USE OF EXPERTS IN INSURANCE COVERAGE AND BAD FAITH LITIGATION AND DISPUTES

Douglas M. McIntosh, President,

McIntosh, Sawran & Cartaya, P.A.

August, 2018

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"Expert evidence has a powerful and potentially misleading effect and may be assigned talismanic significance in the eyes of lay jurors." U.S. v Frazier, 387 F.3d 1244, 1263 (11th Cir. 2004.)

            Despite this longstanding fear of the fragility of the common juror, the use of experts in significant or complicated insurance coverage and bad faith litigation disputes is indispensable. Jurors (and many times, judges) do not always understand the unique conditions or terms within an insurance contract. While everyone knows that most people purchase some form of insurance at some time in their lives, it is a mistake for counsel to assume that those consumers grasp the nuances of the insurance policy, and the correspondent obligations and benefits that accompany the insurance contract. Expert assistance is indispensable to educating the juror about the product involved, and the concomitant duties that flow between the parties to the contract. Case law differs throughout the country on the propriety of use of experts in the insurance coverage and bad faith arena. Most courts, however, are allowed wide discretion when deciding whether to allow, or exclude, proffered expert testimony in any given case. This blog post explores the rationale for utilizing experts in such cases to assist the trier of fact with what can often times be complex and difficult concepts of insurance contract law, custom and practices.

  1. Federal law.

            Preventing an expert from testifying is within the sound discretion of the trial court; expert testimony must be reliable and relevant. U.S. v Frazier, 387 F.3d 1244 (11th Cir. 2004); Daubert v. Merrell Dow Pharm., Inc. 509 U.S. 579 (1983). It is scarce to find a seasoned insurance coverage and bad faith litigator that will try their client's case without an expert. No Florida court has specifically held, however, that expert testimony is necessary to prove such a claim or defense. Courts have excluded expert testimony when the party offering the assistance to the fact finder fails to show that the expert testimony will be helpful to the trier of fact, and that the knowledge and experience of the expert is specific to the issues presented by the claim. See Tardiff v. GEICO Indem. Co., 481 Fed. Appx 584 (11th Cir. 2012); City of Hobbs v Hartford Fire Ins. Co., 163 F.3d 576 (10th Cir. 1998).

            Using the expert properly in the insurance coverage case is often the pathway for a successful decision from the jury or judge. Counsel must take time to carefully qualify his or her expert, and if issues involve industry custom, claims handling standards, and other questions about the conduct of professional claims handlers, that expert must be capable of demonstrating experience and knowledge dealing with those issues and practices. Where the substance of the expert's testimony concerns ordinary practice and trade customs which are helpful to the fact-finders' evaluation of the parties conduct against the standards of ordinary practice in the insurance industry, passing reference to a legal principle or assumption to place those opinions in context of the case will not justify outright exclusion of the expert report or testimony. See Travelers Indem. Co. of Illinois v. Royal Oak Enterprises, Inc., 5:02-CV-58-OC-10GRJ, 2004 WL 3770571 (M.D. Fla. Aug. 20, 2004); accord, Maharaj v. GEICO Cas. Co., 12-80582-CIV, 2015 WL 11279830 (S.D. Fla. Mar. 12, 2015); Fed. Ins. Co. v. Arthur Andersen, LLP, 1:03CV01174, 2006 WL 6555232 (N.D. Ill. Jan. 18, 2006); Mahoney v. JJ Weiser & Co., Inc., 04 CIV. 2592 (VM) H, 2007 WL 3143710, at *1 (S.D.N.Y. Oct. 25, 2007); Crowley v. Chait, 322 F. Supp. 2d 530 (D.N.J. 2004).

 

  1. State law/statutes.

            States vary on the use of experts in insurance coverage and bad faith litigation. The majority rule follows what is espoused above: experience and knowledge from years of practice exposure qualifies an expert under Daubert principles, to testify to the proper claims handling procedures, policy terms and conditions applications, and custom and practice in the industry.  Where many trial lawyers fall down is when they try to challenge a lawyer expert because he or she has "not actually worked at an insurance company adjusting claims", to try to disqualify that person. This fails. Nearly every state has statutes that exempt licensed attorneys from having to become licensed as insurance adjusters, to adjust insurance claims. See e.g., Fla. Stat. § 626.860 (licensed Florida attorney not required to be licensed as an adjuster to adjust or participate in the adjustment of any claim, loss or damage under a policy of insurance); accord, Ala., Ark., Cal., Colo., Idaho, Ill., Ks., La., Maine, Mass., Minn., Miss., Montana,  N. Hamp., N.J. ; NY; N.Car., Ohio, Ok., R.I., S. Car., Texas, Va., and Wash. D.C. And most skilled attorneys with the practice background necessary have routinely been accepted by courts to opine on the claims handling, industry customs, and particular claims handling issues involved in a bad faith case, or underwriting and coverage issues in a coverage dispute.

            The reason for this appears sound and well settled. Fact finders and particularly lay jurors, require the assistance of an expert to grasp the issues presented by a particular insurance contract, and the claims handling practices exercised under the obligations found in the policy, or as may be required by state law. The expert can educate the fact finder and provide them the insight needed to deal with the reality of the issues in the dispute, and not just leave those issues to argument and often vague jury instruction. Our practice has found this to be the case, and the use of the qualified and experienced expert to be indispensable to the insurance coverage or bad faith dispute.

 

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            Douglas M. McIntosh founded the firm's Insurance Coverage and Bad Faith practice division, and has litigated cases in state and federal court for over 36 years. McIntosh has also testified in dozens of cases in state and federal courts throughout Florida and in other states , as a qualified expert in insurance coverage and bad faith disputes. For more information contact him at dmcintosh@mscesq.com, 954-765-1001.

Categories: Expert Testimony

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