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.

Turning Over Uninsured Motorist Rejection Form After Suit Was Not Confession of Judgment

Contreras v. Century Ins. Co. (Fla. 5th DCA 2011)

Petitioner, Contreras, seeks certiorari review of a decision and opinion of the Seminole County Circuit Court, sitting in its appellate capacity, affirming the county court’s final judgment in favor of an insurer in the declaratory judgment action filed by Petitioner and a decision to award appellate attorney’s fees to Respondent.  The 5th DCA held that the circuit court did not err in affirming the county court’s final judgment in favor of the insurer’s right to obtain a signed uninsured motorist rejection form because turning over the form after suit was filed did not constitute a confession of judgment as a matter of law.  As to the award of fees, the court stated that the appellate issue did not meet the threshold for section 57.105 and vacated the order.

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.

Insurer’s Motion for Remittitur on Damages for Medical Expenses Should Have Been Granted Because the Evidence Did Not Support the Award

GEICO Indem. Co. v. Pollie DeGrandchamp (Fla. 2d DCA 2012)

A jury returned a verdict awarding $1,250,000 in future medical expenses (reduced to a present value of $250,000) to an insured for injuries suffered during an automobile accident. The insurer providing uninsured/underinsured motorists’ coverage to the insured then filed a motion for remittitur to challenge the award. The trial court denied the motion and the insurer appealed.

On appeal, the second district held that the trial court abused its discretion in denying the motion and remanded either for the entry of an order or remittitur or the granting of a new trial on the issue of damages for future medical expenses. The court’s reasoning was that the testimony and record evidence did not support the amount of the jury’s award, but merely supported a finding that the insured was reasonably certain to incur at least some medical expenses in the future.