McIntosh, Sawran & Cartaya, P.A.
Insurance Coverage Division
September , 2018

On September 20, 2018, in a 4-3 controversial decision, the Florida Supreme Court arguably changed the landscape of Florida law on insurer "bad faith" for the foreseeable future. See Harvey v. GEICO, SC17-85, September 20, 2018 ("Harvey 2"). In the 23-page majority opinion (authored by Justice Quince and joined in by Justices Pariente, Lewis and Labarga), the high court reversed the appellate decision  rendered by Fourth District Court of Appeal. The 23-page dissent authored by Chief Justice Canady and joined by Justices Polston and Lawson, however, offers a scathing rebuke of the majority decision and essentially accuses the majority of issuing a decision that completely ignores long-standing precedent dating back over four decades in Florida jurisprudence.  As Chief Justice Canady states, "the majority's decision to reinstate the jury verdict (below) muddies the waters between negligence and bad faith and bolsters 'contrived bad faith claims'" in Florida. Harvey 2, at p. 25.


As the dissenting opinion suggests, the case bears significant scrutiny. In Harvey, the lower court trial resulted in a finding of bad faith by GEICO and awarded $8.47 million in damages against the GEICO insured, Harvey, who had purchased a $100,000 policy with GEICO. The 4th DCA reversed the verdict, finding as a matter of law that GEICO fulfilled every obligation imposed upon it under the longstanding precedent of Boston Old Colony Insurance Company v. Gutierrez, 386 So. 2d 783 (Fla. 1980), and thus could not be liable for bad faith despite trial evidence suggesting less-than-efficient and potentially negligent claim handling. See GEICO General Insurance Company v. Harvey, 208 So. 3d 810 (Fla. 4th DCA 2017) ("Harvey  1"). The intermediate appellate court relied upon Boston Old Colony and older case precedent in Campbell v. GEICO, 306 So. 2d 525 (Fla. 1974), as well as more recent federal court appellate decisions interpreting those cases, to hold that the trial court should have directed a verdict for GEICO. As the lower Court stated, while GEICO might have improved its claims process, even if GEICO's actions were negligent, "negligence alone is insufficient to prove bad faith." (citing Auto Mut. Indemnity Co. v. Shaw, 184 So. 2d 852 (1938) and Delaune v. Liberty Mutual Ins. Co., 314 So. 2d 601 (Fla. 4th DCA 1975.))  Harvey 1  also reiterated long-standing Florida law that the "standard for determining liability in an excess judgment case is bad faith rather than negligence", citing Novoa v. GEICO Indemnity Co., 542 F. App'x 794 (11th Cir. 2013)., which in turn cited to Florida's Campbell v GEICO Supreme Court precedent.  


The majority decision in Harvey 2 now appears to change the bad faith landscape in Florida. Seemingly taking umbrage at the 4th DCA's reliance on 11th Circuit Court of Appeals and federal court decisions applying Florida law to bad faith claims, the majority quashed the Fourth District's decision and stated it "misapplied precedent" in relying in part on "nonbinding federal cases that cannot be reconciled with clear (Florida Supreme Court)  precedent." Harvey 2, at p. 2-3. In its decision the high court found that the lower court's statement that "where the insured's own actions or inactions result, at least in part, in an excess judgment, the insurer cannot be liable for bad faith", was wrong and misapplied precedent. Harvey 2, at p. 20. As the dissent points out, this "effectively adopts a negligence standard for bad faith actions, even though negligent claims handling does not amount to bad faith failure to settle." Harvey 2, Canady dissent at p. 40 (citing Campbell, 306 So. 2d at 530.) As well, seeming to overlook that the seminal case of Boston Old Colony was a causation case, that resulted in a decision in favor of the insurer, the majority refused to adopt the lower court's conclusion that GEICO did not cause the excess judgment in question by its less-than perfect claims handling, and rejected the lower court's cite to Novoa v. Geico Indemnity Co. for the proposition that an insurer "does not have to act perfectly, prudently or even reasonably", but instead must "refrain from acting solely on the basis of their own interests in settlement." (where Novoa  quoted State Farm v. Laforet, 658 So. 2d 55 (Fla. 1995), for that proposition). Harvey 2, at p.12.


The Harvey 2 opinion highlights a tension in bad faith jurisprudence in Florida, with the Florida Supreme Court's majority opinion expressing the idea that while a carrier's negligence alone does not support a de facto showing of bad faith, that negligence still remains relevant to the question of bad faith under a "totality of the circumstances" analysis. The Supreme Court's majority opinion, as noted, also rejected the approach that they believed was adopted by the 4th DCA which suggested that if the insured's own actions were partially to blame for the excess judgment, there could be no bad faith as a matter of law.

Florida courts are now faced with a potential avalanche of "contrived bad faith claims" where the hindsight testimony of claimants, policyholders and their counsel can be used to provide evidence of "what would have happened" if a certain fact or issue was made known to them in the claims handling process. The only saving grace might be found in the majority decision which at least acknowledged as it must under Florida law that there "must be a causal connection between the damages claimed and the insurer's bad faith." Harvey 2, at pp. 21-22. By mentioning in footnote 3 of the opinion that use of the Florida Standard Jury Instructions for standard legal cause and optional instructions on concurrent cause and intervening cause should be considered in cases of this type, there MAY still be a way for carriers to provide evidence of the insured's, claimant's and their counsel's conduct, to a jury or fact-finder when assessing causation in the bad faith trial.  Practitioners must be mindful of this in their next bad faith trial, so that Harvey 2 isn't used to eviscerate 40 years of Florida law.

Categories: Insurance Coverage

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