Harvey v. GEICO, a Must-Read Case for Florida Insurers and Claims Handlers

October 4, 2018 by on News

Harvey v. Geico, Case No. SC17-85, 2018 Fla. LEXIS 1705 (Fla. S.Ct. September 20, 2018)

The Florida Supreme Court reversed a decision of the Fourth District Court of Appeal that held that there was insufficient evidence to support a bad faith verdict against GEICO.

The underlying claim involved an August 8, 2006 auto accident which resulted in the death of 51-year-old John Potts. James Harvey was the GEICO insured who was determined by GEICO to be at fault for the accident. Harvey had a GEICO auto policy with $100,000 in liability coverage. On August 14, 2006, a paralegal who worked for the attorney hired by the Estate called the GEICO adjuster and requested a statement from Harvey to investigate whether Harvey had any assets, whether he had any additional insurance and whether he was in the course and scope of his employment at the time of the accident. The adjuster did not communicate this request to Harvey at this time. On August 17, GEICO tendered the full policy limit of $100,000.

There were several subsequent communications between the attorney for the Estate and the adjuster which resulted in Harvey being notified of the request, but Harvey wanted to consult with personal counsel prior to providing a statement. On September 13, 2006, the Estate returned GEICO’s check and filed a wrongful death lawsuit. The jury found Harvey to be 100% at fault and awarded the Estate $8.47 million dollars in damages. Thereafter, Harvey filed a bad faith lawsuit against GEICO which resulted in a verdict finding that GEICO acted in bad faith and awarding Harvey $9.2 million dollars in damages.

GEICO appealed seeking to overturn the verdict and argued to the Fourth District Court of Appeal that there was insufficient evidence to support the bad faith verdict. The Fourth District agreed and reversed the judgment. Harvey then appealed to the Florida Supreme Court.

The Florida Supreme Court discussed existing bad faith precedent in Florida and then held that, “the critical inquiry in a bad faith [case] is whether the insurer diligently, and with the same haste and precision as if it were in the insured’s shoes, worked on the insured’s behalf to avoid an excess judgment.” Harvey, 2018 Fla. LEXIS 1705 at *13. The court then criticized Federal court rulings stating that they did not always “hit the mark,” and that an insurer must not only refrain from acting in its own interests in handling claims, but it must also act with “care and diligence.”

Ultimately the Court held that “GEICO completely dropped the ball” because it failed to inform the Estate’s attorney that Harvey was working with his personal attorney with regard to the request for a statement.

In a dissenting opinion, Justice Canady stated that the majority opinion “muddies the waters between negligence and bad faith and bolsters ‘contrived bad faith claims.’” Id. at *29. He also stated that the majority opinion adopts a negligence standard “in all but name.” Id. at *50.

Jane Anderson
Shareholder / Practice Group Leader
Direct: 904.353.0952
Email: janderson@boydjen.com

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