court wants insurers to keep it simple.

What insurers and policyholders can take from Ruderman is essentially one firm rule and one rule that is not quite settled.  The firm rule is that the use of extrinsic evidence is prohibited when it comes to interpreting an insurance policy.  To that, there is no debate. The unsettled rule is whether policies are to be interpreted against the drafter in general or only in instances of ambiguity.  The dissent suggests that the rule is now the former.  Yet, the majority implies both throughout its opinion.  What we do know is that underwriters are now more vulnerable and, when it comes to interpreting policy language, they will not get the benefit of the doubt.

A Bad Faith Action is Not Ripe Until Liability and Damages are Established

One area of insurance coverage that we receive questions about is the issue of when a bad faith action can be filed.  The Florida Supreme Court has held  that a bad faith lawsuit is not ripe until there has been a determination that the insured is liable and the extent of the plaintiff’s damages.  In Blanchard v. State Farm Mut. Auto Ins. Co., 575 So.2d 1289, 1291 (Fla. 1991) the Court held:

If an uninsured motorist is not liable to the insured for damages arising from an accident, then the insurer has not acted in bad faith in refusing to settle the claim. Thus, an insured’s underlying first-party action for insurance benefits against the insurer necessarily must be resolved favorably to the insured before the cause of action for bad faith in settlement negotiations can accrue. It follows that an insured’s claim against an uninsured motorist carrier for failing to settle the claim in good faith does not accrue before the conclusion of the underlying litigation for the contractual uninsured motorist insurance benefits. Absent a determination of the existence of liability on the part of the uninsured tortfeasor and the extent of the plaintiff’s damages, a cause of action cannot exist for a bad faith failure to settle.

The takeaway is the following rule: “Absent a determination of the existence of liability … and the extent of the plaintiff’s damages, a cause of action cannot exist for a bad faith failure to settle.”  The Florida Supreme Court later clarified:

Blanchard is properly read to mean that the “determination of the existence of liability on the part of the uninsured tortfeasor and the extent of the [insured’s] damages” are elements of a cause of action for bad faith. Once those elements exist, there is no impediment as a matter of law to a recovery of damages for violation of section 624.155(1)(b)1 dating from the date of a proven violation

Vest v. Travelers Ins. Co., 753 So. 2d 1270, 1275 (Fla. 2000).  This rule has been dubbed the “Favorable Resolution Requirement.”

This rule undoubtedly makes sense.  An insurance company cannot be found to act in bad faith to settle on behalf of its insured until the insured is found liable.  For this reason, the Florida Supreme Court has made liability and damages an element of bad faith.  See Vest, 753 So. 2d at 1275.

Since Blanchard, other cases have debated what constitutes this “Favorable Resolution Requirement” and, for example, have found that resolutions such as a settlement, see Brookins v. Goodson, 640 So. 2d 110 (Fla. 4th DCA 1994), and appraisal awards in uninsured motorist cases (UM), see Hunt v. State Farm Fla. Ins. Co., Case No. 2D11-6484 (Fla. 2d DCA April 5, 2013), suffice.

Insureds and Insurers Behaving Badly – Insured Who Left During EUO Given a Second Chance

First Home Ins. Co. v. Fleurimond, (Fla. 1st DCA 2010)

Upon written request for an EUO relating to a claim for damage to a home under a homeowners policy, an insured appeared without counsel, but left in the middle of the EUO after, he claimed, the examiner badgered and yelled at him. Upon retaining counsel, the insured offered to resume the EUO, but the insurer refused, stating that it was too late. Upon the insured’s filing suit demanding an appraisal, the insurer opposed the demand citing breach of policy obligations for failure to comply with the cooperation provisions. The 1st DCA affirmed the lower court’s ruling in favor of the insured, partly because the insured partially attended the first EUO and offered to resume the EUO before the suit was filed.

An Insurance Carrier’s Duty to Defend Under Florida Law

The duty to defend based on an insurance policy under Florida law is very straightforward.  Florida applies a test that the duty to defend is determined strictly by the allegations in the complaint as compared to the insurance policy. See Higgins v. State Farm Fire & Cas. Co., 894 So.2d 5, 9-10 (Fla. 2004). An insurer must defend only when the complaint includes allegations that “fairly and potentially” bring the transaction within the coverage provisions of the policy. Trizec Properties, Inc. v. Biltmore Constr. Co., 767 F.2d 810, 811 (11th Cir. 1985). When an exclusion in the policy applies, there is no duty to defend.  Acceptance Ins. Co. v. Bates, Dunning & Assocs., Inc., 858 So.2d 1068, 1069 (Fla. 3d DCA 2003). 

What does the “duty to defend” mean?  Essentially, it means that if an insured party is sued, the insurance carrier will “defend” it against the lawsuit.  In other words, they will hire and pay for an attorney to defend the insured.  When an insurance company hires an attorney to defend the insured party, the hired attorney finds himself in sort of a dual role.  On the one hand, the attorney represents the insured party as that is his client.  On the other hand, the insurance company is paying the attorney’s fees.  So, although the attorney must zealously represent the interest of his client (the insured party), he must also report to the insurance carrier and let them know how the case is going.

This dual role is usually not a cause for concern because both the insured party and the insurance company want the same thing: for the insured party to get out of the lawsuit with as little damage as possible.  If there are coverage issues, this may become a little more complicated.   But still, even with coverage issues the insurance carrier and the insured both still have aligned interest when it comes to getting the insured out of the lawsuit unscathed.  For more on the role of the attorney when an insurance company is defending under a reservation of rights, check out The Dance of the Porcupines, by Andy Grigsby.  (It’s linked at the bottom under “Download PDF.”)

Florida 4th DCA Opines on the Definition of “Marring” under an Insurance Policy

Ergas v. Universal Property & Casualty Co., Case No. 4D11-3803 (Fla. 4th DCA April 24, 2013)

This case came out this week detailing the definition of “marring” in the 4th DCA and upholding the marring exclusion to exclude coverage in dropped object cases.  It held, “Damage caused by the hammer dropping constituted marring and thus was excluded from policy coverage.”

In more detail, the insured brought suit based on the denial of a claim for damage as a result of a dropped hammer on a tile floor. Universal determined that the damage to the tile, about the size of a quarter, was not covered by the insured’s homeowner’s policy as such was excluded under exclusion number 2., which excludes damage  “Caused by: . . . (e) Any of the following:(1) Wear and tear, marring, deterioration . . . .”

Specifically, the marring exclusion was the basis for the denial and on which summary judgment was granted at the trial court level. The Fourth District upheld the order granting the carrier’s Motion for Summary Judgment holding that the loss was a “…disfiguring mark; blemish… ” and not the same as “wear and tear.” The Fourth District concluded that the term marring was unambiguous and not covered based on the relevant exclusion.

 

Insureds Are Not Entitled to Mutually Agreeable Defense Counsel in Florida

Often times attorneys become confused when reading Florida Statute Section 627.426(2), and think that insureds are entitled to mutually agreeable defense counsel when an insurer agrees to defend under a reservation of rights.  That is generally not the case.  Section 627.426(2) applies to “coverage defenses” which include such things as late notice or other “defenses” to otherwise legitimate coverage.  The exclusions and exceptions to coverage that insurers usually reserve their rights on are not considered “coverage defenses” and are not governed by this statute.  An insurer in Florida is permitted to unilaterally select defense counsel for its insured.  For more explanation, see Travelers Indem. Co. of Ill. v. Royal Oak Enterprises, Inc., 429 F. Supp. 2d 1265 (M.D. Fla. 2004). 

Contrary to Royal Oak’s assertion, this statute does not create a duty to provide mutually agreeable counsel. First, the statute is implicated only when the insurer raises a “coverage defense,” defined by the Florida Supreme Court as “a defense to coverage that otherwise exists.” So defined, a “coverage defense” does not include a disclaimer of liability based on an express coverage exclusion in the policy.²³ Second, the only penalty for noncompliance provided for in the statute is that the insurer is precluded from denying coverage “based on a particular coverage defense.” It does not provide that the insurer’s failure to obtain mutually agreeable counsel in the event of a coverage dispute entitles the insured to recover the fees and costs of its separately retained counsel. Accordingly, § 627.426(2) cannot serve as a basis for imposing a duty on Travelers to obtain mutually agreeable counsel for Royal Oak.

Travelers Indem. Co. of Ill. v. Royal Oak Enterprises, Inc., 429 F. Supp. 2d 1265, 1272 (M.D. Fla. 2004)