For-profit insurance companies enjoy privileges in Florida not afforded individuals and other commercial activities. It is little wonder they profit so handsomely. In turn, their wealth allows them to exercise ever greater control over politicians, the courts, and the psyche of the people. It’s an ugly picture.
In the context of liability claims, an insurance company’s primary responsibility is to protect its insured from an excess judgment. An excess judgment is a judgment entered by the court in an amount greater than the insured’s policy coverage limits. The carrier can achieve this outcome in most cases simply by being conscientious and reasonable. Falling below this standard is generally considered negligence.
As a lawyer, I can be held accountable for negligence causing harm to a client. The same holds true for doctors, bankers, manufacturers, drivers and every other entity … except for insurance companies.
In DeLaune v. Liberty Mutual Ins. Co., 314 So.2d 601 (Fla. 4th DCA 1975), Liberty failed to settle a car crash claim for its insured’s policy limit of $10,000. A verdict was rendered against the insured for $360,000. The court disallowed the Plaintiff’s attempt to recover the difference in a separate lawsuit based on allegations of harm resulting from negligence. The court said that an insurance company cannot, unlike every other entity in Florida, be held liable for harming an insured based solely on negligence. (The insured assigned the Plaintiff his right to sue Liberty in exchange for the Plaintiff agreeing not to enforce the judgment against him. This is standard operating procedure in situations where insurance carriers expose their insureds to excess judgments.) See also Thomas v. Lumbermens Mutual, 424 So. 2d 36, 38 (Fla. 3rd DCA 1982).
Silent (Dominant) Partner
When its insured is sued, the insurance company calls the shots on every aspect of defending the case. The carrier chooses the lawyers, hires the experts (or not), requires the insured’s cooperation, and decides on settlement (or not). Florida juries are not allowed to know any of this. See Sec. 627.4136, Fla. Stat.; Beta Eta House Corp. v. Gregory, 237 So. 2d 163, 165 (Fla. 1970) (The Florida Supreme Court said this information is not relevant to issues of fault and damages.)
Jumping Through Hoops
It is not always clear what is covered under an insurance policy. Unfortunately, Florida law requires that a circuitous and costly route, rather than a direct route, be taken to get the answer. Southern Owners Ins. Co. v. Mathieu, 67 So. 3d 1156 (Fla. 2d DCA 2011) involved construction defect litigation. Southern Owners insured one of the parties accused of performing defective work. A question arose whether such defective workmanship was covered under the policy. The damaged homeowners brought a “dec action” (pursuant to Chapter 86, Florida Statutes) — the direct route — to obtain the answer. The road was blocked. The appeals court decided that the aggrieved parties must first obtain a settlement or a verdict against the party responsible for the defect prior to the filing of their declaratory judgment action. Hence, the court required two lawsuits instead of one to obtain an answer to the ultimate question. See also Sec. 627.4136, Fla. Stat.
What’s Good for the Goose is not Good for the Gander
I’ve already addressed how insurance companies control the litigation. This section describes how they get to avoid one serious consequence of this control at the expense of their insureds and Plaintiffs. Florida Statute 768.79 allows both sides to a lawsuit to propose a settlement during litigation, which, if not accepted, can subject the other side to the significant expense of additional attorney’s fees and costs. While insurance companies are entitled to benefit from the statute, they are not subject to its consequences, thus leaving their insureds holding the bag when things go South. See Steele v. Kinsey, 801 So. 2d 297, 299-300 (Fla. 2d DCA 2001).
Class action lawsuits were designed to allow a thousand tiny ripoffs, none of which alone would make for a viable claim, to be pooled into one big claim against the perpetrator. The tool has been used across the nation to exact justice from the largest corporations for a thousand tiny cuts inflicted on consumers. Florida law prohibits such a “cause of action when an authorized health insurer refuses to pay a claim for reimbursement on the ground that the charge for a service was unreasonably high or that the service provided was not medically necessary.” Section 624.155(6). Fla. Stat. This is not an insignificant matter. It is not uncommon for a health insurance carrier to nickel and dime medical providers over certain procedures. The add-up over thousands of cases can be millions of dollars. Either the providers incur the losses or pass them on to their patients. Both ways the insurance company profits. An individual claim, say for $50-$100, may not be worth pursuing, but thousands of these combined into one may be. The Florida Legislature has taken this effective tool from the hands of consumers.
Price Fixing Not Prohibited
If General Motors (GM), Ford, and Chrysler conspired to fix prices on their automobiles, they could be dragged into Federal Court to pay the piper. Not so with the setting of insurance premiums. 15 U.S.C. Sec. 1013.
Two Bites at the Rotten Apple
An insurance company can act with complete impunity towards its insured, but until it is given a formal 60 day warning it runs no risk of suffering any negative consequences. See Talat Enters., Inc. v. Aetna Cas. & Sur. Co., 753 So. 2d 1278 (Fla. 2000). The practical effect of carriers being allowed to act in bad faith until being warned is that insureds are beaten down into accepting less or nothing on legitimate claims. As the law is constructed, a Florida insurer cannot be held liable for bad faith until it has failed to act properly within the 60 day warning period. This does not mean that carriers only have 60 days to do the right thing. The 60 day warning is never issued at the very outset of a claim. It typically comes months and even years after the event giving rise to the insurance claim occurs. Instead of being allowed to bring a bad faith claim when the carrier is clearly behaving in bad faith, the insurer must first issue the formal warning and wait 60 days for the carrier’s decision. Until then, carriers are allowed to tell their insureds to “pound sand,” “jump off a bridge,” “play in traffic,” or simply ignore them. Not surprisingly, most carriers capitulate during the 60 day period, but only after they’ve trampled rights for months and years.
From a practical standpoint, it is impossible to understand why Florida insurance companies have been elevated to such a privileged status in this state. There is still plenty of money for them to make without being allowed to trample on the rights of their insureds and others who benefit from their coverage. Sadly, things are only getting worse under the leadership of Governor Rick Scott.
Not good. Not good at all.
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Jeffrey P. Gale, P.A. is a South Florida based law firm committed to the judicial system and to representing and obtaining justice for individuals – the poor, the injured, the forgotten, the voiceless, the defenseless and the damned, and to protecting the rights of such people from corporate and government oppression. We do not represent government, corporations or large business interests.
While prompt resolution of your legal matter is our goal, our approach is fundamentally different. Our clients are “people” and not “cases” or “files.” We take the time to build a relationship with our clients, realizing that only through meaningful interaction can we best serve their needs. In this manner, we have been able to best help those requiring legal representation.