In February 2015, the United States District Court for the Northern District of Florida entered its opinion in Vaughn v. Producer’s Agricultural Insurance Company, 111 F. Supp. 3d 1251 (N.D. Fla. 2015). The Court’s reasoning and ruling remains useful as a means to counter allegations that an insurer failed to timely respond to a civil remedy notice. In granting summary judgment in favor of the insurer, the Northern District found that section 624.155, Florida Statutes, does not mandate any specific method or means of responding to a civil remedy notice. Rather, an insurer has the obligation to “unveil” its position to the claimant. Vaughn at 1255. In Vaughn, the insured sought to establish a presumption of bad faith on summary judgment because the insurer never entered a response to the CRN on the Florida Department of Financial Services (DFS) web portal. Id. However, as the court observed, the statute itself does not create a presumption of bad faith, nor does it require the insurer to respond via the DFS portal. Id. at 1254. Rather, the presumption of bad faith was created by The Florida Supreme Court in Imhof v. Nationwide Mutual Insurance Co., 643 So. 2d 617 (Fla. 1994). Id. at 1255.
In denying the insured’s motion, the Northern District reviewed the Florida Supreme Court’s reasoning in Imhof. Specifically, the Northern District found that the presumption of bad faith was meant to prevent an insurer from attempting to avoid liability simply by ignoring a valid CRN. Id. The Northern District emphasized that the response contemplated by both the statute and Imhof is one of “candid exchanges” and that these exchanges are not restricted to some specific technical form response. Id. While the Vaughn court declined to “delineate the precise boundaries of an adequate response,” the Court’s opinion did clarify that Imhof’s 60-day rule was not intended as a gotch-ya to enable the insured to shift the bad faith burden to an insurer merely because of some technical or inconsequential shortcoming in the insurer’s CRN response. Id. Lastly, the Northern District also reaffirmed that an insurer is entitled to deny claims which it reasonably believes are not covered and that a court must consider the insurer’s actions in context to determine whether the insurer was acting in good faith when denying a claim. Id. at 1261-62.