11th Circuit Weighs Car Accident Bad Faith Insurance Claim

A city police officer struck by a van and seriously injured while directing traffic in Florida secured a claim for workers’ compensation and a settlement of $1.5 million against the at-fault driver. More recently though, he lost his claim for bad faith insurance. Florida car accident lawyer

Florida’s bad faith insurance law is designed to protect people why buy insurance and fulfill their contractual obligations (paying their premiums) by making sure the insurer acts in good faith when investigating, handling and settling an insured’s claims. Insurers are compelled to settle claims when a reasonably prudent person would. Failure to settle when extended a reasonable offer to do so can give rise to a bad faith insurance action.

In deciding whether an insurer has acted in bad faith, courts are supposed to consider the totality of the circumstances. The standard isn’t negligence but whether the insurer acted diligently with the same speed, care and rigor it would if it were in the insured’s shoes in working to avoid an excess judgment.

In many bad faith insurance claims stemming from auto accidents, the third-party injured person can obtain from the right to step into the shoes of the at-fault driver insured and pursue a claim against the at-fault driver’s auto insurer. That was what happened in the recent bad faith insurance case involving the Florida city police officer.

Florida Car Accident Settlement Negotiations Fail

According to records from the U.S. Court of Appeals for the 11th Circuit, the defendant (Allstate) was the insured for the at-fault driver who struck the plaintiff police officer. Allstate received word of the crash and assigned an adjuster to the case that same day. The next day, the adjuster got the crash report and spoke to its insured as well as the plaintiff’s wife and employer. She also mailed a statement to the insured about the crash and informing him of the next steps in the process.

The insurance policy in question maxed out at $50,000. The adjuster told the at-fault driver it appeared the police officer’s claims would exceed that, but that Allstate would try to settle the case within the policy limits. (Any amount over and above that would be the responsibility of the insured to pay.)

Little more than a week after the crash, the insurance adjuster mailed the injured police officer a check for $50,000. He was instructed to give the check to the city (his employer) at their behest. That check was sent to the city’s worker’s compensation carrier, which believed the check should be applied to the officer’s workers’ compensation lien. Several months later, the workers’ compensation carrier, asserting a lien of nearly $90,000, returned the check and asked Allstate’s adjuster to negotiate a lien settlement. The insurer hired an attorney, who was told by the workers’ compensation carrier that it wanted the entire $50,000, but that the officer wasn’t ready to sign any releases of liability pertaining to the claim (something that’s typical in insurance settlements).

Months later, the injured officer hired his own personal injury attorney, who was able to ascertain that the at-fault driver had no real property assets that wouldn’t be protected by Florida law even if they did win a case against him. That compelled the insured to agree to resolve all claims with the at-fault driver in exchange for all applicable policy limits paid by the end of that month. In exchange, the officer agreed to release only bodily injury claims against the driver, but would not agree to sign any release that would free another person’s or entity’s claims or that contain any hold harmless or indemnity provision. Further, the plaintiff indicated that any release that failed to comply with the terms of that letter would be treated as a rejection of a good faith offer to settle.

The insurer’s attorney hand-delivered a settlement check to plaintiff’s attorney, as well a form of release for plaintiff to sign. That release indicated that the plaintiff would release the at-fault driver of claims pertaining to the accident not only for himself, but his heirs, personal representatives and successors. The plaintiff rejected this settlement, with attorney indicating he was both surprised and dismayed to see “rejection of our good faith offer” with a release of liability that would release the claims of others besides the plaintiff.

Allstate’s attorney responded by swaying that no one would consider the language in the release to cover anyone else’s claim, that plaintiff didn’t have the power to release the claims of anyone else anyway and that it only applied to plaintiff’s bodily injury claim – but nonetheless agreed to remove that language. Plaintiff’s attorney did not respond, but instead filed a lawsuit in state court.

Plaintiff Wins Liability Case, Loses Bad Faith Insurance Claim

The matter was resolved in a consent judgment for $1.5 million.

Subsequently, plaintiff filed a lawsuit against the insurer alleging bad faith. Plaintiff alleged Allstate acted in bad faith when it failed to settle his bodily injury claim and instead proposed a counteroffer that contained an overly-broad release of claims. Refusal to accept the initial offer to settle, plaintiff insisted, created an unnecessary risk of excess judgment for the insured. Both the trial court and the U.S. Court of Appeals for the 11th Circuit agreed.

The court held that while the language of the proposed release did indicate heirs, personal representatives, etc., it also specified that it strictly pertained to plaintiff’s claims for injuries he may have had, may now have or may hereafter have because of the crash. The release prevented plaintiff from getting around the release by transferring his claims to another party, but it did not release his wife’s or employer’s separate potential claims against the insurer.

But even if the language of the release amounted to the insurer not accepting the settlement offer, the insurer’s attorney agreed to remove that language immediately. Plaintiff rejected that offer.

The details of this case illustrate how a car accident claim – even in a case of clear liability and serious injuries – can get complicated very quickly. This is why it’s imperative that all car accident victims seek the experience of a dedicated Florida personal injury lawyer as soon as possible after a crash.

Contact the South Florida personal injury attorneys at Halberg & Fogg PLLC by calling toll-free at 1-877-425-2374. Serving West Palm Beach, Miami, Tampa, Orlando and Fort Myers/ Naples. There is no fee unless you win.

Additional Resources:

Martin v. Allstate, Dec. 10, 2019, U.S. Court of Appeals for the 11th Circuit